Fintech start-ups have garnered lot of interest from the banking industry. With digital technology and advanced analytics, these start-ups are providing applications for all and more banking services.

World Economic Forum report released in August discusses the transformative role of FinTechs on the financial services ecosystem. The report is titled ‘Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services.’ Fintech firms were assumed to rapidly reshape how financial products are structured, provisioned and consumed. However, it has been observed that fintech start-ups while did achieve success in terms of changing the basis for competition, they have had less impact than expected in disrupting the overall competitive landscape. The report notes that there is increasing competition from global tech giants such as Google, Amazon, Facebook and Apple.

WEF involved C‐suite executives, operating unit leaders of global financial institutions, and industry regulators, held interviews with more than 100 innovators and also facilitated 10 multi-stakeholder workshops at six global financial hubs with over 300 total participants.

The report concludes that FinTechs have materially changed the basis of competition in financial services, but have not yet materially changed the competitive landscape. FinTechs have been successful in defining the direction, shape and pace of innovation and also reshaped consumer expectations. However, they have not been successful in creating new infrastructure and establishing new financial services ecosystems. Platforms that offer the ability to engage with different financial institutions from a single channel will become the dominant model for the delivery of financial services, the report suggests.

As FinTechs and banks seek partners to optimize their value chain, large tech firms start hosting significant distribution platforms. Large tech players are moving upstream from infrastructure to providing software.

The coming collision between financial institutions and large techs leads to tough choices for all firms: capitalize on the services of large technology players or risk falling behind.