Who will capture the most value from the financial services industry transformation via fintech? Consumers, incumbents, disruptive startups, large new entrants? All of them, none?
Further, will the answer be uniform across the globe or geography specific?
If we assume that technology is spreading across the world uniformly and will tend towards a homogenous end point – smartphones, cloud computing, broadband, marketplaces, networks… – then answer will depend on factors that will more easily resist uniformity such as a) how strong or forward thinking the local regulator is and will be, b) how mature and entrenched the market structure is, c) how conservative consumers/corporations are in their behaviors and d) how willful or forward thinking the legislator is or will be.
A more rigid regulator and legislator with more entrenched incumbents and more conservative consumers may mean startups will have a difficult time competing, large new entrants will be stymied and incumbents will retain their dominant positions by adoption, at their leisure new technologies provided by fintech servic providers. Would this case figure fit Japan, South Korean, even France?
A more forward looking regulator and legislator with lumbering incumbents, consumer and corporates eager to adopt something new, an open market place welcoming new entrants and startups alike may mean startups and large new entrants will have a better chance of grabbing market share. Would this case figure fit the UK, Scandinavia?
What of the USA, Germany, China. Where would they stand on this continuum?
One point is clear, at least in my mind, fintech service providers will win no matter what. They are needed to arm whoever wants to compete and win for the next 15 years. What is less clear is whether incumbent fintech service providers will retain their dominance.
Another point is less clear. Will consumers and enterprises benefit? One of the promises of fintech is for faster/cheaper/better in all things product or service wise and for excellence in customer service. Yet, historically, financial innovation has not necessarily delivered better customer satisfaction or real and tangible productive outputs – contrast ATM as an innovation consumer benefited from with innovation in financial instruments like CDOs. Will this time be different?