For years, the relationship between big banks and fintechs reminded me of that scene in Finding Nemo with the vegetarian sharks.
In the movie, the sharks are forced to recite the mantra “fish are friends, not food” — torn between befriending fish and having them for dinner. The shark school was pretty much how I imagined the banks — wanting to dismantle the fintechs while publicly shaking hands and playing happy families.
Today though, there seems to be less and less acting; the big banks are becoming true vegetarians. That’s because as fintech has matured, it’s increasingly spawned companies that cater to banks, and the sector’s early reputation as a disruptor has morphed into something more placid — more like a companion.
Indeed, the vast majority of fintechs we see today are business-facing, making them banks’ friends — not prey. From cybersecurity firms to open banking platforms and infrastructure players, a whole industry of B2B fintechs see one dominant revenue source: the banks.
Far from a sector that wants to disrupt banks, most fintechs are knocking on their doors. Only a handful of fintechs that could actually weaken the banks remain.
Equally, big banks now want to harness fintechs’ powers. Banks no longer view fintech as the play thing of 20-something funders prancing around with fancy interfaces. They want in, and are dishing out big bucks to do so. That may be why last year B2B fintechs attracted more funding than B2C in Europe.
Charley Ma, a fintech veteran (early Plaid employee), agrees that the old culture war is fragmenting.
“I think we're seeing a lot more verticals for new fintech companies, and some of those are very dependent on banking partnerships,” he said.
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By way of illustration, his company — Alloy — services both banks and fintech companies, with legacy banks now looking to partner with infrastructure providers. It’s this sort of agnosticism that has forced the two camps closer together, and weakened the 'anti-bank' narrative.
Of course, there are still the neobanks who grumble about incumbents’ inadequate customer experience, and lobby groups who complain that big banks still get preferential treatment around lending and regulation. It’s also still fashionable to say banks suck at innovation and are going to die, and banks aren’t always the most appealing partners.
Banks can still sometimes revert to their predatory ways. Recently, Australia’s Commonwealth Bank launched its own Buy Now Pay Later product, despite being investors in Klarna — leading some to accuse the Aussie financiers of poor sportsmanship.
But I get the sense that, overall, the rivalry between the two camps is ebbing away.
By and large, pitching banks as the enemy no longer rings true for 'fintech', the majority of whom they are in bed with. The reality is that fintechs and big banks are — broadly speaking — interdependent. They use each other, in varying levels of harmony, far more than they rival each other.
The end of this culture war may be a sign of maturity. Or, it could simply be the sharks having their (fish)cake, and eating it.
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