Abstract
Abstract This chapter considers Fintech innovations in the banking industry. The case study focuses on digital-based challenger banks that have quickly emerged after the global financial crisis 2007–2008, such as Monzo, Starling, Revolut, N26, and WeBank. It examines the phenomenon of ‘too big to fail’, which indicates the market concentration and systemic importance of large global banks. Digital banks (or neo banks) adopt a simplified, efficient, and low-cost business model based on the internet and smartphone apps. Digital banks are known for their unique distribution channels and bespoke financial services for retail customers and SMEs underserved by incumbent banks. This chapter discusses various factors contributing to the rapid rise of digital banks and assesses their advantages over traditional banks. It also analyses how digital banks fit into the existing regulatory system, and identifies key regulatory issues such as deposit insurance, capital requirement, and data safety.
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