Fintech hasn’t replaced existing financial institutions, and strategic partnerships between the big tech platforms and a handful of the largest FIs haven’t triggered a wave of consolidation in the space. Why not?
The disruption of consumer-facing financial services is still coming, but it will look more like the mainstreaming of the Internet.
Big tech players like Google, Amazon and Facebook will become the “application layer” to consumers for financial services. Like ISPs and network infrastructure providers before them, traditional banks and credit unions will move “down the stack.”
20 years ago, the network was front and center to every Internet user— and consequently, a huge area of focus and investment. Today, though no less critical, the network layer is basically transparent to consumers.
Ultimately, traditional financial institutions will become transparent to the consumer, and transform themselves in the process:
- Some financial institutions will focus on being the best network layer they can be. The most reliable, convenient and trusted. These will be the Cisco and Nortel of financial institutions in the future.
- Some financial institutions will innovate on top of their traditional services to create new application layer user experiences that go above and beyond, combining their role of network and application layer in order to remain relevant with consumers. They will be competing with Google, Facebook, Amazon, and smaller FinTech startups. These banks will be the “Microsoft” of financial institutions.
- Everyone else in the space will be classically disrupted as new winners emerge.
Post-disruption, consumer-facing financial services will be dominated by Google, Amazon, Facebook, Apple and FinTechs defining the application layer user experience for finance. Their reach will be global, and concentrate the collective financial power of billions of consumers — without needing to become regulated financial institutions in the process, just as Facebook and Google built their brands on top of the network layer provided by AOL, AT&T, Comcast and Cisco. Just as when consumers abandoned the captured portals and limited content of the early network providers.
Today however, we live in a world where even the largest tech companies find that achieving scale with one-off integrations or cloud-based data aggregation to financial institutions is intractable. It’s clear that a fundamentally different approach is needed. That’s why we developed the AppBrilliance platform.
Whether solving problems with blockchain, disrupting transaction attribution, or building the digital banking experience that will define FintTech for the next generation of consumers, the companies building these applications will build them on a network layer of secure, reliable, and high-performance of financial institutions. To do that, these companies will need a universal read/write interface to that network.
Like the transition with the Internet that came before, the overall opportunity in the space is unbounded. The shift is going to come quickly, unlocking tremendous value and opportunity in the process.
Are you ready?