Jun

Oct 04, 2020

When tech and finance keep crossing boundaries

Both the terms fintech and techfin are a combination of the words ‘financial’ and ‘technology’. Fintech refers to companies that use technology to improve existing financial products and customer experience. On the other hand, the term techfin refers to technology companies that deliver financial products and services on the basis of existing tech solutions. It goes beyond payments. For example, Shopify offers small business loans. Among other well-known examples of techfin companies are Google, Samsung, and Alibaba. They all embed financial products in their ecosystem.

So why do companies want to embed financial products in their ecosystem? Because it provides a seamless experience to users. Companies can also collect data from their customers, and thus, better understand their needs. For example, LINE was previously only a messaging application, but it has become much more by including entertainment and payment features. Before LINEPay, the payment function of LINE was outside their application through a third party. Since users needed the payment function, LINE embedded the financial component to implement fintech solutions to their tech solution. Now, users stay in the LINE ecosystem to use all LINE features.

The image below shows how embedding finance into a tech ecosystem expands the possibilities of a tech solution. The box that represents the application becomes bigger. 

techfin

Marc Andressen famously said software is eating the world. And software is eating the finance industry very fast. Technology has completely changed the way we think, build, and access financial products and services. Technology has opened doors the financial industry didn’t know existed. We’ve entered the era of internet finance, an era where finance is open and increasingly accessible. 

I’m excited about what our companies are building. We work with companies to help them embed finance in their ecosystem, easily accept payments, and we scale decentralized finance. Technology is shaping the financial industry.