Fintech and Finserv—What’s the difference?

If you don’t know, don’t worry! Both terms are being used very frequently nowadays, but they can be a bit confusing. So if you don’t know what the difference is between Fintechs and Finservs, then this article is a must-read for you.


Finserv is nothing more than an abbreviation for Financial Services, and financial services have been with us for a very long time. It could include banks, insurance companies, brokers and other similar types of businesses.

The term in itself doesn’t carry anything more than that. If a company provides financial services to people or to companies and other entities, it can be called a Finserv. But that’s different from…

Banks have been around for a very long time

… a Fintech

A Fintech in itself carries more meaning.

The term is simply derived from Financial Technology, but there’s a difference to Finserv that can be seen right away: It includes both services and products.

Unlike Finserv, Fintech has not been around for a long time. Historically all financial services have used various technologies to provide their offerings, but the term ‘Fintech’ only came to life when the use of technology started to have a disruptive nature in the industry. Meaning it’s not only tech that helps a company run things as usual, but rather the development of new tools that completely change the way the game is played.

Fintechs came about to disrupt Finserv companies that were mainly composed of traditional banks and old school businesses.

Differences between Fintech and Finserv

Fintechs and Finservs are both different in concept and nature, but there are other aspects that also set them apart:

  • Fintechs tend to be modern, contemporary, disruptive and new; while it would be strange, to say the least, to call a normal bank a Fintech
  • Many Fintechs work to serve the underserved, to provide services and products to those who couldn’t be helped at traditional banks and institutions; so in other words, they tend to be more inclusive
  • Most Fintechs are also connected, digital, online, and provide products and services for people anywhere—on their mobile phones or any other device. This is a radical contrast to physical banks where you need to stand in-line and wait for 30 minutes to open an account
  • As Fintechs are not focusing on physical locations, these younger companies usually have more money to spend on engineering and research & development, and tend to have a cost structure that allows for less fees to the final consumer
Financial businesses are changing fast
Financial businesses are changing fast

The gray area

Banks and other traditional institutions might have made their moves later, but the surge in Fintechs didn’t go unnoticed. They kept pace and had their finger on the pulse.

Many old school banks now have teams and departments that resemble something along Fintech lines. These teams are geared to develop new, modern products, increase accessibility, adapt old bank offerings for the digital era, create innovative solutions, and so on. It’s also not uncommon for traditional institutions to acquire rising Fintechs or hire some core members of a successful financial startup, looking to tap into the power of financial technology to revamp its own services.

So in the end, Finservs might have a bit of Fintech within them, while Fintechs that are providing services also fall into the Finserv category, at least in theory. It’s not black and white, but their overall concepts are different.

The future of Fintechs

The Fintech revolution is here. Technology is changing the world of finance—from banking to payments. They’re making everything more efficient and cheaper thanks to innovative new solutions aided by artificial intelligence, APIs, blockchain, and more.

Regardless of being a recent phenomenon, many shifts are already happening and could well affect your financial future:

  • Non-banking entities want to join the cool guys: Large technology firms are working to take their piece of the pie in financial services and products. It wouldn’t be crazy to think some of these companies—think Apple or Google—could turn into finance powerhouses in the next few years.
  • Banking the unbanked: According to the World Bank, there are close to two billion unbanked people around the world. Two billion people that are now being seen by Fintechs looking to provide their services to the unserved.
  • Hello challenger banks: They’re a new type of bank without any in-person branch, typically with very low costs for the end consumer, and they came to disrupt traditional banks to their core. Think of N26 or Revolut for example. There might be more of them in the future and they could become global, as their offerings only tend to grow larger.
Fintechs harness the power of tech to disrupt the industry
Fintechs harness the power of tech to disrupt the industry
  • Open banking: Banks are opening data collection and sharing between third parties for the benefit of banking customers. Think of external apps that you could download or activate that have limited access to your bank account to help you manage your budget and much more.
  • Automation: It started with features such as automatically paying bills, and has evolved into a host of automated financial services, which make it easier than ever for anyone to manage their finances, receive tips, get the best deals, follow a savings plan, etc.

As Fintechs grow and the whole industry reaches the next level, more companies will provide financial services and products to consumers and businesses, making competition harder. This will help to push quality, foster innovation and possibly lower costs. The future of Fintech is really exciting!

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