Fintech is Dead ??; Long Live Fintech ??

The above phrase seems to be thrown around a lot these past few months, so I thought, why don’t I share my 2-cents worth on it too. Purpose of the following essay (if I may call it that) is to encourage a healthy discussion and capture as many different perspectives (as possible) so that we can all learn from eachother. Therefore please feel free to comment and share your perspective

Is Fintech truly dead? The simple answer is NO!

This phrase perfectly captures the paradox of fintech today: while many of its early innovations may now seem ordinary, the spirit of disruption that sparked the movement has not only survived but matured (and accelerated) in my humble opinion.

A decade ago, the concept of “fintech” was synonymous with the never ending rhetoric to do with 'Startups Vs Incumbents'; how innovative startup were disrupting the financial services sector and making the world a better place (phew!). Digital payments, peer-to-peer (P2P) lending, mobile banking, and alternative credit scoring systems were hailed as revolutionary solutions challenging traditional banking. Companies like Revolut and TransferWise (now Wise ) promised (and delivered) seamless, low-cost, user-friendly financial services to many. Many of these early fintechs aimed to replace or bypass traditional banks, with a vision of democratizing financial services and improving accessibility to all. It was about serving both the under-served (financial inclusion being a key word) and opening the eyes (and minds) of the other well served customer segments that there was an even better way to be served.

The early excitement around fintech was driven largely by low interest rates, regulatory easing after the 2008 financial crisis, and an influx of venture capital (and monies were flooding into the ecosystem). Regulatory frameworks allowed fintech companies to innovate with fewer restrictions than incumbent banks and VCs were willing to pump in as much cash as you wanted as long as you could show customer acquisition. In this period, fintech startups saw themselves as "outsiders" with the potential to upend legacy systems and put consumer needs first. However, the path was not without its challenges. Many of these firms discovered that truly disrupting finance required far more than a sleek app and downloads — it demanded deep, often complex, financial infrastructure and most of all customer trust (which in some cases took longer than originally anticipated) - ask the Digital Banks (Side Note: according to certain reports less than 20% of the c500 digital and neobanks which exist across the world were profitable at the end of last year and a large % of them were from APAC and the vast majority of them were part of wider ecosystem play)

Over the past decade, what was once novel have mostly become part of the financial mainstream. The word "fintech," once synonymous with 'scrappy' startups taking on the big banks, now refers to the entire financial system’s use of technology to accelerate change. The technology and business models driving fintech today is both a mix of the old and new — everything from mobile, platforms and cloud computing to blockchain, 6G, and AI (similarly for business models too)

Rather than signaling the end of fintech, this evolution over the past decade, in my opinion, marks an important transformation. What began as standalone innovations is now deeply embedded into every corner of the financial world, extending well beyond traditional financial services and its impact is growing.

Simply put 'Fintech' grew up and became 'Financial Technology'!

From Novelty to Necessity

Today’s fintech industry is not only about disruption and more about collaboration and integration with traditional financial systems (I like to refer to it as co-opetition). Many of the early fintech pioneers have matured into established players, some partnering with or even being acquired by traditional financial institutions. This shift has led to a blurring of lines between fintech and legacy/ incumbent FIs, as both sides recognize the value in collaboration over competition.

Embedded Finance is a great example of fintech’s current role. Financial services are increasingly becoming invisible yet omnipresent within non-financial platforms. Embedded finance allows companies to provide banking services without becoming banks themselves. For instance, e-commerce platforms like Shopify offer lending and payment solutions to their merchants, while Uber integrates payments within its ride-hailing app. This embedding has made fintech feel more like a utility—always present, often unrecognized, and seamlessly woven into users' lives.

As the illustration below shows; both incumbent FIs (providers) and Fintechs (enablers) need to cooperate to make embedded finance a reality and these Fintechs could be leveraging old or emerging technologies to make the 'magic' happen.

What was once revolutionary has quickly become standard (yes, i am purposelly exaggerating the point). Mobile apps and lending platforms that symbolized fintech’s early rise are now table stakes for any serious financial institution. They started as disruptive outsiders but now compete directly with established banks and payment networks. Their journey highlights how quickly innovations can become part of the norm, forcing both fintechs and traditional players to constantly push toward the next frontier.

