January 27, 2016
At LTP, we have always highlighted the debate around banks and their relationship with FinTech startups. The rapid rise of FinTech startups seems to be throwing some shade on the banks basking in the sun. As payment technology evolves, FinTech startups are found to be more imaginative in making money-handling easier for consumers. In fact, more than $5.5+ billion of investments were made in the FinTech industry during July 2015–January 2016. Although the FinTech startups sector is growing rapidly, it is unlikely they will totally replace banks because they actually rely on existing bank accounts. However, FinTech startups tend to shrink the banks’ profitable sectors making it harder for banks to maintain low-margin services. We have seen how banks deal with FinTech startups with different approaches including mergers and acquisitions, investments, acqui-hiring, partnerships, incubators/accelerators and the list continues to grow. Clearly, this doesn’t imply a flaming fight between the two but rather a forced friendship or a creative engagement model. Banks are trying to accommodate FinTech startups even before the startups accommodate their customers.
Much has been said about banks and FinTech. But the FinTech-focused community must know how the non-bank incumbents are dealing with the FinTech explosion and trying to be a part of it by reaching out to FinTech developers, FinTech entrepreneurs and FinTech influencers.
Like banks, even the non-banks in the FinTech universe are facing heat from startups but the smart ones are not going into their ca ...