The FinTech industry didn’t exactly “explode” onto the scene, changing the way we live and do business overnight. While contemplating the multitude of industry startups that dot the scene these days and the skyrocketing investment such startups attract, one should never forget that FinTech essentially started way back in 1998, with PayPal. No, the currently accelerating rise of FinTech was not a quick one, and the unique issues which continue to act as pitfalls for the process, still exist.
A large segment of the industry is focused on consumer financial services, where strict regulations coupled with an overall sense that there’s a war already being waged between the newcomers and the “establishment”, definitely act as a brake on innovation.
While the existence of these problems cannot be denied, are the concerns of the “incumbents” truly justified? According to a study, only about 20% of FinTech industry newcomers are in the same business as banks. The remaining 80% do something completely different. This 20% isn’t much of a problem from the banks’ perspective at a closer look either: the software solutions they deliver can potentially aid existing financial institutions in streamlining their operations, cutting their costs and generally improving the services they deliver. The entities that the startups are at direct odds with are the legacy software providers, who currently dominate the rather stale banking scene.