How Fintech Revolutionised Banking Payment Systems Over the last 20 years

How fintech startups made a revolution in the banking payment system

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With the rise of mobile banking, cloud-based platforms and an emphasis on worldwide accessibility, there is a lot to be grateful for today compared to only 10 or 15 years ago. According to Fortunly, 46% of people use digital banking exclusively without relying on traditional banking institutions, while 88% of established financial businesses stated that FinTech startups are bound to take over their markets in the next five years.

In addition, Hacker Noon indicates that the FinTech industry is poised to grow by 20.5% before 2021 as the investments in FinTech startups have reached $27.4 billion in 2019 alone.

How did the FinTech startup niche make such an impact on the global market and the banking payment system as we know it today? Which brands started their journeys as nothing more than small startup firms only to become industry giants in today’s banking system? Let’s take a look at some of their stories to see if we can figure out what sparked their revolution and if we can learn useful lessons from them in regards to the future of the financial landscape going forward.

PayPal (1998)

It’s difficult to talk about FinTech startups and the revolution they’ve sparked in the banking payment system without mentioning the one that started it all – PayPal. During its first year, PayPal had a difficult time gaining public trust and clients due to its revolutionary approach to banking.

Shortly after, it began to convert clients from traditional banking institutions to a more streamlined payment system which offered more flexibility and less upkeep than Visa or MasterCard ever could. PayPal is truly the first of its kind, offering online banking solutions to its user base without the traditional nuance of a bank. It doesn’t exist in a physical sense (with its own offices and ATMs) yet it offers all the features of a traditional bank – far beyond that in fact.

While the company exchanged hands throughout its history (with Elon Musk and Peter Theil to name a few), each subsequent owner and CEO brought positive changes to the business model and brought the payment system a step closer to where it is today. PayPal currently enjoys 205 million users globally and has processed over 1.7 billion transactions ever since its birth.

The story of how PayPal became a global giant from its humble roots as a FinTech startup is an epitome of sticking to your plan despite what critics may say about your idea at the moment of its inception.

SoFi (2011)

Short for “Social Finance”, SoFi has made its reputation as an online lending startup. Its business model revolves around refinancing student loans and mortgages and it has made quite an impact on the global market due to its out-of-the-box approach to banking. The startup is based out of San Francisco and was created by students who faced the same issues their business now aims to solve which adds credence to their mission statements.

Among others, SoFi offers personal loans, life insurance and wealth management services to their clients, allowing both students and people whose financial skills are lacking to reach out and get the help they deserve. While its business model may be based on noble intentions, the startup has quickly garnered public awareness and has since grown to be a multi-billion company with more than 300,000 clients across the US.

SoFi and its success story showcase that you don’t have to base your FinTech startup on strict banking system disruption – all you need to do is find a niche no one occupies and set your roots there before anyone else does.

Stripe (2011)

E-commerce is a well-known system established in order to make global transactions and procurement of goods and services more user-friendly. As such, this industry held the opportunity for an ambitious startup to lay claim and develop transaction systems which would coincide directly with its business model. Enter Stripe, a US-based startup based around the development of a financial technology platform for e-commerce services.

The startup quickly established partnerships with financial institutions and payment providers with ensured versatility and choice for the end-consumer. Today, Stripe operates on a worldwide scale and is closely partnered with a plethora of global brands such as Amazon, Booking, Kickstarter and Shopify to name a few.

Their success story is based on supply and demand where the startup acted quickly to acquire the market for their financial system’s development. As such, it became the gold standard for e-commerce platforms as it successfully holds its rightful place on the banking payment system market even today.

Adyen (2006)

Sometimes, all you need is a simple and straightforward payment system to succeed in the FinTech market. This Netherlands-based FinTech startup made its mark on the global banking payment system with its user-friendly approach to transactional management. The simple UI and a limited number of required fields for each transaction make Adyen a very approachable and scalable payment system regardless of the industry you operate in.

As such, Adyen attracted the attention of global giants such as Netflix, Google and Microsoft to name a few, raising its overall ROI to 106% in 2018 with a yearly increase of 80% in transactions processed. The secret of Adyen and its success lay in its flexibility and the option to use it exclusively for any payments regardless of business model or location you’re based in. Currently, Adyen services more than 4,000 businesses and continues to grow at a steady pace.

Driving a Revolution (Conclusion)

In order to get a better understanding of why FinTech startups are so successful at disrupting established conventions and banking payment systems, it’s important to see them as development hubs rather than just another FinTech business. Whether it’s payment processing, blockchain, loan management or insurance provision, FinTech startups have successfully brought change to the global banking market with their outside thinking and creative business models.

Will FinTech startups completely take over as go-to solutions for banking management? Only time will tell. For now, however, we can rest assured in the fact that revolutionary financial system changes are looming on the horizon and will bring about groundbreaking new features for us to utilize worldwide.

By Angela Baker, who is a self-driven specialist who is currently working as a freelance writer at Top Essay Writing and writing services such as and Classy Essay and Be Graded where she constantly tries to improve her blogging career. Angela aims to develop and improve her skills throughout the writing process to help inspire people. Also, she writes for LiveInspiredMagazine, rounding out her professional writing career.

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