Fintechs — The Disruptors
Over the past few episodes, we’ve looked at the key stakeholders — citizens, merchants, governments, corporates, and banks — the “Who” of payments. Now we close that section by turning to the newest stakeholder group of all: the fintechs.
Fintechs — The New Young Things (or Are They?)
“Fintech” — short for financial technology, is a term that feels modern, yet its roots run deep. Every major leap in payments has had a technological moment: the first cheque in the 1600s, the telegraph-based transfers of the 1800s, the first credit card in 1950, the ATM in 1967. Each was a fintech innovation of its time.
The digital revolution of the 1990s made the term stick. PayPal (founded 1998) is often credited as the first modern fintech the company that normalised online payments and consumer-to-consumer transfers without traditional banks.
Then came the 2000s and 2010s the era of Stripe, Square, Revolut, and Klarna when the idea of financial services as software changed everything. At some point these fintechs stopped being niche startups and became core infrastructure.
What Fintechs Want
To Be the Next Big Thing Fintechs want to be Stripe. They want to be PayPal. They want explosive growth, billion-dollar valuations, and the kind of market dominance that turns startups into household names. Every fintech founder dreams of building the platform that displaces the incumbents, captures the zeitgeist, and becomes the infrastructure everyone else builds on top of. They’re not here to be another vendor in someone else’s ecosystem - they want to be the ecosystem.
To Make Money Fintechs are venture-backed businesses racing against burn rates and investor expectations. They need revenue - transaction fees, subscription models, interchange, data monetization, whatever works. Unlike banks with diversified income streams, most fintechs live or die on a single business model. They need scale fast, profitability faster, and exits fastest. They want customers, volume, and margins - and they want them before their funding runs out or a competitor eats their lunch.
To Actually Fix Something Broken Not every fintech is purely mercenary. Many are founded by people who genuinely experienced a pain point and decided to solve it - merchant onboarding that takes weeks instead of minutes, cross-border payments that cost 8% and take three days, lending decisions based on outdated credit scores that exclude millions. These founders want to disrupt because the current system genuinely frustrates them. They want to prove that financial services can be faster, cheaper, fairer, and more accessible. The money matters, but so does the mission - making change happen that improves how people and businesses interact with money.
Speed to Market Fintechs measure in sprints, not quarters. They want regulatory approval processes, bank partnerships, and compliance frameworks that move at their pace. Waiting twelve months for a banking integration that could technically be done in twelve weeks kills momentum and burns capital. Fintechs want access - fast access to payment rails, banking infrastructure, and licenses that let them build and iterate without being trapped in legacy procurement cycles.
A Level Playing Field (On Their Terms) Fintechs want the freedom to innovate without carrying the full regulatory burden of banks - but they also want to be taken seriously as equals. They want access to the same payment schemes, clearing systems, and central bank facilities that traditional banks enjoy, without having to become deposit-taking institutions themselves. The tension is real: they want the benefits of banking infrastructure without the costs of being a bank.
Bank Partnerships That Actually Work Fintechs need banks - for licenses, settlement accounts, and regulatory coverage. But they want partnerships that are collaborative, not extractive. They want banks that move quickly, integrate cleanly, and don’t treat them as vendors to be managed through endless security reviews. Fintechs want banks to act like partners who understand that time is the fintech’s most precious resource.
Customer Ownership and Data Control Fintechs build businesses on customer relationships and data insights. They want control over the user experience, the brand touchpoints, and the data flows that power personalization and product development. When they partner with banks or embed into platforms, they want clarity about who owns what - and they want their role recognized as value creation, not just outsourced compliance.
To Scale Without Becoming What They Disrupted Every successful fintech faces the same risk: becoming slow, bureaucratic, and risk-averse - the very things they were founded to replace. Fintechs want to grow into global platforms without losing their speed, culture, and ability to innovate. They want regulatory frameworks that scale with them, not suffocate them. But as Stripe and PayPal have learned, success brings scrutiny - and with it, the responsibilities of incumbency.
A Conversation with Caleb Avery
To unpack how fintechs are shaping modern payments for the Podcast series, I spoke with Caleb Avery, Founder & CEO of Tilled, who started in payments at just 19 years old. He began door-to-door, selling card-processing services to small businesses, before founding Tilled,a company that helps software platforms embed payments through a model known as PayFac-as-a-Service.
“When I began,” he told me, “only one in 20 merchants used integrated, software-led payments. Today it’s one in three.” That single statistic tells the story: fintechs have rewritten how small businesses access payments.
Platforms like Stripe and Square made payments developer-friendly, offering APIs, dashboards, and onboarding flows that traditional processors couldn’t match. For the first time, the merchant’s experience was designed for usability, not compliance.
Speed, Culture, and the “Can-Do” Mindset
In the US especially, fintechs have flourished in a culture of entrepreneurial urgency — “can do, will do, tomorrow.” In contrast, Europe’s financial sector has often been defined by regulatory caution “we’ll see what the regulator says next year.”
That cultural divide explains why American fintechs scaled so quickly. They solved real-world problems faster and regulators learned to catch up rather than lead.
But that doesn’t mean fintechs operate without oversight. In truth, most rely on licensed banks for settlement, compliance, and risk management. It’s a symbiotic partnership, fintechs build the experience layer; banks provide the legal backbone.
This relationship is often described as “coopetition”, fintechs and incumbents working together, not in opposition.
