Fintechs and blockchain start-ups: competition or coexistence?

It was not so long ago that the Fintechs were said to be making life difficult for banks and traditional financial service providers. The digitalisation of the financial sector is becoming an obvious necessity, as there is an obvious innovation backlog when one looks at the development of the banking houses.

But what happens to the non-blockchain fintechs when crypto financial service providers storm the Bitcoin secret?

Trapped in old structures and a regulatory Bitcoin secret corset that is not exactly conducive to innovation, it is almost inviting to be comfortable and conservative and leave everything as it was explained in this review by onlinebetrug. Until the financial crisis of 2008, this credo set the tone and even ten years later, not much has happened. What has changed, however, is the pressure on margins and the realization that it will not be possible to survive in the long run as before. Some Fintechs, who started five to ten years ago, now explain to the banks how things are going. The bankers go to school and are informed by digital ambassadors what financial solutions should look like today.

The disruption by Fintechs has already taken place. The disagreeable regulation and high licensing requirements have meanwhile become a saving bastion for the “old”, procuring time and holding back the young and wild.

However, the “old” do not have much time left – more and more people are switching to hip digital banks such as N26, Holvi or Revolut. Young people in particular are increasingly questioning why many financial services are so cumbersome to use. Despite bureaucratic hurdles, there has to be more to it, especially representatives of Generation Y think, and change banks like a few sneakers. Gone are the days when a banking relationship lasted monogamously until the end of one’s life. It is precisely this change of heart that creates the conditions for the crypto economy.

Is the Fintech sector now being disrupted by crypto start-ups?

So far, most of these changes have taken place without crypto start-ups. The crypto-fintechs are still in the start-up phase and must first create the necessary conditions to be able to survive on the free market in the future. But it won’t be long before the first accounts of crypto-fintechs are issued. The Berlin blockchain start-up Bitwala, for example, proves what such a thing can look like. In cooperation with a partner bank, the legal framework has been created to be able to issue fully-fledged accounts in the near future. Accounts that are covered by the European deposit guarantee scheme in the same way as bank accounts with Sparkasse or Commerzbank. Banking goes crypto is becoming more and more tangible as the convergence of “oldies”, fintechs and crypto start-ups continues. A few fall by the wayside, a few others merge, and in other places completely new market leaders emerge, some already today, but above all tomorrow.

The Fintechs play an important role in this by breaking up the old structures just like crypto start-ups and at the same time creating interfaces in order to embed blockchain technology in a flexible, modern IT infrastructure. The higher the level of digitization, the more likely it is that there will be blockchain use cases.

Crypto start-ups and fintech complement each other rather than cannibalizing each other. There is a market for both centralized and decentralized solutions. Rather, customers are given the opportunity to choose whether they prefer to live by the motto “Be your own bank” and take full responsibility for their financial transactions themselves, or whether they prefer to opt for a non-crypto financial service provider. Of course, there will also be Fintechs at one point or another whose business model is threatened by crypto start-ups. The majority, on the other hand, benefit more from synergies and greater openness to innovative financial services in society and on the corporate side.