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FinTech Primed to Challenge the Big Bank Monopoly


When dreaming of the lottery, even a cash prize of a few million isn’t easy to comprehend. A billion would be even harder. But a trillion? The average person just can’t handle a number that big.

Now try to conceptualize $13.5 trillion. That’s enough to send everyone in the U.S. to their local state college for a four-year degree and still have some left over.

It’s also how much money the 15 largest banks in America hold in assets. Of that cohort, just five manage half of it: Bank of America, Citigroup, JPMorgan Chase, US Bancorp, and Wells Fargo. Until recently, their hold over American wallets had gone unrivalled.

But as FinTech companies grow in scope, new challengers step up to disrupt the grip these Big Banks have over the industry — and consumers like you stand to benefit the most out of this change.

What is FinTech?

FinTech is short for Financial Technology and describes any technology that supports financial services. As a result, it’s a pretty broad term. Even the abacuses of yesteryear technically fit the bill, as do the automatic calculations the Big Banks use when completing transactions.

In 2019, FinTech means something more advanced than helpful back-end functions. It describes a subset of financial companies that offer front-facing services to customers.

FinTech represents a varied group of companies

The headlines make certain parts of the FinTech corner stand out more than others. Bitcoin often makes a splash in the news. The latest drama surrounds now dead CEO of Quadriga Gerald Cotton. He kept $145 million in a cold wallet no one can hack, leaving more than 100,000 investors out of luck.

Before this, it was Elon Musk thinking out loud on a podcast, saying crypto is the currency of the future. And before that, most new sites debated whether crypto is a reliable way to invest your money.

If you’re unfamiliar with the industry, it would be easy to equate all FinTech with Bitcoin because of the focus it’s under. While crypto is one of the most theatrical examples of FinTech, not all FinTech is crypto.

Mobile banks make it cheaper to manage your money

Some FinTech companies offer relatively humble services compared to Quadriga. There are mobile banks that take your day-to-day banking experience out of the branch and onto your phone, tablet, or laptop, so you can deposit a check with your camera or transfer funds to a friend.

Because they don’t have the overhead costs of physical locations, most mobile banks eliminate the common banking fees and restrictions the biggest banks place on their services. While you may have to pay as much as $15 in monthly fees to keep a basic checking account with one of the big banks, FinTech scraps these fees altogether.

FinTech also removes barriers to essential services

There are also online lenders that offer installment loans and lines of credit to people with subprime credit. For anyone who’s tried to get a loan while they’re rebuilding their credit, you understand the importance of knowing your credit score before you apply.

Many of the biggest banks have strict regulations and will reject any applicant with a subprime score. However, there are FinTech companies that won’t — they use other financial criteria to determine your creditworthiness, giving people with low credit a chance at getting an online loan.

Whether you’re denied a loan or tired of paying too much to maintain a checking account, greater convenience and low costs can persuade you to ditch traditional financial organizations for FinTech. And you wouldn’t be alone. By 2023, it’s expected there will be more than 362 million FinTech users in the U.S. alone.

With this many potential customers, FinTech is primed to take a bigger piece of the financial pie as it disrupts the monopoly the biggest banks have over the country.