FinTech startups outpace traditional banks
Startups leverage speed, modular architecture, and AI to deliver agile, user-centric financial services—often launching in weeks, not years.
Banks are investing, but culture holds them back
While many banks acquire or partner with FinTech’s to stay relevant, internal bureaucracy, risk-aversion, and legacy systems limit true transformation.
Customer loyalty has shifted to utility and experience
Modern customers care more about convenience and seamless digital experiences than brand names—driving loyalty to whoever solves their needs best.
AI and embedded finance will define the future
Agentic AI, invisible infrastructure, and open banking are redefining financial services. The winners will be those who integrate tech intelligently and rapidly.
The FinTech Arms Race
The financial services landscape is undergoing a seismic shift. No longer dominated by monolithic banks with decades-old infrastructure, today’s battlefield is defined by speed, agility, and innovation.
FinTech startups, once viewed as disruptive upstarts, are now formidable players competing head-to-head with global banking giants. And as both sides accelerate their adoption of emerging technologies, a clear message has emerged: the future of finance belongs to those who can move fastest.
Welcome to the FinTech arms race — where modular APIs, agentic AI, and customer-centricity are the new weapons of choice.
Speed, Agility and the Power of Starting from Scratch
FinTech startups have an undeniable advantage: they’re not burdened by legacy infrastructure. This allows them to build with a level of speed and adaptability that traditional banks struggle to match.
“FinTech startups excel with their agility, rapidly deploying innovative solutions like AI-driven trading tools and real-time scam detection,” said Rob Maximus, founder of DeepWhalesAI. “Their ability to pivot quickly, leveraging partnerships and user-centric designs, attracts tech-savvy users seeking cutting-edge experiences”.
This speed is not just about development cycles — it’s cultural. “While banks think in 18-month cycles, FinTech startups build in weeks,” commented Philipp Buschmann, co-founder and CEO of AAZZUR. “The advantage isn’t just tech, it’s architectural thinking. FinTechs are built for composition, not monoliths”.
And Raman Korneu, CEO and co-founder at myTU, agrees that speed of innovation is only the tip of the iceberg. “If I zoom out, I’d say the most significant long-term advantage is cultural. FinTech startups are willing to question long-standing norms of how financial services are delivered. They’re not constrained by decades of precedent. That mindset is as powerful as the technology itself”.
Operationally, these startups benefit from leaner teams and AI-native architectures that automate vast amounts of previously manual work. “This results in lower overhead, which often translates into more competitive pricing for customers,” Korneu told Silicon UK.
Vivien Cheung, Head of Financial Partnerships at Airwallex, echoed this, stating that the “clean slate” approach allows FinTechs to remain nimble and adapt to new technologies as customer expectations evolve.
Banks Are Buying Speed — But Not Always Succeeding
For traditional financial institutions, the FinTech boom presents a conundrum: compete or collaborate? Increasingly, the answer has been to acquire innovation rather than build it from within. But as many banks have discovered, buying a FinTech doesn’t always mean becoming one.
“Banks have capital and compliance down cold, but customer experience? Speed to market? That’s where they struggle,” said Buschmann. “They’re buying what they can’t build”.
Korneu added, “Banks can launch or acquire FinTechs, but they cannot simply act like FinTechs. Without real product ownership, a relentless focus on customers, and protection from internal bureaucracy, these initiatives often fall into the same old traps”.
Indeed, the cautionary tales of high-profile ventures like JPMorgan Chase’s Finn and Goldman Sachs’ Marcus illustrate the challenge. “These efforts do not fail because of a lack of funding or expertise,” Korneu commented. “They struggle because they overlook what truly makes FinTechs work”.
Still, the acquisitions keep coming — and for good reason. As Cheung told Silicon UK, “Progressive banks are those that have embraced FinTech partnerships combining the robust regulatory expertise of banks with the agility and innovation of FinTechs. It’s all about creating an integrated financial ecosystem that serves customers more effectively”.
Peter Briffett, CEO of Wagestream, sees it as both a strategic and defensive move. “Rather than try to replicate from within, they are opting to acquire, invest or partner with FinTechs to stay competitive. Sometimes this is about plugging capability gaps; other times it’s about bringing innovation into a slower-moving structure”.
