Difference between Fintech and Banks

A major advancement in the evolution of banking occurred when grains were used as collateral for loans in ancient Babylonia and Assyria. We would be quite surprised by the financial systems of the past if we could travel back in time to an era before technological breakthroughs. Every day, new technical advancements pave the way for the development of innovative financial systems that compete with traditional banks.

Financial technology and products within the financial technology sector underpin the vast bulk of existing banking infrastructures. Although many people worry that fintech will undermine traditional banking, the advantages it provides are unrivaled. In this piece, we'll examine the similarities and differences between fintech firms and conventional banks.

What is Fintech?

Fintech refers to emerging technologies that improve and modernize the provision of financial services. The term "financial technology" is shortened to "fintech." It's used by individuals, business owners, and companies alike to keep track of their finances and run their businesses and daily operations more smoothly. This is achieved through the use of algorithms and specialized software on desktop computers and mobile devices (including smartphones). As a subset of the banking sector, the development of cryptocurrency is also included.

Besides the obvious use in the financial sector, fintech is also finding its way into retail banking, academia, the investment management industry, and even philanthropic groups. As fintech has progressed, there has been a shift toward a focus on end users. Fintech encompasses a wide range of activities that previously required the intervention of a human being but now can be performed entirely digitally, including the depositing of checks via a mobile device, the management of investments, the application for credit, and any assistance that does not require the intervention of a human but makes use of technology.

These are some others −

  • Platforms for crowd financing such as GoFundMe and Kickstarter enable app and internet users to send and receive monetary contributions.

  • Budgeting apps

  • Electronic currency and cryptographic currencies

  • Intelligent connections that can automatically carry out the execution of contracts between buyers and sellers

  • Open banking

  • Insurtech is an initiative that strives to improve efficiency and reduce complexity in the insurance sector.

Opportunities for consumers, B2B clients, and B2C clients to gravitate toward financial technology services have arisen due to the rise of more information, mobile banking, decentralized access, and accurate analytics.

What are Banks?

These establishments are authorized to accept customer deposits and provide loans. Even though there are several kinds of banks, such as investment banks, retail banks, and corporate banks, all of them are ultimately subject to the authority of the national government or the central bank.

No one can deny the crucial role that banks play in any economy. Depending on the type of account they choose, customers can engage in a wide range of financial transactions. Withdrawals, deposits, and bill payments are all examples of such humdrum banking activity. Customers may invest, save, and borrow money, all while earning interest on their savings and investments. Banks also provide other services such as foreign currency exchange, asset management, and safe deposit boxes.

Differences − Fintech and Banks

Both Fintech and Banks share the common goal of giving their clients a unified view of all the financial options available to them. The following table highlights how Fintech is different from Banks −

Characteristics Fintech Banks


"Fintech," short for "financial technology," refers to the use of digital tools to improve the delivery of financial services.

Banks are defined as financial institutions that are authorized to accept deposits from customers and provide loans to those same customers.


Streamlining the customer experience is a top priority for fintech companies. This means making their goods and services more user-friendly, convenient, and accessible.

Safety and the responsible management of possible financial losses are two of the banking industry's top priorities.

Potential coverage

Since it leverages modern technology developments like smartphones, FinTech reaches a wider audience than more conventional forms of financial services.

The availability of banks is limited in this sector.


Companies in the financial technology sector are more likely to innovate because their organizational structures are more flexible.

The rate at which new ideas are implemented in banks might be slowed by their sometimes rigid organizational structures.

Technological reliance

Technology plays a crucial role in the growth of fintech companies.

Financial institutions have a poor rate of adopting new technology.

Target customers

Customers with low credit ratings or other banking barriers are a prime target for fintech companies.

In general, banks prefer to work with consumers that have a solid credit history and a proven track record.


In FinTech dealings, collateral requirements are low and may be adjusted to suit the situation.

Financial institutions have extremely high demands for collateral.


"Fintech," short for "financial technology," refers to the use of digital tools to improve the delivery of financial services. This strategy's primary goal is to provide the user with a seamless experience, hence it focuses on convenience, functionality, personalization, and accessibility. Taking advantage of technological advances and trends has helped expand its customer base and boost sales.

A bank, on the other hand, is a specialized kind of financial organization that may accept deposits from customers and lends money to those who need it. It is legal for banks to conduct other types of business as well. Given their emphasis on security and careful risk management, their reach in the market is limited.