Comparison of FinTechs in three levels of transformation
| Level of transformation | IT-using banks (until around 2008) | FinTech (after 2008) |
|---|---|---|
| External organization | ||
| Regulation | Low need for equity capital and low supervision | Stricter rules and less protection |
| Business model innovation | Business in offline agencies and services | Online and mobile services |
| Infrastructure governance | Centralized institution as a focal firm | Distribution of tasks |
| Payment style | Most customers use cash money | Reduction of cash payments |
| Organization of working networks | ||
| Networking | Small number of partner networks | Many specialist partners |
| Costs: margins and structure | High margins in the core business | Reduced margins and increased competitiveness |
| Competitors | Other traditional financial service providers | Startups and side entrants |
| Culture | Hierarchical | Cooperative and agile |
| Customer retention | High consumer loyalty | Low switching costs |
| Internal organization | ||
| Business focus | Process-oriented | Centralized in the consumer |
| Interaction with consumers | Initially offline | Initially online and multiple channels |
| Key competences | Distribution, products and transactions | Online distribution and platforms |
| Vertical integration | High integration | Low integration |
| Service portfolio | Banks as general service providers | Small diversified suppliers |
| Automation | Processes require manual steps | Fully automated processes |
| IT architecture | Monolithic systems and internal development | Modular systems and application programming interface |
| Level of transformation | IT-using banks (until around 2008) | FinTech (after 2008) |
|---|---|---|
| Regulation | Low need for equity capital and low supervision | Stricter rules and less protection |
| Business model innovation | Business in offline agencies and services | Online and mobile services |
| Infrastructure governance | Centralized institution as a focal firm | Distribution of tasks |
| Payment style | Most customers use cash money | Reduction of cash payments |
| Networking | Small number of partner networks | Many specialist partners |
| Costs: margins and structure | High margins in the core business | Reduced margins and increased competitiveness |
| Competitors | Other traditional financial service providers | Startups and side entrants |
| Culture | Hierarchical | Cooperative and agile |
| Customer retention | High consumer loyalty | Low switching costs |
| Business focus | Process-oriented | Centralized in the consumer |
| Interaction with consumers | Initially offline | Initially online and multiple channels |
| Key competences | Distribution, products and transactions | Online distribution and platforms |
| Vertical integration | High integration | Low integration |
| Service portfolio | Banks as general service providers | Small diversified suppliers |
| Automation | Processes require manual steps | Fully automated processes |
| IT architecture | Monolithic systems and internal development | Modular systems and application programming interface |