Why Darwin Would Have Predicted Fintech

Published on
26 Jun 2015
Initial Author
Jessica Ellerm

A lot of airtime is currently being given to the concept of marketplace banking and fintech ecosystems. Lightweight, agile and highly networked players considered to be part of this new ecosystem are already making inroads into traditional finance.

By cutting out the banking ‘middle men’, these new specialists are delivering better services and experiences to consumers and businesses alike. In the future, rather than a one to many set of relationships, ecosystem banking will deliver ‘many to many’. Consumer choice will reign king and profits will be shared amongst many players, rather than just a few.

The rise of the fintech ecosystem seems to be a smoke signal that an ice age is descending on the banking era as we know it. To add to this bellwether, plenty of data tells us customer regard for banks has been cooling for some time. And just as when similar climate shifts occur in nature, power shifts soon follow. It seems the once dominant, predator banks may find themselves being outsmarted by smaller and much more nimble financial flora and fauna in the not too distant future.

This article explores how fintech ecosystems can learn from the interplay of network dynamics in nature. It touches on two network theories of current interest to economists, nested networks and modular networks, as they turn to biology for answers to banking’s big questions. It’s possible these millennia old, naturally occurring networks could prove key to unlocking the secrets to a more stable and financially sustainable banking sector. Fintech just might be banking’s equivalent of Darwin’s ‘survival of the fittest’.