The desire from FinTech on disrupting the financial services industry, and
thus displace incumbents, sees itself obstructed by one facet – banking
licenses. By holding a banking license, the perspective shown towards the
holder changes dramatically, with an encouraging set of eyes from
investors to a cheaper access to capital. These advantages, among many
others, are critical in the taking of a considerable size of the market
share, hence the high number of FinTech’s pursuing a license.
At first, FinTech merely ‘unbundled’ banks services by focusing on one
specific service driven by innovative solutions so as to have an advantage
over incumbents. These times, however, seem to be coming to an end.
The second 'wave' of FinTech is keen in changing this approach, by now “re-
bundling” the services of a bank. Take Revolut as an example. It started
off as a digital wallet, and now has expanded its services to crypto
trading, brokerage services and bank accounts.
This hunger from FinTech is already accelerating the pace at which the
financial services industry is seeking to adopt innovative solutions, with
the industry becoming increasingly driven by technology. Will this race
towards new disruptive solutions create the risk of unintended regulatory
gaps in the banking industry? Or, will this path towards new business
models ensure the safe and soundness on consumer protection?
Although as of now, these are mere assumptions, regulatory authorities
should hold their focus on striking the right balance between financial
stability and protection for consumers while leaving room for innovation.
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