The strategic problem for banks was no longer whether FinTech mattered. It was whether they could integrate new technology, products and companies without destroying the speed and customer focus that made them valuable in the first place.
By the beginning of 2016, the argument about FinTech had already moved beyond the simple idea that startups would replace banks. The financial-services market was fragmenting across lending, payments, wealth management, enterprise software and, increasingly, blockchain. Banks still possessed scale, licences, compliance expertise and established customer relationships. FinTech companies were showing how much faster individual parts of the experience could be rebuilt.
That made integration the strategic problem. The question was not whether banks could buy technology. It was whether they could absorb innovation without neutralising it.
FinTech was becoming a portfolio of challenges
Some of the most visible pressure was coming from alternative finance, where new platforms were beginning to challenge assumptions about the safety of banks’ traditional lending franchises. Payments had already become one of the most contested parts of financial services, with technology companies attacking friction across the transaction chain.
Wealth management was changing too. Robo-advisers were beginning to show that parts of an advisory relationship could be delivered through software at a different cost and scale. At the same time, cryptocurrencies and blockchain were forcing financial institutions to think about the infrastructure beneath money and transactions, rather than only the products sitting on top of it.
The common thread was not one technology. It was the unbundling of activities that banks had historically delivered inside one institution.
Regulation was accelerating the integration problem
PSD2 brought another dimension to the debate. Third-party payment provision and access-to-account rules meant that banks would increasingly have to accommodate outside services around customer accounts. Regulation was therefore doing more than imposing another compliance obligation: it was pushing banks towards a more connected financial architecture.
For institutions accustomed to controlling the full customer relationship, that mattered. Digital banking could no longer mean putting an existing bank behind a mobile interface. The institution itself had to become capable of working with external technology, products and providers.
From disruption to “fintegration”
The term that best described this next stage was fintegration: the integration of FinTech capabilities into established financial institutions. Banks brought regulatory knowledge, balance sheets, trust and scale. FinTech companies brought new experiences, specialist technology and a willingness to redesign individual parts of financial services.
The difficulty was obvious. Once a bank acquired or partnered with a FinTech company, it risked subjecting that company to the same controls, processes and decision cycles that had made the bank slow in the first place. Successful integration therefore depended on preserving enough of the startup’s agility while connecting it to the assets and controls of the bank.
The holy grail for banks is to become the best at “fintegration”.KEVIN MOSERI · 2016
This also explains the usefulness of the related idea of “co-opetition”. Banks and FinTech companies could compete in one part of the market while depending on one another in another. Collaboration was not evidence that disruption had ended; it was becoming one of the mechanisms through which the industry was being reorganised.
Digitisation is not mobile banking
Banks were already coming to terms with FinTech, but many still struggled to integrate technological innovation deeply enough to change how they operated. Digitisation was more than shifting customers towards mobile banking. As branch interactions became less important, the competitive question moved towards who could assemble the most useful financial experience around the customer.
FinTech had already helped reimagine individual pieces of banking. If banks learned to integrate those capabilities effectively, digital change would not necessarily mean their disappearance. It could instead become the route through which banking itself was rebuilt.
The contest moves inside the bank
In 2015, many banks appeared reactionary and overwhelmed by the pace of innovation. The next stage would test whether they could move from reacting to FinTech to organising around it. Transparent, technology-led alternatives would continue to emerge, and startups would continue to exploit markets that incumbents considered uneconomic, operationally difficult or unattractive under regulation.
But the central contest was changing. The issue was no longer simply whether FinTech companies could challenge banks from the outside. It was whether banks could become sufficiently good at integrating external innovation that they could change from within.