FinTech: Reshaping banking with co-opetition and disruption

SWST 2016-09-26T15:30:00.000Z

Bruce Weber
Dean, and Professor of Business Administration
Lerner College of Business & Economics, University of Delaware

FinTech dates to the arrival of the credit card, book-entry trade settlement, and ATMs in the late 1960s. Patterns in FinTech development are evident: (a) automation substitutes technology for manual and clerical labor, (b) decision making improves with better MIS, (c) connectivity and openness lead to growth of outside service companies and processors to spread costs, (d) new computing-intensive products such as derivatives and ETFs, and (e) disintermediation, margin compression, and distruption threats arise from B2C and P2P entrants, direct access, and ‘robo-bankers.’ Today’s FinTech developments such as distributed ledger, aggregation, and other e-finance initiatives move beyond enhancing customer relationships (‘co-opetition’) with financial institutions, and threaten traditional relationships and franchises (‘disruptors’) of financial institutions. The forces (including regulation) favoring co-opetition and traditional players, and those forces leading to disruption, will be examined.