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Fintech vs. Digital Banking. What is the Difference?

The economic downturn, in-person obstacles, and the growing population of digital consumers have accelerated the demand for digital transformation from all industries, finally catching up to the banking and financial services industry. Irreversibly impacted by emerging technologies, fintech and digital banking are becoming widely embraced by consumers, investors, and incumbent institutions. But while fintech and digital banking are hand-in-hand tech trends often lumped together when speaking of digitized financing, they are, at their core, inherently different.

So, what is the difference?

Fintech, or financial technology, revolutionized financial services through innovative technologies, products, and business models. Fintech competes against old traditional financial banking methods and long-standing institutions with new technology-thinking products and services. Digital banking, on the other hand, is digitized traditional banking services, activities, or products offered via online channels, applications, and mobile platforms.

Fintech start-ups are digital natives who disrupted legacy banking with digital functionalities, simplicity, big data, accessibility, agility, cloud computing, contextuality, personalization, and convenience. Fintech is not only improving the financial consumer experience, but is changing the way people pay, transfer money, lend, borrow, and invest. Digital banking is traditional banking dressed up in a digital wrapper.

They are not the same.

But let’s get one thing straight: digital banking isn’t bad. It is good! Most people don’t want to go to a physical bank branch to deposit a check, transfer finances, or even open up an account ever again. But digital banking is not to be confused with fintech. The industry-shaking, forget-banks-altogether fintech is driving billions in investments and leaving incumbents with only two choices: join or get left behind.

From digital payments to alternative lending, fintech changed the finance market by introducing new services from banking. For example, the very popular PayPal, which owns Venmo, is one of the world’s first fintech companies and utilized emerging technology and reshaped digital payment services with mobile payments and transfers. Another example includes Patreon, one of the first fintech crowdfunding platforms created to help artists receive funding, and Robinhood, a mobile-only stock trading app that reshaped investing accessibility with instant access to trading as well as budget investing.

Digital banking includes mobile device banking, for example, Chase Mobile, from J.P Morgan, a megabank quickly adopted a digital banking strategy and now offers end-to-end mobile banking services including payments and investing. Additionally, digital banking includes the invention of artificial intelligence (AI) chatbots, for example, Eno, Capital One’s virtual intelligent assistant who offers quick information and runs tasks like paying credit cards or viewing accounts within their mobile messaging application. With nearly 90% of banking Americans using mobile banking, consumer banks have all increased their online services exponentially over the last few years.

Key Differences Between Fintech and Digital Banking


  • Fintech start-ups identify marketplace gaps to solve them with improved business models and tech-enabled products or services that eliminate the middleman to benefit customer needs.
  • Digital banking’s purpose is to speed up banking processes with digital channels to meet digital consumer demands and improve customer experience.


  • Fintech is a broad category comprised of multiple business models that utilize technology in the delivery process of financial services and products that are both within or outside the scope of legacy financial institutions.
  • Digital banking is a virtual process limited to the scope of core banking processes and activities such as online banking, financial planning, digital wallets, payments, and transfers.

Customer Focus

  • Fintech’s core premise is the customer experience that was largely underserved in the financial industry by delivering trust, transparency, personalization, and simplicity to customers with increased technological efficiency.
  • Digital banking similarly exists to serve faster and improved customer experience, but that is integrated with legacy banking who traditionally focused more on trust, security, capitalization, and before societal digitization, customer indifference.


  • Fintech firms have flatter organizational structures with limited obstacles to change encouraging innovation and agility. Their data native ability to utilize emerging technologies like artificial intelligence allows them to streamline complex financial processes and offer highly unique customer experiences centered on speed, relevance, and seamless delivery.
  • Digital banking carries the legacy infrastructure of process-oriented banks, banking regulatory framework, and a disengaged workforce inhibiting their ability to leverage new technologies to increase operational productivity, innovate new-age products and services, and address customer demands.


  • Fintech utilizes technologies such as automation, artificial intelligence, machine learning, big data, cloud computing, crowdfunding platforms, blockchain, and robo-advising to reshape the fundamental functions provided by the financial services industry.
  • Digital banking utilizes similar technology as fintech such as robotic process automation, chatbots, blockchain, machine learning, and CRM, but utilize the function of the technology differently to reshape the brick-and-mortar banking experience.

There is quite a bit of cross-over between the two spaces and the gap between banks and fintech are coming closer together, as financial services institutions are increasingly utilizing fintech SaaS solutions and open development to integrate operational capabilities to offer mobile delivery and become digitally savvy. Although banking has a complex framework inhibiting the rebuild of organizational procedures, the incorporation of APIs enables easier integration of third-party, fintech software solutions and features into bank platforms. Can APIs and SaaS adoptions be enough to streamline their processes and meet fintech firms? Digital banking is a major step up from traditional banking, but there is still a long way to go.

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