The Battle for Customer Loyalty is Now Fought on Usability, Not Branding
Historically, customer loyalty in banking was built on trust, longevity, and inertia. Today, it’s defined by relevance, utility, and seamless digital experiences.
“We’ve moved from brand loyalty to utility loyalty,” said Buschmann. “A user doesn’t care who powers their payment, they care that it works instantly, securely, and invisibly”.
Briffett was even more candid: “What was previously perceived as loyalty was actually just inertia in disguise. People stuck with their bank because switching was hard. Today, loyalty is earned through relevance, value and convenience”.
Rob Maximus agreed that the game has changed entirely. “Customer loyalty now hinges on tailored experiences. Apps offering customisable trading strategies and real-time alerts create trust. Loyalty is moving towards platforms that provide responsive, secure services”.
A new trend is the rise of embedded finance — financial services seamlessly integrated into non-financial platforms. “Embedding financial services into lifestyle apps creates micro-moments of utility that build habitual engagement,” said Buschmann. “Customers stick with whoever solves problems seamlessly”.
Wagestream’s model — embedding financial services in the workplace — is a case in point. “Millions of workers already access financial services like instant wage access, better savings rates, and more affordable loans as employee benefits,” said Briffett. “Banking services will be de-coupled from traditional institutions and available through a wide range of new providers”.
The Technologies Tipping the Balance — and Where the Arms Race Goes Next
When it comes to defining the next frontier in the FinTech arms race, the consensus is clear: AI is the tipping point. Not just basic automation, but advanced, agentic AI that can transform compliance, onboarding, trading and customer service in one holistic system.
“AI will tip the scale by optimising trading decisions and outpacing manual systems,” said Maximus. “Blockchain ensures secure, scalable transactions, while quantum computing looms as a future disruptor. But AI’s current maturity gives agile players a significant edge by 2030”.
Korneu was even more specific: “The real tipping point will come from agentic AI. These next-gen systems can process client data, make onboarding decisions, and manage compliance workflows with minimal human input, all while learning and improving. Startups that embed agentic AI into their core are positioning themselves to lead the next wave of payments and financial services innovation”.
Meanwhile, Buschmann pointed out that the winning technology is not necessarily exotic. “The transformative tech isn’t exotic — it’s intelligent middleware routing financial services based on context, compliance, and cost. AI makes finance invisible and contextual”.
The promise of open banking also looms large. By allowing third-party providers access to financial data, it can either level the playing field or entrench incumbents — depending on who controls the aggregation layer.
“Open banking will empower startups by enabling seamless integrations like fiat on-ramps, challenging bank dominance,” said Maximus. “But incumbents may entrench further by leveraging customer data and regulatory influence”.
Buschmann added, “Open banking creates an entirely new game… Banks become rails, FinTechs become features, and orchestration becomes the customer interface”.
Looking ahead, a hybrid model may well define the future. “The ideal bank of the future is an AI-powered, decentralised hub offering real-time trading and robust security,” said Maximus. “Banks might envision a hybrid model, blending stability with startup agility”.
Cheung described this vision as one of “coopetition” — collaboration and competition combined. “It’s all about creating an integrated financial ecosystem that serves customers more effectively,” she told Silicon UK.
And Briffett believes the most profound change will be the disappearance of the bank as a ‘destination.’ “The bank of the future won’t be on the high street. It will be integrated with your wearables or embedded in your life through non-banking institutions like your employer”.
The Future of FinTech
Ultimately, the FinTech arms race is as much about mindset as it is about technology. Traditional banks have strength in scale, compliance, and brand trust. But FinTechs win on cultural clarity: they’re built to move fast, challenge assumptions, and put customer experience at the core of everything.
As Buschmann put it, “We’re at the ‘1998 moment’ of financial services — technology finally enables ubiquitous finance. Companies integrating financial services today dominate tomorrow”.
For businesses — whether startups or multinationals — this is more than just an industry shift. It’s a signal: the financial systems that power everything from payroll to payments are becoming smarter, faster, and more distributed. In the FinTech arms race, standing still is not an option.
