Social disruption and the gig economy will drive true fintech disruption


The World Economic Forum (WEF) recently released its latest ‘State of the Nation’ report on fintech globally, in collaboration with Deloitte.

The paper builds on four years of work, and is an output of the Disruptive Innovation in Financial Services project that had its genesis at the World Economic Forum Meeting in Davos, back in 2014.

The overarching conclusion of the report was that while fintech businesses have materially changed the basis of competition in financial services, they have not yet materially changed the competitive landscape.

The report argues that the continued reluctance of customers to move away from incumbents has prevented any player from dominating a market vertical. Innovations are clearly not being seen by potential customers as ‘significantly better than’ banks and incumbent FIs in order to overcome severe switching inertia. Establishing new financial infrastructure has also been a barrier.

While the report cites 8 disruptive forces as having the ability to shift the financial landscape going forward, in my opinion they have missed one critical theme – the changing nature of how we live our lives.

Banks and traditional FIs have been building products for decades that have catered to a market with a fairly universal idea of what employment is and expected social behaviour.

Having one or two jobs in one’s lifetime, marrying once, buying a house and retiring at 65 have been the bread and butter on which financial services have built product offerings.

But with the rise of the gig-economy, delayed home purchases and the increasing number of women in the workforce delaying marriage, then maybe it is this seismic social shift or disruptive force that will empower fintech to take hold.

To give you some idea of what this looks like, here are some statistics and trends worth looking into.

In my opinion Fintech that sees and understands this changing landscape and can piggyback on socially disruptive change will be successful. Just last week I met a financial advisor who had done exactly that, by building an online tax return platform that specifically catered to the side-hustler community. He’s formed a partnership with Uber locally and said he was amazed at the ecosystem of services that have sprung up off the back of these tech giants.

It really should be no different for fintech.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

One comment

  1. We should not be complacent on the limited inroads that fintech has made so far. Is is fair to recognise that newborn startups have limited power to change an established statu quo, protected by regulation and the trust of the customers (not the love for incumbents). I see more disruption happening at regional level than globally on an uniform basis, with public policies being a key driver of the fintech success/failure. And probably big techs and telcos can be the authentic disruptors. On the other side, I see banks adapting successfully to fintech whereas others will lag and can miss the boat of efficiency and customer attraction, which is in my view the 2 key actions where established players should focus on.

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