For years, many doomsayers have predicted that this rise of FinTech will lead to the inevitable fall of traditional financial institutions. Yet, this has not been the case. While some of this is due to traditional financial institutions themselves working to develop their own FinTech solutions, there are also a few key reasons why FinTech has yet to destroy traditional players:
- Not ready yet – truly revolutionary FinTech services require the restructuring of a business model that has been operating for many years. Few are truly ready for this, especially given the costs to do so.
- Trust – new players, although ushering in innovations and pushing the financial services industry to adopt new ways of doing business, are typically not widely trusted until they can demonstrate that they belong. After all, you can trust a child with a lot of things, but you can’t trust them to drive until they have the experience.
Given that traditional players are still here, let’s look at a few revamped forecasts:
- There will be no simple replacement of old leaders with new ones as IT companies will not be able to crowd out traditional financial institutions.
- Those who invest heavily in creating controlled startups or aggressive buying up FinTech companies will also lose if they fail to rebuild their own DNA.
- Those who will be able to build workable collaborations that focus on individual tasks and audiences will benefit.
- Forms of cooperation will be very different, but the main factor will be the availability of independent, mutually supportive partners.
- Collaborations will become seamless, with users often not even knowing that they are using the services of different providers.
- The financial and technological institutions that can close a significant part of the market and effectively use the data they accumulate will have a huge initial advantage.
- Regulations and the further development of technologies will make the giants advantage in working with data and servicing closed payment (transactional) systems temporary.