Just how scared should banks and credit unions be of fintechs, big techs and others?
It’s far from an idle question. The head of Chase made headlinesin mid January when he said the industry ought to be “scared shitless” by fintech. The oft-repeated quote was taken partly out of context, and the nuance is important, as we explain further on. Yet it reflected a broader trend of stirrings or unease among some of the country’s biggest financial institutions.
On one level, asking bankers if they should be scared of the new crop of competitors is like asking if they should fear any rival. Traditional financial institutions have had to worry about “outside” competition for decades. But in recent years the growth — and threat — of fintechs, big techs and other new entrants into the business has raised the pressure significantly.
Adding to that was a definite change of tone: The snarky quotient went up significantly over previous rivals. Fintechs came onto the scene with bravado, boasting of plans to sink the traditional players with their frictionless services and fresh ideas. Not all have succeeded, and many have partnered with banks, or used banking’s own rails in some fashion, but a significant and growing number are having a material impact on retail and business banking.
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