Why does the Future belongs to Banks, and not Fintechs?
-By Mintoak October 10, 2023 6 min read

In the aftermath of the 2008 financial crisis, fintechs emerged as a disruptive force, shaking the traditional banks to its core. However as the dust settled, it became evident that the future would tilt more towards the incumbent banks. Here are some of the reasons behind the dynamic shift.

Regulatory Challenges

One of the biggest hurdles fin-tech companies face is navigating the complex regulatory environment. Fintech startups are still trying to find their footing whereas banks have spent years navigating these regulations. As the financial landscape continues to evolve and the laws become more stringent, it will become more difficult for the fintechs to keep up. Whereas the banks, with their experience, would be in a better position to accommodate and comply with the government regulations.

Trust & Credibility

Backs have something that fintechs can’t buy with their innovation and agility - trust. Banks have been seasoned players in this financial game for a long time, providing an array of financial services to customers. This longstanding presence has helped them set a strong foundation of trust and credibility in the eyes of the public.

For consumers, entrusting their hard-earned money and sensitive financial information is not a decision taken lightly. Banks provide a sense of security; a belief that the interests of their stakeholders would be put first come what may. Fintechs may offer exciting new solutions, but trust can’t be built overnight. The inherent trust associated with banks gives them a competitive edge here.

Physical Presence

Banks have established a physical presence with brick-and-mortar branches over the years. This extensive infrastructure includes branches and ATMs which assist with the robust network for processing payments and transactions. The physical presence offers the customers a sense of accountability that extends beyond the digital realm. When they face a problem or have questions, the option to physically interact with a real person is a game changer.

In the age of chatbots and call centres, the human touch can make all the difference. Customers often develop long-lasting relationships with their bank representatives, who become familiar faces in their financial journey. While fintechs offer convenience and innovation, they struggle to match the depth of human connection that traditional banks offer. So in the end, it’s not just about the physical presence; it’s about the human connection and trust it fosters.

Simply put, banks know precisely what they're about. With decades of experience in the financial game, they have honed their expertise and adaptability. Their extensive databases and strong customer relationships enable them to provide personalized, tailored services to each client. While fintechs may dazzle with innovation, they must navigate the hurdles of complex regulations, build trust over time, and bridge the gap in human connection.

Indeed, it's important to recognize that while traditional banks hold a strong position today, they must adapt to the times. This adaptation can come through embracing technology, fostering collaborations, or embracing concepts like open banking, as seen with Mintoak, which facilitates collaborations with banks, enabling them to retain their prominent positions in the evolving financial landscape. These strategic moves allow banks to incorporate fintech innovations while preserving their core strengths, ensuring a dynamic and customer-centric future for the financial industry.