What to expect in banking sector

By CHECKusMediaGroup January 1, 2016

Financial sector remains one of the most competitive markets with extremely low margins and institutions in every region all around the world. We see the banking sector fully occupied with sales and less with innovations, so much needed in this segment. Nevertheless, this situation poses an opportunity for fintech startups, luring them to this lucrative sector.

According to the statistics of Accenture, fintech investment increased 201% in comparison with the year 2014, while the entire venture capital saw a growth of only 63%.


First of all, innovation plays a key role in most of the sectors and banking sector is not an exception. Most of the larger banking institutions use permanently their conservative ways and among the top innovations we could see only couple of well-known US or European banks.

They tend to neglect areas of lower profit as money transfer business or small loans. This segment is the most likely to be taken over by fintech startups.

We can see banks using wide budgets to get the most talented and skilled human resources, setting the best infrastructure and proposing new products. Nevertheless, they remain focused on core products of deposits and lending, while customers don’t have the tendency to change their banks often. According to the Consumer Intelligence survey, only 3% of customers change their banks per year.

As the financial sector is constantly wider and wider, banks are not able to cover all the niches constantly, providing a space for new institutions as they have to keep their customers’ base.

2.Fintech banks

Most of the fintech startups are struggling at the beginning as they have to focus on their niche. This is natural, as acquiring a client takes high costs in current environment.

But once they overcome this first stage, they can take the advantage of providing other financial products to their actual customers and widen their services in related sectors. For example small loans can widen their services to insurance, mortgages, etc. Or money transfers can turn to deposits as well.

When reaching enough clients, a horizontal expansion remains the major opportunity to keep existing customers and get new ones.


As mentioned above, banking institutions can’t focus on all the sectors, but they would like to provide the widest scale of services to their clients. Here comes the question, why not to use services of intermediaries.

To develop an expert in any of the weaker sector takes time and costs money, so partnership with intermediaries are useful for most of the institutions to optimize their budgets on their core business. Thus they are able to sustain higher competition, which increases costs significantly.

Moreover, such environment is an opportunity for marketing companies, making a system under one brand and keeping customers satisfied with the entire variety of services under one roof.

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