Introduction: Suptech/regtech defined: Payments, sandboxes and beyond

Bhavin Patel

The evolution of financial technology (fintech) has significantly accelerated since the great financial crisis. For the traditional banking industry, profitability, competitiveness and the ensuing regulation drove compliance costs to record highs while simultaneously restricting credit. The future of the banking industry depends on its ability to leverage the power of customer insight, advanced analytics and digital technology to provide services that help today’s tech-savvy customers control their finances and better manage their daily lives.

Incumbent financial institutions and banks could risk being disintermediated from customers when banking, payments and other financial services can be provided by third parties, while the unbundling of vertically integrated financial services could allow banks to leverage complementary value-added services from fintechs. Put simply, it is a battle between innovation and distribution, and it remains to be seen whether fintech firms will achieve distribution before banks innovate fully. In general, the activities of small fintech companies span all three of these areas, yet there is also a tendency for new entrants to be more radical and