FinTech was widely expected to take market share from banks. By late 2015, however, the more consequential contest was becoming clearer: not simply who would own the balance sheet, but who would control the customer relationship, the interface and the economics around it.
In June I considered whether the involvement of banks in FinTech could eventually become a Trojan horse. My assumption was that new market entrants had an almost instinctive understanding of the internet economy and that incumbent banks, constrained by legacy systems and organisational complexity, risked capitulating.
By October, that conclusion already looked too simple.
The banks were beginning to respond
Large banks were learning from the strengths of successful digital ecosystems, particularly their platform economics and monetisation strategies. The number working towards platform-based digital banking models was growing. Whether this represented genuine transformation or simply a race against time was still open to question, but it was becoming difficult to sustain the idea that FinTech companies would simply steamroll incumbents into surrendering market share.
The threat itself was stirring banks into action. Some were creating startup programmes and incubators. Others were establishing venture funds, partnering directly with FinTech companies, acquiring them or launching their own FinTech subsidiaries.
“The contest was becoming less about technology alone and more about who would control the relationship around financial services.”
Collaboration was also a form of strategic control
The pattern mattered. In the analysis I was looking at at the time, roughly 60 per cent of the FinTech companies engaged by banks were enterprise businesses selling technology back into the banking industry. The remaining 40 per cent offered financial services directly to retail or small-business customers.
That distinction complicated the familiar story of disruption. A FinTech company could challenge a bank at the customer interface while another could strengthen the incumbent from inside its technology stack. Banks were not merely defending themselves against the new ecosystem; increasingly, they were financing it, partnering with it and selectively absorbing it.
European banks appeared particularly active in this engagement, while the limited evidence available from Asia-Pacific suggested a more conservative approach, often involving established technology providers and their innovation programmes. The most visible participants were also predominantly large Tier-one institutions with the resources to experiment across several strategies at once.
Market share was only one measure of the contest
FinTech companies had opened several fronts against banks. Payments, lending, investment, customer experience and infrastructure were all being contested. But it was becoming increasingly clear that counting customers or measuring immediate market-share transfers would not fully explain what was happening.
A bank could lose part of the interface while retaining the regulated balance sheet. A FinTech company could win customer attention while depending on incumbent infrastructure. And collaboration could simultaneously accelerate a startup and give an incumbent access to the very capabilities that were supposed to displace it.
This is why the assumption that technology alone would determine the winner was too crude. Technology could change the economics of distribution and dramatically lower barriers to entry, but it did not erase capital, regulation, trust, infrastructure or the strategic capacity of incumbent institutions to adapt.
The more important question was control
The emerging battle, then, was not simply whether FinTech would take market share from banks. It was where control would migrate as financial services became more modular: who would own the customer interface, who would determine distribution, who would provide the underlying infrastructure and who would capture the economics generated between those layers.
That made collaboration more ambiguous than it first appeared. For FinTech companies it offered capital, distribution and access. For banks it offered something equally valuable: a way to participate in disruption rather than merely defend against it.
The market-share question was real. But even in 2015, the more revealing question was beginning to be who would control the architecture through which financial services reached the customer.