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What are the key competitive advantages fintech startups currently hold?
“Perhaps the biggest advantages that fintech startups have is agility. They’re not weighed down by legacy technologies — the baggage that builds up over decades. There’s no wrestling with systems stitched together from multiple mergers; no untangling of processes that have been in place for decades. This gives startups a real freedom to specialise in something very particular, bring it to market very quickly, and outperform established powerhouses.
“There’s also the benefit of operating under a different level of regulatory scrutiny. Traditional banks offer an incredibly broad range of services, from retail and mortgages to investments and savings. That diversity brings with it a huge amount of regulatory oversight.
“Fintech startups don’t face quite the same level of handcuffing. It gives them more space to experiment, move faster, and bring new ideas to life — which, in this space, is a huge advantage.”
Why are many banks investing in or acquiring fintech firms?
“It’s a lot easier for an established bank to back or buy something that’s already doing the “new thing,” rather than trying to reinvent itself from the inside out.
“Take Chase, for example. You’ve got JP Morgan Chase in the US, which is one of the biggest, most established banks in the world. And then you’ve got Chase UK: same brand, but actually completely different in its offerings. Chase UK is fully digital-native, no branches, no legacy systems dragging it down. It’s essentially a new brand, under the same umbrella.
“In that sense, acquiring or investing in a startup — something that’s already agile, innovative, and wrapped in a neat package — gives these big institutions a sort of shortcut. They can let it run semi-independently for a while, see how it evolves, and then gradually think about how (or if) it gets folded into the broader business. That approach is likely to be much more manageable than trying to overhaul decades of legacy systems from the inside.”
How is customer loyalty being redefined in an era of hyper-personalized apps?
“Customer loyalty is now being shaped less by big, generic gestures, and more by the experience someone has with a brand on a day-to-day level.
“What we used to call “personalisation” was more just segmentation. You’d fit into a group of people who behaved in a certain way, and you’d get offers or messages aimed at that group. Sure, it was sort of personalised, but it wasn’t exactly tailored.
“Now, with hyper-personalised apps, it’s much more about you: your preferences, your behaviours, your history, all based on a data-driven understanding of you as an individual. While that can feel a little intrusive at times, the benefit can be huge. If done right, it saves time for both customer and staff.
“Imagine the standard customer service journey, and the time you’d save if you didn’t have to re-explain yourself to each new person and department you spoke to. The best companies are bringing the data that tells them that together, perhaps in a stream, so that whether you email, call, or use the app, the person on the other end actually knows what’s going on.
“That shift — from fragmented, frustrating experiences to something more connected and contextual — is what’s starting to define loyalty. It’s not just about points or perks anymore, but about whether a brand actually understands you.”
What cultural or structural limitations prevent banks from innovating faster?
“There’s the obvious stuff, like legacy systems, infrastructure, all of the technical baggage. But often, it’s the organisational approach that sometimes becomes the real blocker. When people have been in the same business for years, they get used to a certain way of doing things. That familiarity can actually get in the way. It becomes “well, this is how we’ve always done it, and changing it feels too hard.” So, innovation ends up getting stalled before it even starts.
“That’s something we try to challenge at Confluent. We bring customers into workshops and ask them to focus on what they actually want to achieve, without worrying (at least at first!) about the structural hurdles. Once that ambition has been voiced, we then work backwards and figure out how to get there, even if that means rethinking how the organisation operates.
“Because it’s not just technical debt. There’s organisational debt too in how people work, how decisions are made, how change is perceived. Tackling that is just as important if you want to move fast and innovate.”
How do startup founders perceive the regulatory environment compared to incumbents?
“It really depends on the founders themselves, and their particular experience and background. For example, many have previously worked in larger and more traditional businesses, so can bring some understanding of the regulatory landscape and how challenging it can be.
“In fact, in many cases, they’ve probably started their own company because of that frustration, seeing how slowly things moved or how difficult it was to innovate. Consequently, many startups will focus on a specific area where regulation is either lighter or just less immediately involved, giving them more time to work a concept through.
“That said, they’ll almost certainly have someone on the team who knows what kind of regulatory challenges are coming down the line. But if a particular area becomes too heavily regulated, they’ve got the flexibility to pivot, and shift into something adjacent that’s a bit more straightforward to operate in. That ability to adapt quickly is a big difference compared to incumbents.”
Will open banking level the playing field or entrench incumbents further?
“The original idea behind open banking, of course, was to enable data-sharing between businesses so individuals can get the best offer or the best value tailored to them. For a while there was this sense that open banking hadn’t really been taken advantage of — that over the five or six years it’s been around, businesses could’ve done more with it.
“That’s starting to change now. The rise of generative and agentic AI has made people look at open banking differently, given the potential to automate parts of the process that were time- and energy-intensive. It’s becoming less of an afterthought — no longer “how does open banking affect our existing product?” and more “how can we use open banking to create the thing we want to build in the first place?”
“I think the answer is yes, it can level the playing field. If more businesses start to take full advantage of what it enables, then it does offer a real opportunity.”
Which technologies will tip the scale—blockchain, AI, quantum computing?
“It’s easy to point to the big buzzwords — AI, blockchain, quantum — but I think what really tips the scale is how those technologies are actually made useful in practice. From our perspective, most AI applications rely on access to fresh data, the most current version of the truth you can get.
“That’s where real-time streaming comes in. Data streaming platforms help get the latest data into AI models so that they can respond to what’s happening now, rather than what happened last week or last year. That applies whether you’re surfacing customer insights, automating decisions, or building intelligent agents into your operations.
“So, while AI might be dominating the headlines, I’d argue that it’s streaming that will quietly make a lot of it possible, providing both real-time context and the continuous data flow needed for models to improve and adapt over time.”
What does the ideal “bank of the future” look like from both sides?
“From a customer point of view, the “bank of the future” is one that’s genuinely proactive. We’re already starting to see glimmers of this with banks offering smarter, more personalised messaging that actually helps, rather than just sells. Things like, “Hey, we noticed you mostly check your balance online. Would you like to stop getting paper statements?” It’s a small thing, but useful.
“Of course, there’s a balance. It has to feel helpful, not intrusive; recognised, rather than watched. Nobody wants to feel like they’re being observed, but they also increasingly expect an experience that depends entirely on their data.
“The challenge for banks is how to make those experiences feel seamless and respectful, giving people insights they want without crossing that line. That means having the right infrastructure — systems that can pull together data from across the organisation, in real time, and actually make sense of it. Without that, you can’t offer this kind of intelligent, joined-up experience.
“So, the “bank of the future” is probably less about shiny new tech, and more about being able to act on the data you’ve got in a way that’s thoughtful, contextual, and human.”
Peter Pugh-Jones, Director of Strategic Accounts, Confluent.
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