Fintech Is Making It So There Are No More Swim Lanes In Financial Services

Ask enough people what the biggest trend in fintech is, and eventually you’ll start to hear a few repeated phrases. One-stop-shop. Big tech. Integration. Platform-as-a-Service.

Generic as those buzzwords may be, they also hint at something that’s happening within the financial services industry: everybody is trying to encroach on everybody else, and no one is safe.

Trading platforms want to also manage your cash. Payment platforms want to help you invest. Lenders want to be banks. Banks want to do everything. 

Look around fintech—partnerships and synergies are everywhere. To name but a few, SoFi has partnered with Mastercard Inc MA to launch a credit card; Square Inc SQ has a partnership with eBay to increase small-business lending; JP Morgan Chase & Co JPM is merging its blockchain unit with Consensys. And this is to say nothing of the product launches—hello (again) Robinhood Cash Management—and the overall increased investment from Wall Street. 

On top of that, you have the fintech overtures from the “big tech” companies. In 2019, Apple Inc AAPL launched a credit card, and Alphabet Inc GOOG GOOGL announced its own checking accounts. Microsoft Corporation MSFT, meanwhile, has its own banking accelerator, and Amazon.com Inc AMZN has spent the better part of the last 15 years building out its financial services, from digital wallet Amazon Pay to Amazon Cash for underbanked consumers.

For financial services firms, the only logical conclusion is that there are no more swim lanes, so to speak. Everybody’s customers are fair game to be poached by anybody else. 

Speaking at a conference for financial advisors in October, Fidelity Institutional President Mike Durbin dubbed this trend the rise of the “super-platform.” 

“Key players in the wealth and investment management industry are positioning themselves as platform businesses, really one-stop shops for customers,” Durbin said. “We all want to build that super-platform.”

He highlighted how many financial firms, such as Fidelity National Information Servcs Inc FIS and SS&C Technologies Holdings, Inc. SSN, and even technology platforms like Salesforce.com CRM all have “eerily similar” technology roadmaps. “We all come at it from a different root offering, but we’re all aspiring to deliver a similar vision,” he said. 

This increased dogfight for scale has created a cutthroat environment among financial services and tech companies that ultimately benefits consumers. Fees are lower across the board (and in some cases gone entirely). Lending rates are hyper-competitive. Services are increasingly easier to integrate with other services.  

“All of this competition has simultaneously made it tougher and easier for fintech companies to acquire new customers,” said Phillip Rosen, Founder and CEO of Even Financial, a fintech company that enables companies to integrate a financial services marketplace into their product offering via APIs and turnkey solutions. “Tougher because these companies now have to fend off more competitors, but easier because the barriers to entry are so low for so many different types of products.”

And you can see why the competition has gotten so intense, especially during what is the most economically uncertain time in 12 years. After all, one of the lasting impacts of The Great Recession was the creation of what we now know as fintech. Just like neobanks and digital lenders stepped in to fill the void left by traditional services in 2008-09, commission-free trading platforms are capitalizing on increased interest in retail trading and investing. 

But even with all this increased competition, Rosen said the core mission of the industry is still customer service. 

“The landscape has changed, but the core mission really hasn’t for these companies, including Even. It’s still about providing solutions and the best possible customer experience for people. It’s still about convenience. It’s still about customer service. So it’s one of those things where the more things change, the more they stay the same. Our number one concern is still building great partnerships, and providing consumers an easy way to get matched with the financial services that work best for them”

Photo by Dylan Nolte on Unsplash