The major banks are strengthening their positions against fintech start-ups, particularly in the area of deferred payments. In recent years, they have established strategic alliances and invested heavily to adopt the digital technologies that are shaping the future of finance. This underlying movement reflects a race for innovation where adaptation and collaboration become essential to maintain their influence and meet the changing expectations of consumers.
Traditional banks facing fintech innovations
The traditional banking world is undergoing a major transformation. The large banks are increasingly finding themselves up against agile fintech start-ups, ready to revolutionize the payments sector. This competition encourages banking institutions to rethink their strategies. Indeed, banks are seeking to catch up by investing in novelty and strengthening their collaborations with fintechs.
Recent fundraising in the fintech universe reflects vigorous growth. For example, in 2024, this sector raised 1.3 billion euros in France, indicating significant dynamism that is pushing banks to act. The strategic acquisition of Plaid by Visa for 5.3 billion dollars in 2020 illustrates this shift towards an open banking environment. The banks, connected to the fintech ecosystem, thus aim to effectively respond to digital challenges, thanks to fruitful cooperation.
Bank adaptation strategies in the face of fintechs
In this race for innovation, new banking strategies are emerging: accelerators, incubators, and partnerships. Citigroup and Goldman Sachs, for example, are among the first to invest heavily in fintech start-ups to avoid being left behind. By integrating comprehensive solutions ranging from cash management to ESG assessment, banks are exploring all possible avenues to adapt to the modern needs of consumers.
In recent years, banks have had no choice but to invest in the fintech sector to maintain their primary role. Traditional structures must thus offer greater simplicity in international transfers, a need heightened by the Covid crisis and by increasingly ingenious fintech start-ups. The pressure from Big Tech, also present in this field, only intensifies this imperative for digital transition.
The impact of fintech unicorns on the banking sector
Fintech unicorns have added real value to the modern economy, challenging the monopoly of large banks on certain financial services. Among the most innovative fintech companies, many unicorns stand out by developing cutting-edge technologies that better meet the expectations of today’s consumers. With the rise of new technologies, the impact of fintechs is not only limited to disrupting the banking sector but also redefining the financial rules of the game.
For banks, integrating innovative fintech practices is a must to remain competitive. This openness is not only an advantage for banking institutions but also for clients who thus benefit from simplified services at lower costs. Collaborations between banks and fintechs during times of crisis demonstrate that these two players have much more to gain by cooperating than by competing.
