How TechFin is reshaping the financial models - Taha Sajid (Huawei Technologies) at CryptoFinConf

Summary

The video discusses the concept of 'Tech Fin,' a term coined by Jack Ma to describe tech companies like Alibaba, Amazon, and Facebook that offer financial services using their existing infrastructure and vast user data. Unlike traditional banks and FinTech companies, Tech Fin companies can rapidly scale and innovate due to their technological resources. The video covers the evolution of Tech Fin, from marketplace creation to platform development and diversification, as well as the challenges of regulation and legacy systems. It highlights how Tech Fin is reshaping the financial services industry and presents the future potential of these companies.

Takeaways

• 😀 Tech Fin is the fusion of technology companies (like Alibaba, Google, Amazon) and financial services, creating a new paradigm in the finance world.
• 😀 Jack Ma coined the term 'Tech Fin' to describe companies that leverage their existing tech infrastructure to provide financial services.
• 😀 Unlike traditional FinTech companies, which only enhance banking services, Tech Fin companies integrate financial products into their platforms, offering a seamless user experience.
• 😀 Alibaba’s Alipay is a prime example of a Tech Fin company, offering not only payment services but also insurance, lending, and other financial services.
• 😀 Tech Fin companies have a distinct advantage over traditional banks by leveraging massive user data, allowing for personalized and efficient services.
• 😀 The scalability of Tech Fin companies is driven by their technology infrastructure, enabling them to grow rapidly and serve more customers at lower costs compared to banks.
• 😀 Traditional banks face challenges in scaling due to outdated legacy systems, while Tech Fin companies continually upgrade their systems to maintain agility and innovation.
• 😀 Tech Fin companies face fewer regulatory hurdles than traditional banks, as regulators are often slow to catch up with the rapidly evolving landscape of tech-driven financial services.
• 😀 The development stages of a Tech Fin company typically start with creating a marketplace, followed by developing proprietary financial products, and then expanding into a broader range of services.
• 😀 The future of financial services is likely to be dominated by tech companies, as they possess the infrastructure, data, and scalability to outperform traditional banks and FinTech players.
• 😀 The global market is seeing increasing involvement from companies like Amazon and Facebook in the financial services space, further driving the rise of Tech Fin companies.

Q & A

What is the concept of TechFin?

TechFin refers to technology companies that provide financial services using their existing infrastructure, such as user databases and technology platforms. Unlike traditional FinTech companies, which focus on financial services, TechFin companies leverage their tech resources to offer financial products and services.

Who coined the term 'TechFin' and why?

The term 'TechFin' was coined by Jack Ma, the founder of Alibaba. He introduced the term to describe how Alibaba, an e-commerce platform, was expanding into the financial services industry by using its existing tech infrastructure to offer financial products like Alipay.

How does TechFin differ from traditional FinTech?

While both TechFin and FinTech offer financial services, TechFin companies come from the technology industry and use their existing infrastructure (such as large user databases and tech platforms) to scale financial products. In contrast, traditional FinTech companies like Stripe and PayPal primarily focus on offering financial services without the backing of an extensive tech infrastructure.

What are some examples of TechFin companies?

Examples of TechFin companies include Alibaba (via Ant Financial and Alipay), Google, Amazon, Apple, and Facebook. These companies use their technology infrastructure to offer a wide range of financial services, such as payment systems, loans, and insurance.

What are the benefits of TechFin companies over traditional banks?

TechFin companies benefit from access to large databases of user behavior, which helps them offer more personalized financial services. They can also scale their products more efficiently and at lower costs due to their existing technology infrastructure, all while facing fewer regulations in the early stages compared to traditional banks.

What challenges do traditional banks face in adapting to TechFin?

Traditional banks face challenges due to their legacy systems, which hinder innovation and scalability. These systems have been developed over many years, and upgrading them to match the pace of TechFin companies is a significant hurdle. Additionally, banks are subject to stricter regulations, which can limit their ability to quickly adapt to new technologies.

How did Alibaba's Alipay become so popular in China?

Alipay, created by Alibaba, became popular in China by integrating seamlessly with Alibaba’s e-commerce platform. With a massive user base already using Alibaba for shopping, Alipay provided a convenient and efficient way to handle payments, loans, insurance, and even micro-investments, making it a dominant player in China's digital payment system.

What is the role of data in the success of TechFin companies?

Data plays a crucial role in the success of TechFin companies. By leveraging vast amounts of user data, these companies can analyze behavior patterns and offer highly personalized financial services. This data-driven approach allows for more efficient and tailored products, giving TechFin companies a competitive edge over traditional financial institutions.

How do TechFin companies scale their services?

TechFin companies scale their services by using their existing technology infrastructure, which is already equipped to handle large volumes of data and users. They also continuously upgrade their systems to keep up with growing demands, ensuring they can offer efficient and cost-effective services at a larger scale compared to traditional banks.

What are the three key market segments that TechFin companies focus on?

TechFin companies primarily focus on three key market segments: peer-to-peer (P2P) lending, customer payments, and merchant lending. These segments allow them to capture large portions of the financial services market by offering services such as loans, payment solutions, and merchant financing.