Fintechs Are More Likely To Complement Rather Than Disrupt Capital Markets
Fintech has been a rapidly growing market over the past decade; and some would say it is currently peaking with the multitude of options that consumers have for retail banking and payments. PayPal is the most notable fintech firm, given its widespread acceptance as a secure payment processor across almost all platforms. Since PayPal, there have been thousands of new entrants into the fintech space, but can any of them be classified as disruptive? Most fintech solutions revolve around an added benefit to consumers during their banking or payment process, which is why I think that the majority of fintech is really just sustaining the capital markets industry, not disrupting it. Mobile and online banking applications make financing easier for consumers, but consumers are still engaging in the same activities as they did with an in-person teller – therefore, no new-market was created. Furthermore, the cost to do banking has not materially changed due to the advent of online or mobile banking, which indicates no sign of low-end disruption. While fintech remains a hot industry, I think the market as a whole will begin to decline in the near future unless new technologies are implemented to truly disrupt the space, instead of merely sustaining it – which has been the case over the past few years.