Discrediting the Myth: Fintech Start-ups are Competing with Banks

Added 3 years ago     By Kirby Dela Cruz

Since the arrival of Fintech and how it disrupted the market, there is an idea that Fintech start-ups are a great threat to banks. It’s an idea that pits Fintech which is an innovative financial solution or service to the bank, a traditional financial institution. This idea created waves since it made it look like that it was a battle between the future and the traditional. Though it is exciting to see a traditional financial institution which is the bank take on the innovations of Fintech, this idea is a myth.

We look on why this is a myth by understanding Fintech and its types per Neal Cross, chief innovation officer of DBS.

Fintech has grown to have many types and categories to its definition.

The first type of Fintech is the bank. The bank has started to adopt to the demands of the future and has already started to innovate with their services. As per Cross, the bank is the biggest and most successful fintech in the world.

The second type is still related to the bank. This fintech type sells technology to banks. As banks are focused on improving traditional services, this type of fintech are the ones tasked to innovate for the banks.

Far from the two types of fintech are the competitive fintech. These fintech were once focused on competing with banks. This type was the one innovating to replace the banks. This type eventually softened and traded their perspective for cooperation because of the burden of customer acquisition costs and complying with strict regulations.

This leads to the fourth type of fintech which is cooperative. This type are the ones that works hand in hand with the banks and other industries that has a hand in fintech.

The fifth type is considered the most important by Cross. They are the big companies that has the money, manpower and customers. Companies such as Amazon, Google, and Facebook are the pioneers for this type.

These are the types of fintech and this clearly demonstrates why banks and fintech are not battling it out for existence. Banks are key to fintech as fintech is to banks. Both are necessary for the changing culture of finance. It is also key to learn that fintech is continually evolving in its definition as the future becomes the present.

Follow Texcent for more Fintech news and topics.