What Are the Next Steps for Fintechs?

Fintechs, startups that use innovative technology to offer traditional financial services, have seen significant growth in recent years, transforming a landscape previously dominated by traditional banks. By focusing on the end user, reducing bureaucracy, and streamlining costly and slow processes, these companies have redefined how customers manage their money. With increasing competition and investments from traditional banks in this market, what can we expect in the coming years?

Traditional Banks vs. Fintechs

As fintechs grow and attract customers from traditional banks, these banks have had to adapt by improving customer experiences and digitizing more services. Despite offering somewhat better services, it hasn't been enough to regain customer trust, and the growth gap between fintechs and traditional banks continues to widen.

With a better understanding of customer needs and evolving business models, two new trends are emerging: Banking as a Service (BaaS) and Banking as a Platform (BaaP).

BaaS: Banking as a Service

Banking as a Service (or contextual banking) provides bank customers with services and products tailored to their profiles, delivering proposals based on their expectations. Through data analysis and behavioral profiling, offers become unique and personalized, available when needed. For example, if a customer needs a loan at the time of a purchase, this service can be offered immediately.

BaaP: Banking as a Platform

Banking as a Platform (or conscious banking) is a strategy to extend banking services and products in collaboration with other companies, fostering closer and more transparent relationships with customers. With an integrated platform, customers can access more services in a single environment, enhancing user experience and adding more value to the platform. For instance, customers can use other apps to manage their checking account funds with just a few clicks.

Are There Still Opportunities in This Market?

Although the market seems saturated, there is still plenty of room for growth, especially in developing markets. Opportunities exist to cater to new niches that were previously considered too small or unprofitable, innovating and personalizing value delivery for these markets. Overall, there are still areas to be developed, integrating multiple services into digital platforms and creating a collaborative financial ecosystem. A business model that can combine these services and generate value still has the potential for rapid and exponential growth.