What does Fintech mean?

This conversation started over here when @j06 said:

The author thinks First Direct is fintech


To be fair fintech applies to technologies, not individual banks. First Direct is a bank that uses primarily financial technologies direct with the customer rather than branches. I’m not sure is see how it wouldn’t apply?

First Direct is simply HSBC without the branches. Underneath it’s still the same technology, and endless paper letters and (even, sometimes) required branch visits. So, when TSB launched PhoneBank in 1994, that was fintech too? (It looked identical to First Direct) Therefore, Lloyds telephone banking (unchanged from the TSB incarnation) is fintech? As is Smile, a piss–poor Co–op facsimile product but solely on the internet?

Come on. Traditional banking, just without the branches, does not a fintech make.


I suppose that depends on your definition. Wikipedia (I know) has a fairly good definition:

Financial technology , often shortened to FinTech or fintech , is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services.[1]

So when we say Fintech, we aren’t talking about financial institutions using technology (as you say - everyone uses tech, so that would make the term pointless). Instead, we’re talking about a new generation of companies that are applying the tools, techniques, cultures and approaches of the internet age to banking.

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I mean, cash machines are technology which interface directly with the customer. Are they an example of 50–year old fintech?

You understand that financial technology means… financial technology.

There isnt a clear definition or origin of the phrase, which has oddly enough lead to a paper being made to determine an appropriate definition. The following definition was was concluded:

Fintech is a new financial industry that applies technology to improve
financial activities.

The author does note the difficulties though

The overall claim of this article is that no one single definition of Fintech exists. After
more than 40 years that the term has been used in practice as well as literature there is
no agreement as to what Fintech entails. The process of deriving a shared language for
business phenomena has long been recognized to be a daunting task (Daft and
Wiginton, 1979). By demonstrating elusiveness of Fintech as a concept this paper
corroborated this assertion. The differences in definitions revealed by the literature
review, underscore that there are definitional problems with Fintech. This is often
compounded by the interchangeable use in the practice, but also in scholarly literature

The wikipedia article you link is a good example of how the wikipedia can be a poor source, since it sources a definition through research then tries to narrow down the definition by using the huffington post as a source (huffington post is what you’ve used as your definition).

Yes, cash machines would be a new industry that applies technology to improve financial activities. At the time they were implemented they would absolutely be fintech in my mind. they wouldn’t be modern fintech now though.

Same with first direct and internet banking in general, they are fintech, sure, but not new anymore and now well established, so we could say they dont come under the umbrella of modern fintech.

first direct haven’t seen do much recently, but i haven’t payed attention. If we are to apply ‘fintech’ to banks as a whole, then the likes of Barclays and Lloyds are fintech banks.

The problem here is you’re attempting to control ‘fintech’ to “new” banks, which would then exclude new technologies from existing banks. Take cheque imagine for example. This isnt a fintech because its been deployed by Lloyds and not Monzo? That’s clearly not true, so to suggest that fintech is exclusive to new companies would be erroneous.

The problem with that is that it’s reductive. You haven’t addressed my earlier challenge: what’s the point of the term if it’s as broad as a financial organisation using technology?

I don’t think that’s correct. I quoted Wikipedia (with the “I know” aside to acknowledge that it’s not a rigorous source), which has a reference to an academic article as its source.

My point isn’t so much about finding an academic reference though. It’s what I said above:

when we say Fintech, we aren’t talking about financial institutions using technology … we’re talking about a new generation of companies that are applying the to banking.

Under that hypothesis, I’d contest that First Direct isn’t fintech because it isn’t using the tools, techniques, cultures and approaches of the internet age - it’s using old technologies and a dated cultural approach.

I’d concede, though, that if it were to thoroughly reinvent itself to meet these criteria then I’d see it a fintech. No evidence of this at the moment, though.

I thoroughly disagree for the reasons set out above. I’m not the arbiter of words, though - it just seems we have different definitions.

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In fairness to Smile, it was one of the best online banks when it came out. It just never got updated in about 15 years, as the world passed it by, and when it did get updated it seemed to get even worse :sweat_smile: .

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I believe I did with with the defintion posted above. There isnt a clear concensus, but broadly it could be defined as:

Fintech is a new financial industry that applies technology to improve
financial activities.

I misread you a little sorry, it was in reference to this

Which was similar to this part of the wikipedias definition.

FinTech is the new applications, processes, products, or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the Internet.[3]

I think id agree, ive not kept up with first direct but we could probably agree that they haven’t or haven’t very well implemented modern fintech. Although im not sure the article was making that distinction?

In what way? You believe that fintech can only apply to new banks? There doesn’t seem to be any reason for this to be true. Id say for example that pingit is a good fintech incorporating many new financial technologies into a product for users, but (correct me if im reading it wrong), because its from Barclays its not fintech, but if Monzo implemented the same features it would be?

While First Direct is owned my HSBC, I’m pretty sure their systems, processes and training are different.

From a old report (2007):

Systems and processes
A striking feature of First Direct throughout has been the integrated approach: whether you communicate by phone, written correspondence or the Internet, service representatives have a single customer view, encompassing all interactions via different channels, as well as the range of products held, customer preferences and so on. Coupled with a high level of connectedness in First Direct’s systems architecture, and a culture of empowerment, this integration leads to more than 90 per cent of customer requests being handled at first point of contact, usually without any ‘passing off’ of calls.