Where Does Traditional Banking End and Fintech Begin?


Fintech is the fast-growing darling of the finance industry. With an all-star growth rate averaging 6.7% over the past five – eventful – years, it’s a sector that’s transformed products and consumer expectations alike. 

With major returns and the spotlight of consumer attention, traditional financial services and banking firms haven’t been able to resist eyeing up what Fintech brings to the table. 

The once sharp line between high-street retail bank and cutting-edge Fintech firms is increasingly blurred. Will all banks morph into Fintech firms or is inspiration a two-way street? 


A bold disruptor

Fintech companies represent a unique threat to traditional banking and financial services: not only do they offer a leap forward in the way services can be delivered, they can directly compete with well-established competitors. 

Research into the cost of more traditional financial services shows that charges are, on average, around 2% of the asset value

With new technology and technology and streamlined business models, Fintech firms immediately appeal to people looking for more affordable and convenient ways to manage their money. 


A moving target

What’s made Fintech such a dangerous and impactful competitor is the industry’s ability to pivot. 

More agile and adaptable than traditional institutions, Fintech firms can quickly develop and launch new products and services to meet changing customer needs.

It’s led to digital wallets, peer-to-peer (P2P) lending platforms, robo-advisors, and blockchain-based cryptocurrency exchanges. 

Fintech companies have also started moving into more traditional financial services and banking areas. 

For example, some P2P lending platforms have started offering more traditional loan products, such as personal loans and mortgages. Digital banks have also started offering a wider range of financial products, such as credit cards, savings accounts, and investment accounts.


Traditional banks pay the price 

Low consumer trust and demand for greater transparency following the 2008 banking crisis combined with the digital-first pandemic years have created new consumer expectations – ones that Fintech firms are best-placed to meet. 

Estimates suggest traditional banks and financial services firms could be losing up to 15% of existing revenue and a third of new revenue to shiny new Fintech competitors. 

It’s not just revenue: big tech has eyes on replacing bankers too with 61% of tech leaders predicting that AI would make traditional bankers redundant before 2030. 


Rising to the challenge

In response to the rise of Fintech companies, traditional financial services and banking institutions have had to adapt and evolve. 

With 81% of adults saying the quality of the online experience affects who they bank with, traditional banks have had to invest heavily in technology and digital transformation initiatives. 

British retail bank Natwest, for example, has introduced a new sub-brand, Mettle. Targeted at the growing side-hustle market, it’s a free, mobile-only bank account aimed at sole traders and freelancers. Taking inspiration from the API-obsessed Fintech market, the account syncs with popular SaaS accounting tools. 

It’s just one example of how traditional firms are having to innovate and integrate in order to keep up. 


If you can’t beat them… 

Rather than go head-to-head, some traditional providers have started partnering with Fintech firms in order to leverage their expertise, accelerate the digitisation process, and expand their product offerings.

Some traditional banks have started partnering with P2P lending platforms to offer their customers access to alternative sources of credit. Others have integrated robo-advisory services into their wealth management offerings, allowing customers to invest in low-cost portfolios of exchange-traded funds (ETFs) that are managed by algorithms. 

It’s a trend that’s likely to continue with 82% of financial services firms saying they plan to increase partnerships with Fintech firms over the next three to five years.

There’s a mutual benefit. By partnering with traditional banks, Fintech firms can leverage their regulatory expertise, access to funding, and reach a ready-and-waiting audience that can help Fintech firms reach the sky-high growth numbers investors want to see. 


Will two become one? 

As both Fintech companies and traditional financial institutions continue to evolve, the line between the two has become increasingly blurred. Fintech firms are starting to look more like traditional banks, while traditional banks are starting to look more like Fintech firms. 

Ultimately, success in any market is determined by how well companies can understand, meet, and adapt to customer demand. 

Fintech has fundamentally changed what people expect from all aspects of banking and financial services. Whether it’s opening a new account or managing an investment portfolio, consumers expect transparency, value, and increasingly personalised offerings that fit into their wider life and the technology they use.

Traditional banks and financial services that refuse to embrace digitisation will find themselves quickly outpaced and out of business. 

Those that invest wisely in Fintech partnerships, however, have the potential to form the super banks of the future, combining reputation and stability with innovation and convenience. 


Building the right team

Whether it’s identifying new business partnerships with major banking players or finding new ways to reach consumers, the right salespeople are key to any Fintech firm’s growth. 

Most Fintech sales roles, particularly at leadership level, are better suited to those with industry experience, but as the line between Fintech and traditional financial services continues to blur, some top candidates may be able to make the switch to Fintech.  

Focusing on Fintech for over 15 years, Finiti Search understands where the industry’s been, where it’s going, and how to create the sales team to help you get it there. To fill a vacancy in your sales leadership team or just pick our brains on industry hiring trends, get in touch with the team today.