HSBC’s Zing Shutdown: What Traditional Banks Can Learn from FinTech Disruption

The closure of Zing, HSBC's international payments app launched just last year, is both disappointing and unsurprising. In an era where Wise and Revolut continue to disrupt traditional banking, Zing’s failure highlights several important lessons for banks trying to remain relevant in the evolving fintech landscape.

Let’s break this down.

The Challenge of Scale

First, let’s acknowledge the massive scale of HSBC’s global operations. With millions of customers and significant foreign exchange (FX) capabilities, the bank was in a strong position to build a successful cross-border payments platform. However, as we saw with Zing, large organizations are often too slow to innovate, weighed down by internal politics, compliance challenges, and an unwillingness to disrupt their own profitable business models.

Lesson #1: Misalignment with the Target Audience

Zing’s attempt to compete directly with Wise and Revolut was essentially a “me-too” product, struggling to carve out a unique value proposition. In a market where consumers expect speed, transparency, and low-cost services, merely replicating existing offerings rarely works. Zing lacked a clear, innovative edge, and without that, no amount of marketing or expansion plans could help it succeed. Banks need to understand that in fintech, it’s not enough to compete in the present—you need to anticipate where the market is headed.

Lesson #2: Innovation is Hard When Your Own House Isn’t Aligned

Zing’s internal struggles, especially its complex restructuring of compliance functions, point to a deeper issue in traditional banks: the disconnect between the innovation team and the core business. Large banks are often tied to premium services that generate high-profit margins. When an innovation like Zing challenges this foundation, internal politics and channel conflicts arise, creating roadblocks to success. This is where startups have the advantage—they can innovate quickly without navigating conflicting revenue streams or legacy systems.

Zing’s failure underscores a broader issue: it wasn’t just about launching a product. It was about building something new within a legacy framework, managing risk-averse investors, and complying with evolving regulations—all while competing with nimble fintechs that aren’t weighed down by such challenges.

Lesson #3: The Challenge of Competing with VC-Backed FinTechs

Fintechs like Revolut and Wise are built for scale and are willing to risk short-term profits for long-term growth. Zing’s inability to break even and scale quickly enough points to a major issue—legacy banks need to be willing to disrupt their own models if they want to compete with more agile, VC-backed players.

The decision to close Zing early may be seen as a pragmatic move, yet it reflects the broader challenges that banks face in a rapidly evolving market. Traditional banks, constrained by risk-averse investor expectations and legacy systems, may struggle to compete with fintech innovators unless they adapt.

The Compliance Dilemma

In the world of cross-border payments, compliance is king. Zing’s internal struggles with restructuring its compliance functions reflect a broader issue facing traditional banks: regulatory hurdles. Compliance complexity is often a hidden barrier to innovation, particularly in financial services, where regulatory landscapes are constantly shifting. While fintech startups are often able to bypass some of these barriers by being more agile, banks like HSBC are encumbered by complex, global compliance requirements.

If traditional banks hope to remain competitive, they must streamline their compliance processes to accelerate their time to market without compromising on security or regulatory adherence.

My Thoughts as an Industry Insider

Having worked both in traditional banking and fintech, I can tell you that Zing’s downfall highlights several crucial mistakes that banks need to learn from:

1. Innovation for Innovation’s Sake Doesn’t Work: If you’re not solving real customer pain points with innovative solutions, your product is destined to fail. Racing to market with a copycat product doesn’t work unless it’s truly solving a unique problem or offering something new to customers.

2. Corporate Politics Will Kill Innovation: Large banks are often bogged down by internal competition, legacy systems, and the fear of cannibalizing existing products. When internal departments prioritize the status quo over progress, innovation dies.

3. The Risk of Traditional Bank Investors: Risk-averse investors in legacy banks value stable returns over growth, which isn’t sustainable in the fintech world. Traditional banks must evolve their investment models to take more risks or risk becoming irrelevant.

The Silver Lining

Zing’s early closure is not necessarily a failure, but a lesson in knowing when to cut losses. Too many companies continue to invest in products that aren’t working, burning resources with no end in sight. HSBC’s decision to stop before things got worse shows a level of business acumen that many firms lack.

The bigger question for HSBC—and for all traditional banks—is: Can they learn from this experience and adapt quickly enough to compete with fintech innovators? The road ahead will be tough, but if banks don’t evolve, they risk falling further behind and losing market share to more agile players.

Final Thoughts: Can Traditional Banks Compete with FinTechs?

As someone who’s seen the inner workings of both large banks and fintech startups, it’s clear that the future of payments and financial services will likely be dominated by digital-first challengers. Traditional banks need to ask themselves: How will we innovate, scale, and disrupt ourselves before someone else does?

What do you think? Can traditional banks still thrive in the digital-first world, or is the future of payments purely in the hands of fintech disruptors?