The fintech industry has been growing in waves but things seem to be coming full circle. While at first they seemed to offer change, the margin of difference seems to be shrinking.
The first wave was disruption. Fintech came in an offered an alternative to traditional banking. Things got cheaper and more collaborative, but they didn’t change things all together. The banks are still here, still functioning as they were before, mostly. However, the fintech startups did manage to make the banking institutions take notice.
In the next wave, the startups that survived really brought the collaborative aspect to bear. They started innovating and making more experienced hires; further, after raising a lot of funding, these companies became regulated and integrated into the financial ecosystem. During this stage, the banks began to work together with the fintech startups to work together. Gone is disruption, welcome collaboration.
The last wave, which we are steadily approaching, seems to be that the fintechs are becoming that which they sought to replace. The startups are going to either absorb their competition or become hybrids. Don’t believe it? Zopa and Number 26 have applied for full banking licenses. At the very least, the financial ecosystem is becoming more competitive.