“What? Over? Did you say ‘over’? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!” —John Belushi as Blutarski in Animal House

An article titled in The Telegraph The phony ‘fintech revolution’ is eating itself offered the following points as evidence of the shortfall of fintech promises:

  • Falling market valuations. Klarna and Robinhood (two-time Fintech Loser of the Year on this blog’s annual list) have seen their market valuations fall significantly.
  • Un-disintermediation. According to the article’s author Matthew Lynn, “the peer-to-peer lenders that promised to cut out the middlemen have more or less given up on their original idea.”
  • Challenge-less challenger banks. As Lynn writes, “challenger banks have failed to crack the monopoly of the big four [presumably UK banks]collecting a few customers with easier-to-use technology but little more.”

The crux of Lynn’s argument is this:

“A decade after the term entered the mainstream, “fintech” has promised a lot but delivered little. Unlike retailing or media, the internet doesn’t change the way finance works in any very significant way.”

Yes, the fintech hype is overstated…

Having published an article titled The End of the Neobank Era, I’m inclined to agree with Mr. Lynn on his point about the challenger banks (where, in the US, they’ve amassed a ton of customers but only a few ounces of revenues and profits).

And yes, some fintech people have overpromised and made outlandish claims about how fintech would improve financial inclusion or how it’s more “ethical” than traditional banking.

For an example of the latter, see the article Is Fintech More Secure than Traditional Banks? in which the author asserts, “fintech is better than traditional financial companies because challenger banks focus on securing the data of their clients using technology. Traditional banks are slower than challenger banks especially the issue of adopting cybersecurity measures.” Not true, and not even grammatically correct.

…But Fintech’s Impact on Banking is Underestimated

Basing the contention that “whole sector is flimsy,” as Mr. Lynn does at the end of his article, on falling market valuations and the pivoting of P2P lenders, ignores the lasting impact that fintech has had on the banking industry including: