Fintech has overcome many obstacles to become a huge global industry in a relatively short space of time, and with each obstacle overcome it has changed the way people thinking about banking. Each of these disruptions has had a significant effect, from the acceptance of online financial services like PayPal, to the universal ubiquitous presence of mobile banking applications. More than most new technologies, fintech has always had to put trustworthiness at the forefront of new developments, as while people will happily spend their hard-earned wages with very little thought, where they keep their money until they do that is often a matter for serious consideration. As well as convincing consumers that their technology is reliable and trustworthy, fintech has also had to deal with a host of banking regulations which have often been established long before the online revolution took place; add to that the complexity of the global nature of the financial industry, and the difficulty of going up against what are literally the largest and most powerful companies in the world, and it’s easy to see why many fintech companies have struggled. Despite that, there have been two significant fintech waves of disruption.

Disruption and innovation

Firstly, fintech blossomed with the widespread adoption of the internet and mobile technology. The key here was innovation: by smoothing out and simplifying things like online payments and money transfers, at a moment where traditional banking was in crisis and facing significant criticism for making these sorts of operations more difficult, smaller independent companies could offer services that the big players hadn’t even considered their customers might want. It was a point where the size and inertia of large banking corporations worked against them, and many companies with useful new products sprang up and established themselves.

The second wave

Of course, if there’s money to be made from banking, the big players want a piece of it. So the second wave of fintech disruption might be considered the moment when large banks started taking the possibilities more seriously – investing in innovation and research, pushing for changes to regulation to ease the process of fintech adoption, and generally trying to muscle the smaller players out of the industry.

Small can be beautiful

The problem with large companies though is that, once they’ve found a thing that works for them, they have a strong tendency to stick to it – and history shows that the internet often works in the opposite way. While many technology companies require vast departments of researchers and developers, good and innovative online development can come from a relatively small source. From cryptocurrencies to insurance brokers, innovative technologies which work have managed to force a space for themselves in a crowded market.

So what comes next?

Although many smaller fintech developers have traditionally placed themselves as an alternative to big banks, more and more fintech companies are positioning themselves to operate alongside traditional vendors and offering supplementary rather than alternative services. By offering products and services directly to their more traditional rivals, fintech companies are finding not only a new market, but also a way to leverage the power of global corporations to their benefit. This may well result in a greater push for innovation, as banking giants find that the public puts as much stock in pragmatic tech-based solutions as they do to rates and in-store facilities.