Fintech 101: Distinguishing Fintechs from Traditional Tech and Financial Companies

Welcome Back to “Digital Products Everyday.”
We have recently started a series of articles that will mainly discuss the importance of Fintech companies in advancing the Financial Inclusion agenda. We will refer to advanced markets like China and India, where Fintech companies have done a tremendous job in changing how financial services are viewed and delivered in their communities.

Previously, we discussed in general how Fintech companies are very key in both giving access to financial services in untapped markets and also empowering those with existing access to achieve more with it.

However, I didn’t want to proceed before we make sure we are on the same page about what FINTECH companies actually are. I call it Fintech 101. From there, it will be much easier for you to understand the role they play in empowering people.

Background

After reading and learning more about Financial Inclusion, I have categorized the journey to being financially included into two major parts. One part is having access to finance, which I like to call “Access,” and the other is what people can do with that access, which I like to call “Empowerment.”

In layman’s terms, suppose the Financial Inclusion we want to achieve is a house. I would call “Access” the foundation of that house and “Empowerment” the remaining, larger part. I consider them equally important because one cannot exist or be beneficial without the other.

My focus in this series of articles will be more on “Empowerment” because it is the most ignored part of the journey to Financial Inclusion. I will keep explaining why I believe we cannot achieve Financial Inclusion without it, and why I believe the key to empowerment is held by Fintech companies.

So what is a Fintech company? And what’s not?

What’s a Fintech company?

A fintech company is one whose core business model, value proposition, or service delivery depends fundamentally on technology to offer financial services. It’s not just a company using software to operate more efficiently; it’s a company that creates, transforms, or delivers financial products or infrastructure through technology.

That is a standard explanation of what a fintech company is. Now let me explain it in a very clear way. Normally, as the name suggests, Fintech is composed of two major parts: “Finance” and “Technology.”
Let’s explore what a company should have in terms of “Finance” and “Technology” to be called Fintech.

Finance

These are companies that offer financial services in one way or another. Normally, Fintechs operate in spaces that are traditionally regulated, like payments, lending, savings, investments, insurance, banking, remittances, etc.

That means it’s possible for a fintech company to offer the above-mentioned service(s), or to partner with a licensed entity that offers them.

But one thing I want you to understand is that it’s not just about offering financial services — it’s about how they are offered. Remember, we already have traditional banks that give all these services, so why can’t we have more banks or branches instead of fintechs if the only problem is access to financial services?

It’s more than just giving financial services — it’s about how you actually provide them. Fintech companies introduce new ways to deliver financial services, reduce costs, reach underserved segments, or improve user experience in financial interactions.

So, on the finance part — if you offer financial services but aren’t bringing anything new to the table, I would consider you just another traditional bank or microfinance institution. Fintechs simply deliver financial services differently.

NB: Another important thing to note is that not every company offering a financial service becomes a Fintech. The financial service needs to be a core part of that business.

Technology

Since technology is a major part of “FINTECH,” it clearly means the financial services we discussed above need to be tech-enabled.

But there is a major difference between delivering financial services through technology and technology being the key enabler. Fintechs are tech-enabled — technology is a core part, not just a means of delivery.

Banks nowadays have mobile applications to deliver their services more easily, but technology is not a core part of their business model. And that’s where Fintechs are different.

Now that you understand the two major parts of “Fintech,” let’s look at what’s not a Fintech — and we’ll use examples to understand their differences better.

What’s not a Fintech company?

Traditional banks that adopted a mobile app

Again, as explained, delivering financial services through technology doesn’t make you a fintech — unless your core operations are restructured around digital delivery. The tech part of Fintech is not about digitizing traditional operations; it’s about completely restructuring and becoming tech-enabled.

And this applies to telcos with mobile wallets as well. This one can be nuanced. If the mobile money operation is spun off, licensed, and functions with its own tech-driven product roadmap, it might qualify. But if it’s just a value-added service on top of a telecom business, maybe not.

You’ll realize it’s less about what you do and more about how you do it.

E-commerce platforms and other related platforms

Some people confuse platforms that offer payments or credit as a secondary feature with Fintechs. These are not fintech companies — they are just platforms offering other services, while helping their clients pay more easily.

This means that having a payment system integrated into your platform doesn’t make your company a fintech.

The same mistake happens in transport, agriculture, and other industries — once they integrate with payment systems, they think they have become fintechs.

I’ll give you an example of a mobile app called MYCOOP that I had a chance to contribute to. It is built and owned by a startup called HiveOnline. It helps cooperatives and their farmers to build their financial history and leverage it to easily access loans. They do this by helping them plan their production, and from there HiveOnline helps them find markets for that production. Based on the records, financial institutions can assess and trust users depending on their history and their production plan (depending on how well they deliver on it).

So is that a Fintech or an AgriTech?

Why It Can Be a Fintech:

If the app:

• Enables payments for production sold via the platform (e.g., mobile money, bank payments)

• Stores financial transaction history for the user (earnings, sales, costs)

• Uses that data to enable or directly offer credit/loans — either directly or by integrating with lenders

• Positions itself as a platform to help farmers access financial tools (credit, payments, savings, insurance)

…then yes, the app is a Fintech platform tailored to agriculture (AgriFintech).

But It Depends on Execution:

If the app only tracks farm inputs and sales, like a digital notebook or e-commerce store for farmers, and doesn’t actively facilitate or build access to financial services, then it’s more of an AgriTech or marketplace — not Fintech.

I didn’t just answer whether it's fintech or not, I showed you how to evaluate and decide if a company is a fintech or not.

Software companies serving banks or fintechs

Sometimes, companies that develop technology solutions for banks or other financial institutions call themselves fintechs just because they build financial tech. No, those aren’t fintech companies. They may be SaaS or RegTech providers, but not fintechs themselves, unless they offer financial services directly.

Conclusion

“Being a fintech is not about using tech in finance. It’s about using tech to redefine how finance is done”.

I believe this was an important discussion because if we are going to be talking about the role of Fintech companies in advancing Financial Inclusion, we first need to understand what Fintech companies are — and what they are not. This helps ensure we’re aligned when it comes to identifying the players advancing Financial Inclusion.

Next, we’ll go deeper into understanding how Fintech companies in advanced markets have been key in pushing the boundaries of Financial Inclusion. Thanks for learning with me. Stay tuned