Insurtech vs Fintech: What is the Difference?
Insurtech and fintech are common buzzwords often used in entrepreneurship ecosystems. Entrepreneur-owned Insurtech or fintech firms have the potential to raise billions of dollars in venture capital. According to CB Insights “Global insurtechs raised $7.4B in the first half of 2021. This fact is making these two terms even more popular. Today, we will explain to you what is Insurtech and how is it different from Fintech.
What Is Insurtech?
Insurtech is a new term or trend related to insurance emerging within the financial industry. It is a term that combines the words “insurance” and “technology,” inspired by the term fintech. This fancy tech term refers to the use of technology innovations designed to squeeze out savings and efficiency from the current insurance framework.
InsurTech firms try to bridge the gap between the expectations of customers and the requirements of insurance companies. Insurtech can also be said as Regtech for Insurance.
What Is Fintech?
FinTech, which is short for financial technology, provides solutions for more accessible financial transaction processes for consumers or commercial businesses to simplify connectivity and investment. It is a term that has a more inclusive definition that includes any technology that improves financial services.
How Are They Different?
Financial services are already heavily tech-reliant, so technology can have an essential impact on how we manage our finances. This includes technology in the form of FinTech. FinTech is the use of technology to perform financial transactions and financial technology refers to anything and everything used in the financial industry, from banks to mobile apps, to cloud services. Although insurtech is not a new Fintech application, Insurtech serves an incredibly functional purpose; that is consumer convenience and experience.
You can easily understand that these two tech terms serve different scopes. In today’s world, the global domination of t fintech and insurtech services are different from each other. For example; fintech solutions and services are generally more accessible in India, while most of the insurtech solutions and services are from the United States. This is solid proof of these two terms are different and they solve different things.
The challenges faced by InsurTechs and the challenges faced by FinTechs are different. The discipline of InsurTech, as an emerging and rapidly-expanding segment of the FinTech sector, spans globally in its nature but is heavily influenced by the sphere of regulatory regulations.
Insurtech companies are competing to offer the most detailed and customer-oriented services, with customized policies that are appealing to current consumer trends.
The fintech industry includes a substantial portion of mobile banking and the fact is mobile banking and cashless transactions are rising. Fintech companies will keep helping businesses, and consumers manage their finance-related needs by providing solutions for specific financial activities such as debt, investments, loans, bills and more.
How Technology Is Driving Innovation in The Insurance and Fintech Industry
Businesses and organizations are leveraging technology to automate repetitive tasks related to processing data, which include efforts to pull this data from a back-end set of sources. Thanks to these kinds of offers of the latest technologies,
Insurers are automating or leveraging technology to help obtain data from their back-end systems, generally. We can say InsurTech can have a foundation to reshape the insurance industry.
There has been a lot of concern with transferring technologies that fintech businesses get advantages of into the insurance industry in the past. But now Financial transactions for consumers and businesses are becoming more accessible each day to change our life in a good way.
No one denies that there is a big shift taking place within the industry. It’s essential to know the top and new technology trends to understand where your business can stand in the future.
Many new technologies help to automate repetitive data collection tasks generally associated with extracting data from a back-end source. This is helping insurtech and fintech companies, too.
Consumers changing habits force the digital ecosystem to produce more insurtech and fintech solutions. These new forms of financial technologies can change our life for the better. For that reason, entrepreneurs will keep raising billions of dollars in funding for their insurtech and fintech firms.
There is a gap between the expectations of the customers and the requirements of the insurer when it comes to insurtech. Insurtech have been developing a variety of innovative ways to bridge that gap. We can use the term insurtech to refer to new technologies designed to squeeze out savings and efficiency from an industry currently in existence. On the other hand, fintech provides a range of financial transactions for consumers or businesses that make these transactions more accessible and generally more affordable for customers.
Hope we can explain the difference between Insurtech and Fintech, how they both differ, what they consist of, and what their purposes are.
Curious about the world of Fintech? You can check out our article on top Fintech startups and scaleups in London.