Defining Fintech

A lot of people ask us how we define Fintech. The really short answer is “broadly”.  The slightly longer answer is “the reinvention of Financial Services through digitization“.

We envisage Fintech as big ocean with a lot of fish.

Fintech is big because Financial Services is a big % of GDP (e.g. 7% in USA and 10% in UK and Switzerland), accounts for a big % of corporate profits (as much as 40% by some estimates) and most of it (say 80% to 90%) can be delivered digitally.

Fintech is an ocean, because whatever categories we define, the lines will be increasingly blurred over time and the fish (customers) will move from one part of the ocean to another, even if we can expect more of a certain type of fish in a certain part of the ocean.

One of our mantras is that “bits don’t stop at historical category boundaries”. The business practices & models that evolved pre digitization defined the historical Financial Services categories. However, if you deliver value through a customer centric approach, you ignore artificially defined categories to focus on the needs of real people.

For example, in the big population high growth countries (China, India etc, what used to be the Rest of the World), the distinction between consumer and small business is largely artificial as most people are entrepreneurs. Another example is that the investing part of Insurance really fits within Capital Markets.