The emergence and swift expansion of new fintech entities in the market for financial products
and services, coupled with the participation of ‘Big Tech’ companies in alternative financial
activities, are giving rise to a fresh competitive landscape in the financial industry. This sector,
traditionally known for its maturity and stability, is now grappling with significant changes. The
current market dynamics pose substantial challenges for established banks as the new entrants
not only provide competitive products and services but also pioneer innovative business models
that are challenging for traditional banks to emulate.
In terms of vying for innovation, Financial Technology Companies (FTCs) seem to outpace
traditional banks. Within the context of the incumbent-challenger dynamics, FTCs swiftly
implement cutting-edge technology solutions and customer-centric approaches compared to
banks. Furthermore, their innovations often disrupt a significant portion of traditional
intermediaries’ value networks, particularly in segments that may be underserved by banks, such
as payments or lending. FTCs tend to break down the products and services of traditional
financial intermediation, leveraging high-tech orientation and intense specialization. The entry of
these assertive new players into the market compels financial institutions to redefine their
business models and devise swift and efficient strategies to acquire new skills, competencies,
know-how, technology, and innovative solutions. As recognized, banks have several viable
innovation strategies at their disposal, including closed and open innovation, partnerships and
collaborations with FTCs, and external growth through investment or acquisition of FTCs.
