Financial technology startups shaking up the payments industry are least likely to be acquired by established banks, despite the increasing efforts by financial institutions to become more innovative.
The most likely end-game for a successful startup developing innovative new ways for making payments in the rocketing FinTech sector is being acquired by a major technology firm such as Apple and Google.
Traditional, centralized banks may be miserable at keeping power in check and satisfying customers, but they do have a convenient side. Banks are one-stop shops for accounts, loans, transfers, investments, and other consumer products. While FinTech companies are finally giving each area of banking crucial attention and updated technology, they’re also naturally eroding at centralization in the process. This necessary “unbundling” of financial services contradicts our love for having everything in one place. So, what will happen when the network of disparate FinTech services becomes too inefficient for consumers and businesses?
We previously dug into the US companies that were disrupting banking with a look at the startups attacking the likes of Wells Fargo, Bank of America and Citi. While the US is a major market in the FinTech landscape, the UK, and more broadly, Europe has proven to be another key market in the global boom in FinTech.
Ask most people what the state of mobile payments is today, and they’ll tell you it’s just kicking off. With Facebook announcing the option to send money to friends via Messenger and the release of Apple Pay last year, 2015 has excitedly been dubbed “The Year of Mobile Payments.” Yet what most people don’t realise is that these services are already lagging 10 years behind.
Bankers may be taking undue solace in Chris Skinner’s April 10 American Banker BankThink post, “Like Airlines and Pharma, Banking’s Too Big to Disrupt.” I was party to the specific round of sparring he cites in his article over whether financial technology startups will overthrow the banking industry. And although I agree with many of Mr. Skinner’s points, he discusses several ideas that merit further exploration.