Automation Set to Replace Traditional Banking Models
Fintech companies initially disrupted banks by offering better specialized services, but established banks are now copying these innovations to retain customers. The only viable long-term defense for fintech firms is full automation of personal financial decisions.
Fintech companies successfully unbundle traditional banks by focusing on specific financial services and doing them better than the old guard. This disruption starts after the 2008 financial crisis when banks pull back on activities to reduce risk, leaving a gap in the marketplace that innovative startups eagerly fill.
Now that the economy rebounds, established banks aggressively move to recapture lost ground by copying the best fintech features. They move slowly but rely on their massive scale, lower cost of funds, and wide distribution to offer a just-good-enough experience that keeps customers from leaving for smaller competitors.
Because banks easily crush startups that merely serve overlooked markets, the only defensible long-term strategy for fintech companies is automation. In the near future, intelligent automated services collaborate with individuals to understand their life goals and independently execute most of their financial decisions.