FinTech Innovations as Disruptor of the Traditional Financial Industry

Abstract

The COVID-19 pandemic has led to a sudden jump in the digitization of financial services. Today, the financial sector is the target of disruptive action by a number of FinTech companies that are innovating and changing financial services. Since 1995, the term disruptive innovation has become widely used to describe the way of operating and market conquest of many, primarily technological, start-up companies that have achieved global success. This chapter goal is to give a clearer view of the way FinTech companies are changing the financial industry and how FinTech innovations are disrupting financial markets and tend to eliminate existing established financial companies. FinTech companies offer services that reach neglected market segments and were initially perceived as a small threat to established companies. A significant market share is taken by fully digitalized financial institutions that offer products and services that provide high level of satisfaction and low costs. Although traditional financial companies try to keep pace with technological changes by introducing new digital services, the entry of global technology brands into the financial services market further complicates their position. Traditional financial companies tend to develop a collaboration strategy with FinTech companies to bridge the technology gap and survive in the market.