In the business world, companies can generally be put in one of two groups. These categories relate to the type of consumer that they sell their products or services to. Businesses that sell products and services to other businesses are considered to be in the business-to-business (B2B) category. Businesses that sell directly to consumers fall under the business-to-consumer (B2C) umbrella.

Businesses often sell to both other businesses and directly to consumers. A bank, for example, may offer personal checking accounts for consumers and business lines of credit. In these cases though, the two streams usually operate as separate business entities, each with its own marketing, sales, and other business functions.

The financial technology, or fintech, world is no different. There are fintech solutions for consumers, fintech solutions for businesses, and fintech solutions that work for both but that operate in different ways for B2C vs B2B clients. Here is what you need to know about the difference between B2B and B2C in fintech.

B2C Fintech

B2C fintech solutions generally focus on the products and services that are offered by most major banks. This includes things like checking accounts, savings accounts, credit cards, personal loans, online payments, personal financial management, investing, and retirement savings. There are also B2C fintech solutions that roll all or many of these services up under one umbrella of an entire digital-only bank.

History of B2C Fintech

While fintech solutions technically go back to the late 1800s when people were first able to transfer money via telegraph thanks to Western Union, we’ll focus here on internet-based fintech. The first successful all-internet bank began in the late 90s with Netbank. This bank was short-lived but it led to internet banking becoming mainstream and by the early 2000s, a major bank like Bank of America boasted over 3 million online users.

The late 90s also saw a company called Confinity partner with eBay (News - Alert) to offer online payment to its customers in addition to the traditional pay by mail option. This means it started as more of a B2B2C solution but it would go on to become one of the biggest success stories ever in the B2C fintech space after Confinity changed its name to PayPal (News - Alert). This and other late 90s fintech companies paved the way for the fintech explosion to come.

The 2010s saw a wave of B2C fintech companies come on the scene. These companies got lots of money from investors and disrupted the finance and banking industry in big ways. While some companies failed, others succeeded. Many of the top fintech companies we know today were started in this decade, including Affirm, Acorns, Chime, TransferWise, and SoFi, to name a few.

Who Uses B2C Fintech?

The audience for B2C fintech can be incredibly diverse. There are B2C fintech solutions made for pretty much anyone who wants to engage. That said, the major groups using fintech solutions tend to be younger people. These people, starting with the Millennial generation, grew up with the internet and other technology and tend to be more comfortable dealing with sensitive issues like their finances online. One interesting target group for fintech in 2021 is young kids. Fintech companies are targeting kids at younger ages to help both promote financial literacy – which traditional elementary schools don’t typically do enough of – and also create customers for the future. 

B2B Fintech

While most of us are much more familiar with B2C fintech products, there is also a huge market for B2B fintech solutions. According to Liventus, fintech solutions are increasingly in demand for both the B2B and B2C audiences. The biggest category within the B2B fintech space is Software as a Service (SaaS (News - Alert)). This technology powers how banks, insurance companies, retail sellers, and other financial institutions support the tech they offer to consumers.

History of B2B Fintech

Along with PayPal (which fits into both categories), one of the first big success stories in B2B fintech happened in the late 90s. In 1999, Envestnet created a technology platform for financial services and wealth management companies. Their idea was to level the playing field so that all financial advisors had the same access to technology that would allow them to give the best advice to their clients.

As the internet became more and more a part of business in the early 2000s, other success stories were made. One of the biggest was Shopify. Founded in 2004, Shopify provides a full-service e-commerce platform for online stores and other retail endeavors. As of 2021, over 1 million Shopify stores around the world are up and running.

B2B fintech actually caught on faster than B2C. It experienced its first boom in the 2000s. This decade was the tipping point for technology use in business and many companies capitalized on this trend. While these companies may not be household names like their B2C brethren, companies like BlackLine, OnDeck, Q2, and Avalara are just as successful today in their space.

Who Uses B2B Fintech?

Like B2C fintech, the short answer is any business that wants to do business online or be connected to the latest tech trends. However, there are certain niches where B2B fintech is more common. Online-only retailers and tech companies are two of the most prolific users of B2B fintech. One of the biggest groups though is the financial services industry. Today, financial services companies must have an online presence and B2B fintech is helping them do that. 

Conclusion

Fintech is changing the world in 2021. Whether it is fintech that helps make financial transactions and financial literacy easier and cheaper for the average person or tech that makes companies more proficient at providing and using more tech, fintech is seemingly everywhere these days. The crazy part is, the industry is likely just getting started. Both the B2B and B2C fintech sectors are just over two decades old.

Even if fintech doesn’t grow at the astronomical pace it has over the past 20 years, it is still likely to keep growing very fast. This means that there will be more fintech in our everyday lives in the coming years and that fintech will continue to help make businesses more accessible for clients and more profitable for investors.