When Banks Become Fintechs
The influence hasn’t been one-way. As fintechs have learned to act like banks, banks have learned to act like fintechs.
Many now build their own digital-first brands, running them on modern API-driven architectures separate from their legacy cores. We’ve seen it across the industry, Marcus from Goldman Sachs, Chase UK, and Hello bank! from BNP Paribas, all attempts to combine the stability of a bank with the agility of a startup.
In practice, banks are borrowing the fintech playbook:
rapid prototyping and customer testing,
open-banking integrations,
simplified onboarding and instant KYC,
and partnerships that let them plug directly into ecosystems rather than build everything themselves.
As one banking executive recently said to me, “We don’t want to become Stripe — but we need to behave like Stripe.” It’s a recognition that innovation is no longer optional. In a world where customers compare every experience to the best app they’ve ever used, even centuries-old institutions must evolve their digital DNA.
The Reality of Partnership
Of course, collaboration between banks and fintechs sounds straightforward, in practice, it rarely is.
For the largest banks, partnering with a small or mid-sized fintech can be painfully slow. Procurement, security, and legal processes built for billion-dollar vendors don’t adapt easily to a ten-person startup. Even when the technology is ready, governance can kill momentum.
Fintechs, on the other hand, often underestimate the scale of a bank’s internal machinery — the layers of approval, compliance testing, and risk sign-off required before anything can go live. A product that can be deployed in a month for a software company may take a year inside a major bank.
Many partnerships stall not because of technology, but because the operating tempos are mismatched: one side measures in sprints, the other in quarters.
The good news is that this is changing. Banks are building innovation gateways, dedicated teams and sandbox environments designed to test fintech solutions safely, without exposing core systems. It’s progress, but the gap remains. Trust and patience still matter more than code.
Digital DNA vs Legacy Systems
Traditional financial institutions were born in an analog age, their core systems pre-date the internet. ACH networks from the 1960s, RTGS systems from the 1980s’ built long before digital was a concept.
Fintechs, by contrast, start digital-first. They think in terms of APIs, UX, and data-driven design. As Caleb observed, fifteen years ago, online banking wasn’t standard, today it’s unthinkable not to have it.
Fintechs made digital the default, forcing incumbents to modernise or risk irrelevance.
From Challenger to Incumbent
It’s tempting to think of fintechs as perpetual outsiders, but success brings its own irony. PayPal moves nearly $1.5 trillion USD annually. Stripe reportedly processes more than $1 trillion a year. At that scale, they’re no longer disruptors, they arethe system.
Stripe, for example, is no longer a challenger brand but an incumbent, a sign that fintechs can grow into the very institutions they once sought to unseat. And with incumbency comes the same challenges the old guard once faced: slower decision cycles, regulatory exposure, and customer-trust risk.
Still, the fintech ethos persists, fast iteration, open platforms, and user-centric design continue to ripple through every part of the industry.
The Niche Advantage
Fintechs rarely try to do everything, they pick their battles. They choose specific pain points where they can innovate quickly: faster onboarding, better lending analytics, frictionless checkout, or smarter fraud detection.
That focus gives them an edge. They can build deep expertise, design better user experiences, and move fast without the heavy compliance layers that weigh on banks. But it also means they operate under a lighter regulatory umbrella.
While banks are bound by capital requirements, prudential oversight, and systemic-risk rules, most fintechs partner with licensed institutions that carry those obligations for them. It’s a clever model, agile innovation wrapped in another firm’s compliance.
The trade-off is that fintechs sometimes cherry-pick profitable segments without providing the universal access or resilience that full-service banks must maintain. They move fast — but within niches of their own choosing.
Co-Creation, Not Competition
Today’s payments ecosystem isn’t a war between banks and fintechs — it’s more a partnership. Fintechs depend on banks for settlement and licenses. Banks depend on fintechs for agility, innovation, and customer experience.
Many banks now white-label fintech platforms, embedding modern APIs under their own brands. At the same time, fintechs increasingly rely on one another — connecting lending, wallets, issuing, fraud tools, and data analytics into shared solutions.
It’s not “big vs small” anymore, it’s collaboration at scale.
AI — The Next Catalyst
We both agreed that AI feels like the next big “hot thing,” much as blockchain was a decade ago. It’s early days, but the potential is clear: intelligent fraud detection, dynamic credit scoring, real-time compliance, and adaptive payment routing. Still, technology alone isn’t enough. As Caleb reminded me, having the best tech means nothing if it doesn’t solve a business problem people will pay for. The fintechs that thrive are the ones that pair innovation with purpose.
The Future — Fintechs as Everyday Infrastructure
So where next? Fintechs are no longer just disruptors, they’re integrators, blending into every layer of financial life: payroll, retail, lending, identity, and data.
Some will mature into global financial firms; others will fade. But the mindset they introduced - speed, accessibility, and digital thinking, is here to stay.
Looking Forward
With Fintechs — The Disruptors, we close the “Who” section of Bitesize Payments 201: citizens, merchants, governments, corporates, banks, and fintechs, the full ecosystem of modern money.
Next, we move from Who to What — exploring the actual payment rails and instruments that move trillions daily: ACH, RTGS, Instant Payments, Cards, and Digital Cash.
That’s where the story of how money moves really begins.
In the next section, we move from people to process - The what, the rails that make these innovations real.