Fintechs Acting Like Banks

Note from the Publisher:  Things are all so exciting and scrambled and clear cut and garbled, all at the same time, in the world of fintech right now.  TradeStreaming has published a great piece about how fintechs are starting to act like banks, and offers Square and Paypal as examples of fintechs that have recently rolled out small business loan offerings.  But is this fair to banks who have to go through intense regulatory scrutiny for their offerings? 

Likewise, in the P2P area, many firms are rolling out offerings that smaller investors can easily get into, but are they safe?  Over-regulation can kill an industry, under-regulation can kill investors.  We don’t profess to have all the answers, but we’re sure that over time there will be far more regulation on fintechs in all sectors than are currently in place.  But by that time, they’ll be on to something else new, and ahead of the regulators once again, no doubt about it.

“If the Oxford Fintech Dictionary were searching for the 2016 Word of the Year, one of the frontrunners would definitely be bundle. True, as a word that predates fintech by at least four centuries, it has escaped the nearly compulsory fintech trends of misspelling words on purpose or the adding of rogue capital letters. Nevertheless, this unassuming, rather ordinary English word has played a major role in the epic Bank vs. Fintech battles of 2016.

On the one hand, veteran fintech blogger Pascal Bouvier has written compellingly about the unbundling of incumbents as a result of emerging fintechs and about the different ways for banks to deal with the disbanding of their value chain.

On the other hand, Bernard Lunn and Chris Skinner have argued that the prevalent trend is actually one of rebundling, of banks integrating fintech into their own technologies to form one-stop-shops for customers………..

There is, however, a third hand: plain old bundling. Bundling is happening within the fintech ecosystem and without the banks, with payment companies like Square and PayPal launching their own lending services for SMBs. In a sense, if banks are becoming or are trying to become more like fintechs, some fintechs are also becoming more like banks.”

Read Full Article at Tradestreaming