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Banks Versus FinTech: At Last, it's Official

Author

Listed:
  • Bunea, Sinziana

    (University of Pennsylvania)

  • Kogan, Benjamin

    (FinTxt Ltd.)

  • Stolin, David

    (Toulouse Business School)

Abstract

In recent years, we have witnessed a substantial amount of discussion, but little empirical evidence, about the threat that financial technology (“FinTech”) firms pose to the established banking sector. We seek to contribute such evidence by analyzing explicit mentions of competition from FinTech in U.S. banks’ annual reports. Surprisingly, there were no such mentions prior to 2016. We identify 14 banks that acknowledge being threatened by FinTech companies. These banks represent only 3% of the banking sector by count but nearly a third of its assets. While this FinTech-mentioning group is skewed toward large banks, its characteristics and valuation differ little from those of other banks of comparable size. On the other hand, there is some evidence that banks that have expressed concern about FinTech competition are more likely to be involved in the FinTech space themselves. Overall, banks that have formally voiced their concern about FinTech competition seem, if anything, to be better equipped to weather it.

Suggested Citation

  • Bunea, Sinziana & Kogan, Benjamin & Stolin, David, 2016. "Banks Versus FinTech: At Last, it's Official," Journal of Financial Transformation, Capco Institute, vol. 44, pages 122-131.
    • Handle: RePEc:ris:jofitr:1578
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    Citations

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    Cited by:

    1. Barbara Będowska-Sójka & Agata Kliber & Laivi Laidroo, 2023. "Has the pandemic changed the relationships between fintechs and banks?," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 33(4), pages 15-33.
    2. Wentao Hu & Xiaoxiao Li, 2023. "Financial Technology Development and Green Total Factor Productivity," Sustainability, MDPI, vol. 15(13), pages 1-28, June.
    3. Ruihui Pu & Deimante Teresiene & Ina Pieczulis & Jie Kong & Xiao-Guang Yue, 2021. "The Interaction between Banking Sector and Financial Technology Companies: Qualitative Assessment—A Case of Lithuania," Risks, MDPI, vol. 9(1), pages 1-22, January.
    4. Anagnostopoulos, Ioannis, 2018. "Fintech and regtech: Impact on regulators and banks," Journal of Economics and Business, Elsevier, vol. 100(C), pages 7-25.
    5. Dulani Jayasuriya Daluwathumullagamage & Alexandra Sims, 2021. "Fantastic Beasts: Blockchain Based Banking," JRFM, MDPI, vol. 14(4), pages 1-43, April.
    6. Luiz Antonio Joia & Rodrigo Proença, 2022. "The social representation of fintech from the perspective of traditional financial sector professionals: evidence from Brazil," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-27, December.
    7. Małgorzata Hałasik-Kozajda & Martyna Olbryś, 2020. "Analiza ewolucji i struktury sektora fintech," Bank i Kredyt, Narodowy Bank Polski, vol. 51(5), pages 549-586.

    More about this item

    Keywords

    fintech; banking; SEC;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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