Banking on the Very Human Potential of FinTech

The FinTech phenomenon is off and running with the success of financial startups such as Venmo, Mint, Square, and Stripe. But what makes this new industry more than just a flash-in-the-pan? What do the last five years of innovation say for what the future may hold for financial startups – and for the corporate banks they challenge and the old-school way of thinking they represent?

The answer lies in the consumer’s ongoing need – and now the expectation – for around-the-clock, unmitigated access to their financial life, without the constraints of physical banks, tellers, and 9 - 4 office hours. FinTech has pushed change at an astonishing rate – in the last ten years, banking has moved from happening primarily in physical buildings to living mostly in the cloud; money transfers are overwhelmingly handled through third-party apps; and companies like Paypal, Stripe, and Square now make it possible for business owners and consumers alike to buy, sell and settle up at retailers across the globe, all without ever visiting a physical bank or handling paper currency.

Here at Brightwell, our prediction is that the “old way” (i.e. traditional checking and savings accounts, deposit slips and chained-up pens, paper money transfers and personal checks) will become an endangered species, falling to the wayside as FinTech emerges dominant, and that we’ll see the younger generations migrating away from big banks entirely. As a result of that exodus, generations-old financial institutions are likely to fall, owing to business models that resist change. Quick-moving startups with on-demand tech and new ideas will outpace them and recreate the entire banking world in their image – simpler, more delightful, anywhere and anytime. And they’ll do it at the speed of light: A tiny startup operating with a staff of ten can already deliver in six months an experience that would typically take a big bank three years and a labyrinth of red tape to accomplish. With the amount of innovation swirling around in the FinTech sphere, established financial monoliths don’t have time to spare.

We also know, however, that for all its promise, FinTech’s journey toward dominance won’t be without its fair share of roadblocks. Federal governments are likely to stifle a number of startups while still in their infancy, due to the slow change of regulation and compliance. Rightly so: the government’s job is to protect the financial and economic health of the country and its citizens, so an existing and “known” system, such as traditional banking, feels safer and easier to regulate. As commerce moves away from the traditional banking systems and toward startups and FinTech however, we’ll be moving into a world of more unknowns and uncertainty than established norms, and with that, more regulation.

Other industries have faced similar challenges, and we should learn from them. There’s a sensitivity, for example, to someone becoming the banking industry’s Uber, which is itself reason for caution. In our case, it’s unlikely governments will allow the health of economies to suffer because of how convenient something is or how fast an app loads. So, the challenge becomes all of ours in this space: How will banks and the regulating forces above them respond to new technologies? How will FinTech companies help regulators understand their products and implications? And how will regulation change around money movement itself continue to evolve? It’s up to us to be a part of the solution.

"We are proud to be a part of the revolution."

Even if FinTech doesn’t ultimately gain endorsement by the U.S. Government as the banking mode of choice, it goes without saying the financial sector has forever been shifted by a bevy of little apps from little startups with big dreams. Together, they’re creating a new financial world that is exciting, intelligent, and set to change how we use, move, and enjoy our money forever. And we are proud to be a part of the revolution.