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A Random Walk Through the Fintech Ecosystem

A fintech industry overview of the key players and their roles

Lawrence Johnson


Fintech is impacting all facets of the financial services industry. This stems from the adoption of fundamental technologies that are transforming economic models and changing how value is created and transferred.

Fundamental technologies—such as mobile, artificial intelligence/machine learning, cloud computing, analytics, blockchain, and the "Internet of Things"—transcend the value of earlier technologies that focused on generating new efficiencies, reducing cost, or doing things faster.

So how did we get here and where are we going? To gain a better understanding, here’s a fintech industry overview of the key players.

3 key players in fintech

  1. Startups. These were initially embraced by thousands of new businesses that didn’t exist, and couldn’t have, just a decade ago. With their agile ways and motivation to disrupt, startups are changing how we organize information, interact, learn, and think. Startups have their own ecosystem of disruption, with billions in capital, global reach, and network. They succeeded by putting in play strategies that optimized for a digital, mobile-first mindset. They create experiences that scale through extensive social networks that afford them the ability to offer segment-specific propositions with efficacious learning feedback loops. Startups are both shaping and taking advantage of consumer expectations and behavior by assigning a premium on understanding their preferences and making them active participants in this process.
  2. Financial institutions. Financial institutions have been equally savvy in embracing changes in technology. By honing best practices for innovation, many institutions now have regained an edge. Some have gone so far as to claim they are technology companies engaged in finance. They got there by partnering with startups. They also invested in incubators, accelerators, consortiums, hackathons, open days, venture capital funds, and patents.
  3. Regulators. Regulators act as change agents. They create new pathways for innovation, either out of fear of being outpaced or to advance policy. They became proactive by espousing new technologies. They surprisingly supported blockchain, which runs a global tally of every bitcoin transaction, because it gives them a unique, real-time view. They have created their own accelerators, or environments where startups can operate with relaxed regulations and in close collaboration with the regulators. They even created protocols with leading regulators around the world under which startups can enjoy a fast-track approval process.

That’s the ecosystem in a nutshell, and it is changing rapidly.

2 takeaways for financial professionals about fintech

  1. Fintech users intimately understand and monitor habits, patterns of usage, and preferences by reaching further into a customer’s world.
  2. Fintech can cherry-pick customer segments and create niche products and services delivered in new ways with segment-specific propositions.

Learn more about how Morningstar is embracing fintech to help advisors evolve their practices. 

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