Banking is an industry that has historically been slow to change, benefitting from unique product-specific expertise, extensive distribution networks, protective regulations and a very large and loyal customer base that are slow to switch financial providers. Until the relatively recent past, established financial organizations have generated good returns despite an increasingly outdated business model and back-office technology that was developed when ATMs were young.

Even as the Internet was developed and new technology-based competitors entered the financial services marketplace, few survived. According to McKinsey & Company, “In the eight-year period between the Netscape IPO and the acquisition of PayPal by eBay, more than 450 attackers – new digital currencies, wallets, networks, and so on – attempted to challenge incumbents. Fewer than 5 of these challengers survive as stand-alone entities today. In many ways, PayPal is the exception that proves the rule: it is tough to disrupt banks.”

A New Battlefield

As everyone in the banking industry realizes, there has been a new wave of disruption occurring in the banking industry over the past several years. As was found in the McKinsey research report, “The Fight for the Customer: McKinsey Global Banking Annual Review 2015,” the number of fintech start-ups is greater than 2,000 today, compared with 800 in April 2015. And the offerings of these firms spans product lines, consumer segments and industry boundaries.

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