AI, big data, and blockchain have driven much of this recent evolution, embedding fintech deeper into daily life. One of those frontier technologies is AI (here we go!). In areas like fraud detection, predictive analytics, and personalized banking, AI has gone from being experimental to essential. Companies like Betterment and Wealthfront use AI to make investing accessible to everyone, while insurers use AI to create flexible, usage-based policies. These examples show how fintech innovations evolve from novel ideas to mission-critical functions. Similarly with blockchain as a technology, it has opened doors to decentralized finance (DeFi) and tokenization, albeit with ongoing regulatory scrutiny.

Fintech and Traditional Finance: A New Partnership (the birth of Co-opetition)

The relationship between fintechs and traditional banks has also evolved. Initially, fintechs were seen as disruptors, poised to replace banks. But over time, both sides have recognized that collaboration is often more effective. Many traditional banks have embraced digital transformation, launching their own fintech-like services or creating venture arms to invest in innovation.

Open Banking has accelerated this collaboration, blurring the lines between fintechs and traditional players. The regulatory shift has lead to the emergence of new business models which are being adopted by incumbent and new FIs and mostly in collaboration with Fintechs and Techfins. Now, fintech companies provide the infrastructure while traditional institutions focus on delivering the customer experience. The roles are starting to converge, creating a more tightly integrated financial ecosystem.

Hello Techfin's (now who are these folks?)

No article on Fintech's can be complete without the mention of Techfins!

Over the past decade, the emergence of Techfins has had a material role to play in the way the fintech landscape has evolved (they have been one of the catalysts who have accelerated its evolution). Unlike fintechs, which are primarily financial services companies leveraging technology to innovate and differentiate, Techfins are technology giants (Bigtechs) and not so big players but defintely disruptive ones (especially as we start to see players who specialise in the application of emerging technology within the financial services sector) that have entered and/or started to service the financial services sector.

Companies like Amazon, Apple, Google, and Alibaba are the well know traditional techfins (if I may call them that). They did not start with a financial services focus but have gradually integrated financial solutions into their ecosystems, using their massive user bases, vast troves of data, and advanced technological infrastructure. For instance, Alibaba’s Ant Financial (now 蚂蚁集团 ) revolutionized payments and lending in China, setting new benchmarks in speed, scale, and customer experience. Techfins have contributed to the evolution of fintech by raising the stakes and expectations for digital finance, pushing the boundaries of what is possible in terms of personalization, efficiency, and integration with everyday activities. They are now again raising the bar by introducing emerging technologies into existing ways of conducting financial services and radically changing what it looks and feels like.

As we look to the future, Techfins will continue to play a pivotal role in both changing the status quo (through emerging technologies) and by embedding finance into broader digital ecosystems, enabling seamless and invisible financial interactions. This will challenge traditional financial institutions and even fintechs to continually innovate, ensuring that financial services remain frictionless, data-driven, and hyper-relevant to consumers’ evolving needs.

Fintech’s Challenges Intensify: Regulation, Profitability, and Market Saturation

With maturity come challenges, particularly as fintech faces a more stringent regulatory landscape and heightened competition. Many governments now apply similar regulatory standards to fintech companies as they do to banks. Across the world, greater regulatory intervention is impacting data use, increasing costs for companies and creating new compliance hurdles.

Additionally, profitability has proven elusive for many fintechs (especially digital banks). Companies that once thrived on rapid growth models now struggle with higher capital costs, more competition, and lower-than-expected revenues. Many early fintech models, especially in P2P lending and digital wallets, failed to deliver sustainable profits. The result is a wave of consolidation, as only the largest or most specialized fintechs survive independently. The recent economic environment, marked by rising interest rates and inflation, drastically reducing venture capital investments, pushed fintechs to find pathways to profitability more urgently than before.

These challenges arent going away and if anything will further intensify as regulators become more careful, profitability remains as a key metric of success and competition intensifies.

The Future: Fintech as Essential Infrastructure

As we look ahead, fintech (or lets call it Financial Technology) is transitioning from a disruptor to a core component of the financial infrastructure (enabling the reorchestrating of the global financial system). Technologies like AI, blockchain, and quantum computing have started to and will continue to unlock new capabilities in traditional financial services (whether payments, lending, and wealth management). Tokenization of real-world assets and decentralized finance (DeFi) could potentially transform capital markets and the wider financial services sector, providing new ways to raise and allocate funds. Super apps like Wechat and Kaspi.kz demonstrate how fintech can anchor entire ecosystems, offering users everything from payments to lifestyle services.

