Can banks survive to the decentralization caused by fintech startups?


With innovative fintech startups (like PayPal) growing at a fast pace on several markets that were own by banks (payments, insurance), can the banks survive? Can banks and fintech startups coexist? How does this going to influence the economy?

Fintech & Banking
Ricardo Santos
31 months ago

4 answers


Banks will survive for a number of years because consumers don't like change - especially where their money is concerned.

My father's generation never used an ATM, the next generation have never used electronic banking, while I'm using fintech I do not foresee the day when I will close and replace my bank account.

What banks cannot survive, which is why they are exploring their options, are cryptocurrencies. Cryptocurrencies will ultimately put banks and insurance companies out of business but it will not be in the next 50 years since my generation will have to die out before banks are gone.

C. Thomas (Tom) Smith, III
31 months ago
I agree with you that cryptocurrencies will change the paradigm of banks that we know today. But the economy is, somehow, controlled by banks. If cryptocurrencies goes forward and every transaction becomes decentralized without any regulatory entity like a bank, wouldn't it be chaotic? - Ricardo 31 months ago
Ricardo, I see the evolution taking so long, similar to IoT and big data, AI/ML,DL, standards will emerge over time. As such, it will seem slow rather than chaotic since it will take 20 to 30 years. - C. Thomas (Tom) 31 months ago
Nice generational description - agree - Dr. David E. 17 months ago

It depends on what you mean by banks. There will likely always be some sort of institution or platform that transfers capital from people who want to save/invest to those that want to borrow it. In the simplest sense, that is what a bank does. An argument can be made that the names of the banks that are successful will likely change as the banking market adjusts to new technologies, fintech startups mature, and crypto currencies find their place in society. Market evolutions like this always have winners and losers and history tells us that many of the incumbents likely won’t adapt fast enough to survive.

Jason Griesenauer
31 months ago
It depends on what you mean by banks = Retail banks and CUs; not commercial or IBs - Dr. David E. 17 months ago

I feel fintech will kill the banks is overstatement, I feel there is room for both. I feel the collaboration is the way to go forward.
It is the convenience that fintech is providing by vertical expertise, integration of workflows and make it easy by keeping the client informed on all the events and providing advice at each step. This differentiate the fintech from banks.

Can banks do this offcourse, but due to the monopoly they have created a culture which is very slow to move and absence of innovation.

To over come this challenge most of the banks will be partnering and buying the fintech companies to bring this shift and change in their organizations.

Parminder Sohal
31 months ago
You made a good point, thank you! - Ricardo 31 months ago
Agreed - Dr. David E. 17 months ago

I think Banks will survive because Bank is a concept rather an organization. And the good part about banking industry is, it believes in transformation. Now, one can argue about the timeline or stage of transformation but sooner or later- it happens. 
FinTech changes were always there since the inception of technology and Banking organizations kept adopting those changes. From smart card to online transactions, these were not the idea of the Banks but came from some startups or nonbanking organizations. Banks collaborated with these ideas pretty good and today its the core of banking. 
I would say, Banks as an organization need to be more tech-oriented and to think like a digital organization within their space. Of course, they can not build another PayPal but they can use PayPal for so many use cases ( Refer the example of Interac payments which most of the Banks support today). 
Also, another major aspect of Banking is their products. They have series of products like savings, chequing, mortgage, pensions, business loans, credit cards etc. These are the revenue earning streams for Banks. So far a lot of FinTechs are working to help Banks, making their products more sellable. So, not all FinTechs are competitors. And this is the example of Co-Existing. 

Hitesh Mathpal
31 months ago
"Bank is a concept rather an organization" = not the question. - Dr. David E. 17 months ago

Have some input?