In the past decade advanced technology and regulations have rapidly transformed the way in which the financial sector operates. Technology changed the way customers interact with their financial services providers as digitalisation drives the demand for seamless integration of financial services into the ‘daily lives’ of the tech-savvy customers. FinTech players emerged, who with their agility and customer centric propositions challenge the status quo.
The first wave of FinTech is driven by emerging technology and specialised services. Where banks traditionally serviced their customers throughout the value chain, FinTech parties focus on specific parts of the universal model and aim to compete on isolated services and products. Building scale and reach turned out to be one of the biggest challenges. With established players seeking for new capabilities while being hindered by their legacy systems, their mutual dependence was born, exemplified by a large number of acquisitions and investments.
Slowly the dynamics are changing again: successful FinTechs are taking advantages of their digital capacity to scale their operations with limited incremental costs and at the same time incumbent players are forced to embrace the FinTech line of thinking internally as well. Their mutual dependence remains, but more in form of partnerships. At the same time a more opportunistic approach is rising, with FinTechs taking their share.
Now that the market is opening up due to PSD2 and Open Banking the competitive landscape will diversify even further. Combined with the ability to gather and use vast amounts of data, this presents one of the biggest market opportunities for FinTechs, ranging from smaller challengers to Big Tech, to take their position in the more traditional landscape.
At INNOPAY we embrace this development, and help FinTechs in their growth, building sustainable income streams and more general, navigating their way through the complex financial services sector.