Levers for Disruption: How Incumbents Can Compete Against Fintech

The history of fintech (financial technologies) may be rightfully traced to 1915 with the advent of wire funds transfer via telegraph and Morse code. The ensuing confluence of technology, digitization, and globalization throughout the twentieth century revolutionized all aspects of global financial systems.

This modern era of fintech, propagated by the internet and mobile technology, continues to transform financial services today at an ever-increasing pace. Fintech services now provide businesses and consumers anywhere, anytime access to previously restricted financial platforms, technology and services.

Although fintech new entrants were once considered simply niche threats around targeted pain points to incumbent banking/payment, lending, credit, insurance, and investment players (such as those that have dominated the Fortune 1,000 list for decades), they are growing and maturing rapidly. Fintechs continually disrupt long-established value chain incumbents, expanding across segments, often with global ambitions.

  • 96% of global consumers are aware of at least one payment fintech service
  • 33% of global consumers often use fintech services other than their main bank first
  • 48% of global consumers use an insurance fintech service
  • 64% of global consumers have used two or more fintech services or platforms

Consumer fintech entrants typically attract the most newsworthy attention. However, B2B fintech has been equally, if not more disruptive, opening new markets and marketplaces with business opportunities for providers of applications, infrastructure, automation, and services.

The business opportunity and consumer willingness to engage – along with companies like Goldman Sachs estimating the global market approaching $5T – has spurred massive investment in fintech. Growing at a rate of in excess of 25% CAGR, over 40% of global VC funding went to fintechs in 2018. And despite ongoing global market challenges, Standard and Poor’s reported 30% growth in fintech investment for the first half of 2020.

Incumbent Response: A GTM Point-of-View

With reputational advantages and access to resources, financial services incumbents, have deployed a range of successful strategies to mitigate the product side of disruption – M&A (PayPal/Venmo), alliances (Zelle), product evolution (QuickenLoans – mortgage origination).  In addition, incumbent firms are focusing more broadly to transform their underlying business models and corporate cultures to drive greater innovation.  While these strategies are imperative for long-term business evolution, the earliest and fastest responses are sometimes overlooked.

Go-to-Market innovation provides an immediate pathway for incumbent success at any stage of disruption while the business focuses on longer-term initiatives.

By making Go-to-Market changes such as improving the purchase experience (driving loyalty), expanding product usefulness, and driving awareness, incumbents can drive immediate value in competitive response.

Our Research

MarketBridge analyzed the entrant and incumbent strategies of over 100 financial services and fintech companies across banking and payments, insurance, and investments.  A consumer survey of 1,500 participants across those same segments was questioned on everything from business strategies to consumer preferences.

From this, our team is in the process of developing a Fintech Disruption Go-to-Market Playbook detailing the best insights and strategies incumbent firms can leverage to thrive through this disruption. Register below for “first-in-line” access when it’s available. Learn how to:

  1. Understand and diagnose disruption and its impact on your business
  2. Identify incumbent-specific advantages to mount an effective response
  3. Execute detailed go-to-market activities to leverage inherent incumbent advantages