The financial sector has been one of the most turbulent industries since 2008. The space has been disrupted by Financial Service Technology (FinTech), and startups are springing out of the ground to innovate in an area that is riddled with mistrust, outdated thinking and slow-moving corporate giants.

Why did FinTech boom?

The financial sector has primarily been a few large, well-established companies that have dominated the industry, but when the credit crisis of 2008 rolled in, a new opportunity for startups arose. The crisis was followed by heavy regulations in financial services. This led to regulators fining traditional banks, thus pushing banks to invest in risk management and compliance. This is known as ‘back office’ work. The ‘front office’ work was being neglected which created a gap that new FinTech startups were keen to fill.

The key to FinTech startup success was to create business models that avoided the structural formalities of a bank and provide efficient services to the user, often at a fraction of the cost of a traditional bank.

It’s important to note that, after 2008, there was also an increased mistrust in the financial sector. By shifting the focus onto the user, FinTech startups started to develop new relationships by promoting transparency to gain trust.

Can FinTech take on the giants?

FinTech is disrupting all areas of financial services, but what makes a FinTech company standout amongst the finance giants is their accessibility and affordability. They cater for individuals and businesses alike regardless of their size. This is known as inclusive financing.

The untapped user base

Within the industry, the giants claim a large portion of users, but there are two groups that they cannot obtain. These are the unbanked and underbanked.

Unbanked simply means that the user does not have traditional finance tools (e.g. a bank account). This could be due to inaccessibility to banks or a deep mistrust of the financial system. Underbanked individuals are adults who have access to traditional finance tools, but do not incorporate digital transactions (e.g. digital payments). Both groups tend to be in remote or rural areas where users will carry out transactions in cash or cheques. This makes them vulnerable to theft and street fraud.

FinTech startups have opportunities here where big banks don’t. By using every day technology such as mobile apps and ruling out the need for a physical branch, FinTech companies are increasing accessibility to faster, more secure and cheaper financial services.

Taking on the giants

FinTech innovation can be broken down into 4 main categories with several subsections:

  • Banking & capital markets
    • Consumer banking
    • SME banking
    • Brokerage services
    • Commercial banking
    • Market operators & exchanges
    • Investment banking
  • Asset & wealth management
    • Investment & wealth management
    • Fund operators
  • Insurance/reinsurance
    • Property & casualty insurance/life insurance
    • Insurance intermediary
    • Reinsurance
  • Fund transfer & payment

Its users can also be organised into 4 main categories:

  • Business to business for banks
  • Business to business for a bank’s clients
  • Business to client for SMEs
  • Business to client for consumers

The two areas that will be the most disrupted in the next 5 years are consumer banking and fund transfer and payments. This should come as no surprise with our reliance on services such as PayPal. Asset management and insurance is another category that the corporate giants are expecting high disruption levels.

When it comes to business challenges, 75% of businesses want FinTech to meet changing customer needs with new offerings. Data and analytics, interaction and trusted relationships, and, lastly, sophisticated operational capabilities are other areas businesses want from FinTech.

It is apparent that both individuals and businesses are becoming more expectant of quality digital experiences. User experience is becoming a key component in every other industrial sector and, more often than not, this is where the financial service giants are lagging behind. This is particularly relevant for those in the banking sectors.

Security and increased payment ease is a main focus for the fund and payment sector. This is due to the driving trend of mobile apps and mobile payment. This might speed up payment processes, but security becomes an increasingly pressing issue.

Data analytics to identify and quantify risk is becoming impetuous to asset and wealth management. The question lies in how to get these sophisticated models across to advise the user. The shift is being seen from technology-enable human advice to human-supported technology-driven advice. Quick, reliable information is what the user wants to use and trust. Nail it, and you’ve got yourself a business.

The trends above outline areas that FinTech startups are succeeding in. The disruption of this sector has led financial service businesses to believe that 23% of their clients are at risk to being lost to FinTech startups.

For more information on trends, read PwC’s report.

However, it is important to realise that FinTech disruption does not only fall in the business to consumer (B2C) user groups. Yes, a huge element of FinTech startups are taking on the financial service giants, but it is important to realise that many are also improving business to business (B2B) relationships for the giants themselves. In fact, Romaney O’Malley (General Manager for Belgium and Luxembourg at AIG), even suggested that startups approach the giants in order to improve the financial industry overall.

The question shouldn’t be whether or not FinTech startups can take on the giants, but rather, whether they can collaborate to pull the financial services industry into the now. According to PwC, 73% of CEOs support the integration of FinTech at the top levels of management. This is encouraging businesses to put FinTech at the centre of their strategy and can only lead to better opportunities for startups.


FinTech has evolved from the dinosaurs of the finance world. They bring healthy competition, recreate trust and security in user groups that may not approve of traditional banking, and they can help the financial service giants take a step into the future. Finance is so often seen as something inaccessible, but with FinTech startups lighting up the way, inclusive finance has never looked so bright.