In the future, we will see the rise of "invisible finance". Payments and lending will be seamlessly integrated into every part of life—from smart devices to the metaverse (Yes, lets give it a plug too). Fintech will no longer be just a product or a business model; it will be the foundation upon which the financial services industry (and non-FIs who offer FS) will build value for their customers in innovative ways.

A simple exercise (a quiz)

This past weekend, I decided to conduct a simple exercise – reached out to ?half a dozen friends and acquaintances who I believe know more about #Fintech than I do and I asked them a simple question – What thoughts and statements come to your mind when you think about Fintech over three (3) different time horizons – from a decade ago, now and in 5 years time?

Received some useful responses (incl. some very colorful language which I have NOT shared). I then categorized the responses into different tranches which I have referred to as 'Perspectives' in the table below. The purpose of this simple 'quiz' was not to have an exhaustive response but to capture how the concept of what we call 'fintech' has (and will) evolve according to a group of people who know a thing or two about the subject.

Conclusion: Fintech’s Flame Burns Brighter

The evolution of fintech shows that while its early spark may have faded, the flame continues to burn brightly. Fintech is not just alive—it’s thriving, evolving into the backbone of the future of finance. It has moved from a disruptor to an enabler, transforming how we create, exchange, and experience value across industries. In that sense, fintech is far from dead. It has simply grown up.

The industry has transitioned from a disruptor to a vital part of financial infrastructure, reaching beyond its early ambitions to power new, integrated financial experiences. "Fintech is Dead; Long Live Fintech" captures this evolution perfectly: the flashy, standalone days of fintech might be over, but its journey as an indispensable component of modern finance is only beginning. As we move into a new era, fintech’s resilience and adaptability will likely continue to shape how value is created, distributed, and experienced globally, demonstrating that while the fintech of yesterday is gone, the financial world it inspired is just beginning to flourish.

In 5-10 years, fintech will likely be seen as infrastructure rather than innovation (not suggesting that we cant have innovation in infrastructure!). The excitement of disruptive startups will have faded slighyly, replaced by the seamless integration of financial services into every facet of life. The core themes will revolve around AI, blockchain, regulation, privacy, and sustainability, with fintech playing a critical role in shaping the future of global finance, but in a much less visible way. The technology will be there, but the novelty might not be. Fintech will have fully transitioned from an industry of disruption to a critical enabler of modern economies.

For me, in the future, when someone mentions “Fintech,” the thoughts will likely reflect the further maturation and embedding of fintech into the global financial landscape and here is what I think will come to my mind (in no particular order)

• Ubiquitous Embedded Finance: Seamless financial experiences are integrated into everyday life—people hardly think of fintech as separate anymore
• Fintech Infrastructure as Core Banking (BaaS): Banking-as-a-Service is the backbone of financial ecosystems, with non-financial companies offering robust banking services.
• Super Apps and Financial Ecosystems Dominate: One-stop platforms for everything—banking, shopping, investments, and even healthcare
• Deeper Financial Inclusion—But Still Gaps: Efforts to use fintech for good face criticism for not achieving their original impact
• AI Fully Embedded Across the Financial Services Value Chain: Artificial Intelligence is integrated at every level, transforming decision-making and customer experiences.
• AI Ethics and Transparency Become Major Issues in Financial Services: As AI becomes ubiquitous, ethical concerns and the demand for transparency grow.
• Data Privacy Concerns Hit a Tipping Point: Consumers and regulators demand more control and transparency over how data is used
• Cybersecurity Becomes the Biggest Challenge: As financial technology becomes more integrated and complex, the need for robust cybersecurity intensifies
• Sustainability and Green Finance Embedded in Fintech: Fintech aligns with environmental goals, though the pace remains slow and uneven
• Digital Currencies Integrated as Part of the Financial System: CBDCs, stablecoins, and regulated cryptocurrencies become mainstream
• Tokenized Assets for Retail Investors: Investments in tokenized assets like real estate and art become increasingly common
• DeFi Carves Out a Niche: Despite regulatory hurdles, decentralized finance secures a place in the broader financial ecosystem
• Quantum Computing's Potential in Fintech: Early developments show promise, particularly in encryption, risk modeling, and fraud detection
• Regulatory Tightening and Divergence: A multi-polar world creates fragmented regulatory landscapes, complicating global fintech expansion
• Fintech as a Utility: The term “fintech” fades into the background as it becomes indistinguishable from finance as a whole

May the debate and conversation continue.....