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Business Insider asked executives at nine of the largest financial firms to define the word “fintech.”While fintechs have largely been viewed as a threat and competition to traditional players, respondents largely dismissed that notion. Many say that fintechs initially went head-to-head with incumbents, but they now view them as partners.Click here for more BI Prime stories.Fintechs are friends, not foes.That, largely, was the takeaway from many of the nine people we surveyed from some of the world’s largest financial institutions. We asked them one question: what is a fintech?Often, fintechs are portrayed as the young, agile upstarts taking on the big incumbents, whether they be banks, asset managers, or brokerages. With lower overhead costs and a tech-first mindset, fintechs have marketed themselves as being able to respond faster to customer demands and disrupting the status quo. But traditional players says that’s no longer the case. Only one of the respondents used the word “compete” in their definition — Citi’s Vanessa Colella — and it was to explain how fintechs used to be considered. Instead, words like “collaboration” and “partner” were used to categorize how the Wall Street behemoths describe the term. See responses from all nine people below. This is part of our broader survey of 43 execs at powerful Wall Street firms, hot startups, and big investors, who we asked to weigh in on the buzzy but hard-to-define term.
Lance Braunstein, head of Aladdin product group at BlackRock
BlackRock
Fintech has fundamentally changed the way financial services are conceived, structured, delivered and executed.From the early innovations in electronic trading, to process automation and the digitization of the investment life cycle through technologies like Aladdin, it’s clear that the term “financial services” is so inextricably defined by fintech that the terms are becoming synonymous. After all, you can deposit a check at your retail bank branch, but why would you when mobile banking has subsumed that experience?
Vanessa Colella, chief innovation officer for Citi and head of Citi Ventures
Citigroup
The term “fintech” should be obsolete. In the past, it was typically a term for small technology companies that were building one-off solutions to compete with incumbent institutions. But rather than clashing, collaboration has created a more integrated financial services experience, rendering the term “fintech” irrelevant. Today’s digital experience is so seamless, the lines between the tools and services we use are inherently connected in some way to financial technology. Every company — startup or 200-year institution — uses financial technology to create the best possible customer experiences.Whether that be buying a house or a car, refinancing a loan, revamping a payroll system or integrating payments into social media apps. Bottom line: you can no longer do finance without technology. It is a necessity, not something that makes a company or service stand out.
Emily Turner, head of innovation and business development for Citi’s Institutional Clients Group
Citi
In the early days of fintech, the emphasis was almost exclusively on challengers that were looking to unbundle banks, often in an adversarial way. As we have seen over the last few years, a trend of rebundling has emerged, in many instances characterized by incumbents and fintechs working together….Today I see the word including all of these efforts, where the business model and customer need is largely financial in nature, and the product or experience is delivered largely through technology.
Alaina Sparks, US fintech leader at Deloitte
Deloitte
Financial technology obviously has been around for quite some time, powering our traditional financial institutions with core infrastructure.What I see as different between financial technology and this abbreviated term fintech is that fintech is just a newer way to describe these newer players. And by that I truly mean newer players.I consider fintech to be financial technology players who arrived on the scene as long as 20-plus years ago, who are digital first. They’re actually tech companies that are providing financial services or primarily enabling financial services. They’re also VC-backed. They tend to offer new experiences, lower fees. They’re more agile. They leverage new business models. This is how I think of fintech.
Rana Yared, partner at Goldman Sachs
Goldman Sachs
What we like to say to people is we were investing in fintech before it was named. Taking an exchange from the floor up to electronic was considered the leading edge of financial technology. That is what we were doing. And so because of that context, I have a very broad definition of fintech, and as Goldman Sachs we have a broad definition. It covers everything from consumer retail to capital markets. It covers investments in capital markets platforms. Payments. Tech-enabled lending. New banks. Neo banks, you might call them.And then all of the infrastructure that underpins financial services. I think the avant-garde term is banking-as-a-service. It is just the underlying pipes and plumbing kit that runs banking, capital markets, wealth management, and wealth management tech.And then any software application that is solely dedicated to servicing financial services, we also put inside of fintech. So it is quite broad.
Michael Elanjian, global head of digital strategy and fintech for JPMorgan’s corporate and investment bank
JPMorgan
We view fintechs as companies that provide technology which is used to support, enable, improve and automate the delivery and use of financial services.This includes a fintech which provides a customer-facing financial services solution in the traditional sense or it could be a piece of infrastructure that allows us to perform our existing services better as a firm or as an industry. Fintechs can take the form of their underlying technical solution (i.e. cloud, blockchain, etc.) or in the form of their business activity (i.e. banker analytics).We look to partner with any fintech that can generate strategic value for JPMorgan, or our clients, but recognize that there are companies with different needs and maturities which require a range of engagement models.
Sigal Zarmi, head of transformation at Morgan Stanley
Morgan Stanley
At Morgan Stanley, we are defining fintech broadly. As such, any technology-based product, service or functionality specifically designed for financial services, capital markets, and banking will fall under the fintech category.From an innovation perspective, we are looking at startups and big tech that truly drive business-model innovation and disruption in the financial services space by using new, existing, or a combination of technologies in novel or unexpected ways. The disruptive power of fintechs is measured by its potential to drive new revenue opportunities, disrupt current competitive ecosystems, or drive unprecedented scale, performance, and network effects.
Jason Gurandiano, global head of financial technology investment banking at RBC
RBC
We define fintech as having five key verticals: -Payments-Market Structure-Financial Software-Information Services-Finternet (“disruptive financial services”) The unifying premise is fintech is all about putting more transactions through a fixed-cost infrastructure to drive operational leverage.Fintech at RBC is a dedicated, and the largest, vertical within our tech group.
Vijay Sankaran, TD Ameritrade chief innovation officer
TD Ameritrade
By definition all finance is information and all information is delivered through technology these days, so in theory, all financial services companies are technology companies. However, it’s in their progressive adoption of technology that makes some of these companies earn the title of “fintech.”Fintechs are those that act nimbly like startups and apply technology innovatively to all aspects of their financial services business, from AI-fueled recommendations for salient market news, to voice-enabled stock trading via a virtual assistant, to robots offering help to clients in retail branches.A fintech is a company where tech is the first — and always the first — answer in providing financial services solutions. Fintech companies are constantly searching for innovative tech-enabled solutions based on client problems in the financial services domain.
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