FinTechs – Evolution or Disruption?

• For years FinTechs have been pushing in increasing numbers onto the financial market

• A high disruptive potential is attributed to this disruption.

• Disruption by changing the ecosystem based on the utilisation of technological innovation

• A challenge for established players to open up new technological possibilities in the context of changes in ecosystems

Report

The FinTechs appearing for several years in the market for financial services are charac-terized by a central mechanism: They ac-cess a new, promising aspect of current technologies thus realizing a specific aspect of the wide range of financial services and formulating this offer in the context of high-er-level, mostly digital value chains.

There is usually nothing extraordinary in this process, making it basically just the devel-opment and innovation described based on new technologies. But why is this develop-ment considered to be "disruptive"; how it is not a mere "evolution"?
In history there are examples of revolution-ary developments. The Industrial Revolution bear its disruptive force in its name. Specifi-cally: Edmund Cartwright's power loom was a disruptive innovation with far-reaching consequences for the market and society. The many factories that operated in a previ-ously stable market before the invention of the power loom, disappeared almost com-pletely.
These profound changes relate, of course, to individual phenomena. An example from the recent past is the photo lab. The busi-ness of developing film collapsed with the emergence and the mass distribution of digital cameras, and is limited only to a niche market for professionals, enthusiasts and nostalgics.

An important structural element of this revo-lutionary development lies in the breadth of the changes that are conjured it. It is not just about profound or lasting changes that would affect individual sectors; it involves a wide range of interaction and action areas.
In relation to FinTechs this means: They alone do not have the disruptive potential that is attributed to them from watching the wider development. Rather it is the digitiza-tion - understood as the driven technological innovation that disrupt business models and the surrounding ecosystems - that leads to civilization and social upheavals in the entire width of economic activity and the actions of people.
Relating this to the market for financial ser-vices, this means that also in such markets a revolution is taking place. For established players therefore it is crucial to be able to tune their own business models to the many changes in ecosystems.