Fintech, or financial technology, represents a billion-dollar market which has changed the way we make purchases and transfer money.
It’s also created a lively debate about the future of banking as we know it, and made its way into the lexicon of pundits, financial analysts and thought leaders alike. In short, it’s a big deal.
However, despite the technology’s recognition, some companies might be fintechs themselves and not realize it.
Many organizations either have the potential to become, or already are, fintechs without identifying as one.
What Are Some Examples?
A fintech is any company that streamlines financial processes. For example, Venmo lets you pay your friends without using cash or going to the bank. Banking apps are fintechs, too, allowing you to transfer money from your phone.
However, fintech goes beyond platforms that are solely focused on finance. Uber is a fintech. It allows riders to pay for the service on their phone. Amazon, too, is a fintech. Even though it’s mostly known as a retailer, its payment methods make it a fintech.
Organizations that don’t know they’re fintechs are those that either could, or already do, offer payment options on their platform. Snapchat, for example, is a fintech. The social media platform could host payments between users, similar to what Facebook or Google already does. Snapchat did have a payment platform, but it was shut down in 2018.
Unsplash, a stock photo site, could be a fintech. Theoretically, the photo site could allow visitors to give donations to its photographers.
These are just examples, but hopefully you get the gist: Fintechs that don’t know they’re fintechs are companies that could use their platform for financial transactions, but don’t already. Or maybe they do, but wouldn’t refer to themselves as fintechs.
“The platform didn’t set out to solve this problem, but all of a sudden there will arise a need to do something in the financial sector,” explained Sunrise Banks Director of Strategy and Innovation Mark Gabriel.
Where Do Banks Come In?
Fintechs need the ability to move, lend or store money, a concept that banks already operate in. Because of their expertise in this area, banks are able to provide the regulatory compliance necessary for fintechs to transfer and hold money.
In the case of platform companies that don’t already use financial transaction services but could, banks can help them devise a plan of action.
“We can introduce (fintechs) to the right concepts and right people,” said Gabriel.
At the end of the day, up-and-coming fintechs can’t do it all alone. It’s necessary to work with a bank that possesses the risk and compliance experience necessary to ensure money is moved and stored according to regulations.
Learn more about Sunrise’s fintech partnerships here.