What is the difference between fintech and banks?

What is the difference between fintech and banks? How are the two industries different from eachother? Or are they the same?

They are definitely not the same!

However, they are fighting for the same dollars. They are offering many of the same products. Furthermore, they will often fight over the same people. As someone who can crush it at a bank can most likely crush it at a FinTech. However, its not always the other way around.

FinTechs by nature are much more lenient than traditional financial firms and banks.

So its really not a fair playing field in comparison.

But, the differences lie in how business is executed and the products offered.

Most of the time a FinTech looks to make something more simple for the masses whereas a bank or traditional financial institution wants to maximize profit. And if you want a great comparison look at the banks personal trading arms. Many will charge up to 6 cents a share for an execution. Whereas, Robin Hood, one of the poster children for the world of new age FinTech offers their product of trading for absolutely free.

But, is the Robin Hood product really free?

Robin Hood sells their trades and has a buggy interface. You won’t find that at a traditional financial firm.

So the trades made by Robin Hood have multiple “hidden” cost. That you really don’t see.

But at the end of the day the difference between FinTechs and banks boils down to new age tech vs traditional means. However, often the lines are becoming blurred today.

What is the difference between fintech and banks?

Sources:

Fintech vs Traditional Banks: Competition or Collaboration? | MONEI