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Excellent blog and fully agree with your position. Although incumbent banks definitely face challenges in their digital transformation, but they have also so many advantages compared to Fintechs and more specifically challenger (neo-) banks. As such it will be very hard for challenger banks to really disrupt the existing banking players, especially if they are forced to do it a profitable (in the long-term) way. Check out also my blog: "Neobanks should find their niche to improve their profitability" (https://www.finextra.com/blogposting/19706/neobanks-should-find-their-niche-to-improve-their-profitability)

Interesting article and very fair points. I wrote a few months a simular analysis (a number of points are similar) on Finextra : https://www.finextra.com/blogposting/18994/low--and-no-code-platforms---will-it-developers-soon-be-out-of-a-job

Adrian, thanks a lot for the kind feedback. 

Indeed, engagement is critical, but there is still a long way to go. To give the banks credit, it's also very complex to find the right balance between adding these gamification elements, while still appear serious enough and avoid making your banking app too gimmicky.

Excellent article. 

Many of the neo-banks will start to find themselves in a Catch-22 situation, when trying to switch to profitability, as they will start to look more and more like the incumbent banks they initially wanted to disrupt. The best remedy in my opinion, will be for neo-banks to focus more on a specific niche, in which they can excel. 

Check out my blog on this at: https://www.finextra.com/blogposting/19706/neobanks-should-find-their-niche-to-improve-their-profitability

Very interesting article. Indeed AR/VR can give some interesting opportunities, but today it's still mainly used as a gadget or marketing stunt. Am curious when it will become a day-to-day tools in the financial services industry, which really brings added value to bank/insurer employees and customers.

In May of last year, I published a similar blog, describing the possibilities of AR/VR in the Financial Services industry, i.e. https://www.linkedin.com/pulse/can-augmented-reality-make-daily-banking-more-pleasant-joris-lochy

Dear Ketharaman,

Thanks a lot for your detailed and interesting comment. Fully agree with your statements, that the issue is that many Fintechs, being heavily backed by agressive VC funding, needed to say that they would disrupt (even kill) the existing financial services industry. This didn't happen and will not happen, in my opinion.

Before Fintech, the line between banks and financial service software vendors was very clear. One was of supplier of the other.

With many Fintechs first trying to go after the bank customers directly, but not succeeding, they piloted to a mixed solution of partnerships with existing banks, where they still partially manage the customer relationship. These kind of constructions has made the line blurry.

Furthermore the evolution of Open Banking and "Banking as a Service" has resulted in also a move-away from the traditional customer-supplier relationship. Many of the traditional Fincumbents (which have indeed been around for 20-30 years) are also experimenting with new business models, like SaaS, BaaS, marketplaces, obtaining their own banking license...

In the end it is in everyone's interest (especially the customer of banks) that there is cooperation, allowing to combine the innovative technology of Fintechs, with the banking expertise and customer base of the existing banks.

Thanks for your feedback. Indeed I agree there are very few examples of the "Winner Takes it All" principle, because competition immediately rises and regulators tend to intervene. Nonetheless there are some examples where principle seems to apply (at least for a number of years). Netflix seemed to have a monopoly on streaming for years, but is now being strongly attacked by Amazon (Prime), Disney (Disney+), HBO (HBO Now)... Same with Facebook, which has had quite some competition of Snapchat and TikTok. But some examples are still there, like the Search Engine of Google or the marketplace of Amazon.

Clearly the strategy of many large venture capitalist firms (like SoftBank) is still to pursue this "Winner Takes it All" principle. Obvious examples are Uber in the ride sharing app space, Uber Eats, Deliveroo or Doordash in the food delivery space, Bird or Lime in the shared mobility space or WeWork in the office rental space. Recent evolutions have however showed that this is probably not the most successful strategy to follow in the long-term.

Hi Jayanth,

Thanks a lot for your interesting comment.

Interesting to read about the Aadhaar framework. This is indeed exactly the type of (government-backed) digital authentication/identification/signing framework we should all be having. Unfortunately like many other such initiatives, it is a national (in this case India) initiative, which makes it very difficult for internation tech firms to use.

We therefore need a globally acceptation digital ID backed by all countries and governed by the United Nations. Some initiatives like ID2020 and ID4D have already been taken, but there is still a long way to go. Until then national (government) initiatives will continue to increase and some private companies will also make a shot for this market (e.g. the big tech giants, Tulioo, globaliD...).

Will be interesting to see how it evolves, but I don't expect a global digital ID any time soon yet.

Thanks a lot for the interesting comment and feedback. Indeed as I mention in my article, there is a long quest for "micro-payments" and even now technology is not fully mature to fully support the use cases, but am convinced that ultimately it will happen. As for many evolutions, markets don't evolve as quick as people anticipate.