The Great Fintech Rebundling

By Bernard Lunn

You know all those cool infographics of the Unbundling of a Bank with lots of startup logos?

The Great Fintech Unbundling also looks like this:

HiFi Separates

Rebundling usually follows Unbundling in the tech business and looks like this:


Some people care about music technology. I had pals at University who would obsess happily about woofers and tweeters (carbon dated myself there) but I was more interested in the music. It is the same in Fintech. To a few of us in the business, the nuanced differences between various Fintech offerings is endlessly fascinating. To most people, the only interesting thing is how to get all that boring money stuff done as quickly and cheaply as possible so that one can do something more interesting.

The great Fintech Rebundling story is fundamentally a Customer Experience story, as I explore in this post specific to digital wallets (aka current/checking account). You wait for Moore’s Law to transform the basic capability of woofers and tweeters and then you put it all back together into a different form factor.

Somewhere in there is some design magic, which Steve Jobs clearly had a lot of.

The Great Fintech Rebundling can only be done by a fully licensed/regulated entity aka a Bank. It could be a start-up bank or it could be a big existing bank moving into foreign markets (using the Telecoms playbook that we explained in this post).

Whatever the source of this fully licensed/regulated entity, it must be unconstrained by physical branches. It must be digital first. The Rebundling is about fulfilling the customer need for one stop shopping, to go to one entity to handle your needs for:

  • current/checking account (payments in and out)
  • earning money on savings (aka fixed income and equities)
  • borrowing money.

Daily Fintech is written by entrepreneurs for entrepreneurs. Those entrepreneurs can be in a garage, or in a big bank or in big tech company moving into Fintech or in a VC funded hyper-growth venture moving into adjacent markets or in a well funded fully licensed startup bank. What all these entrepreneurs have in common is:

  1. A clear view of unmet customer needs. These should be overlooked niche markets, which you can enter while nobody else is looking.
  1. The ability to create a great digital customer experience. This is a lot more than adding a UX layer onto an old system. The iPod looked great, but it also delivered a fundamentally different experience. Building a great mobile user experience is important, but it has to offer real value – better, faster, cheaper, more.
  1. They use the startup model. The startup model is well documented and taught in many classes – Minimum Viable Product, Product Market Fit, equity incentive, etc. Incumbents can do this if they are willing to break some eggs (break down organizational boundaries).

The great entrepreneurs can just as easily be in a big company as a garage. Apple was a big company in decline when Steve Jobs started to work his magic again after he returned via NeXT. The biggest hurdle to incumbents doing the Rebundling is the mistaken belief that their internal resources are their secret sauce.

The founders in the garage never make that mistake because it is simply not an option; they have no internal resources to leverage.

This corporate misconception cuts deep. The conversation within incumbents is all about leveraging internal:

  • Talent
  • IT
  • Data

In each case, there is likely to be a lot that can be leveraged, but the mental model has to change:

  1. Talent. 

Misconception: even if we don’t have the smartest guys in the room, they are already paid for.

New thinking: getting the best talent (from anywhere) aligned to your strategic objectives is the whole game.

  1. IT.

Misconception: everything has to be layered onto our core systems.

New thinking: what external resources can we leverage via digital interfaces? What would we do if we did not have a core system?

  1. Data.

Misconception: our customer data is our gold mine.

New thinking: our customers are a tiny % of the Total Addressable Market that we need to win. How do we leverage all the data out there in networks and clouds?

In this new way of thinking, your core competency becomes how to partner. This is so alien to corporate thinking, which is about controlled relationships (with employees and vendors). For a massive company to genuinely partner with a bunch of weird looking folks in a garage is totally alien. Yet the chance that one of those teams of weird looking folks in a garage will one day be more valuable than your business is no longer absurd. (For example, Yahoo is valuable today because of their investment in Alibaba).

Nor is it technically simple to deliver enterprise scale systems with great complexity using external resources in real time. For the user experience to work, data and services have to be delivered in context to what the user is doing at that moment in time. The Bank comes to the user not vice versa. Sure we have plenty of APIs and we can run it all in the Cloud. However just running a standard middleware stack in the cloud won’t enable this new type of service. Some new computer science is needed as well.

The Fintech Rebundling can be done by startups or by Banks. It is perfectly suited to Red Ocean markets. In Blue Ocean markets, the “do one thing and one thing only” startup mantra is more appropriate.  Startups tend to go for Blue Ocean markets and banks tend to fail at Blue Ocean markets due to organizational forces that attack such a radical idea. So Banks tend to operate in Red Ocean markets where they need to innovate in order to counter moves and by Fintech ventures to capture Millenials and other parts of the market that are up for grabs.  Rebundling is a strategic response by Banks in these Red Ocean markets and a way to create new competitive moat.

The Fintech Revolution that we write about on Daily Fintech currently looks like this:

HiFi Separates

Somewhere out there are the entrepreneurs dreaming about building this:


Daily Fintech Advisers (the commercial arm of this open source research site) can help implement strategies related to the topics written about here. Contact us to start a conversation.


  1. […] If Banks think creatively about this, they will see the Rebundling opportunity to create an integrat…. However this does not need to be a bank. A startup can do this as well. If banks cede this customer innovation territory to startups they will be relegated to being low margin, low growth regulated utilities (about as exciting and necessary as electricity or water utilities). […]

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