Whether it’s crypto currency or peer-to-peer, the lifecycle of a fintech start-up can be roughly summarised as follows:<p>Phase 1
Fintech startup creates a tool using engineering logic borrowed from information technology methodologies, tries to go it alone.<p>Phase 2
Fintech startup realises client acquisition is really hard and costly. Oh, and the tool either doesn’t scale or there’s some other unintended consequence related to risk or liquidity.<p>Phase 3
Fintech startup tries to sell the tool to banks, who engage out of politeness to avoid the risk of passing off on the next big thing.<p>Phase 4
&gt;Banks say… actually there’s a social or compliance reason we do things this way not that way…<p>Phase 5
Fintech start-up pivots to account for this… tries to resell tech to banks.<p>Phase 6
Banks say, actually you’ve also overlooked this other factor…<p>Phase 7
Fintech start-up adapts, and goes into “partnership” with the bank, at which point it realises the compliance headache associated with financial services, and also why the compliance is there in the first place.<p>Phase 8
Fintech is absorbed into the bureaucracy of banking. Innovation stalls.<p>Lifecycle completes.
The lifecycle of a fintech startup (ftalphaville.ft.com)