Study on the Impact of FinTech Start-ups on Incumbent Banks

The connection and mutual promotion of finance and technology have experienced a long history. The recent booming development of information technology gives birth to a fire-new paradigm of improving financial services. FinTech start-ups are becoming the rule changer of the financial world. This essay studies on the impact of FinTech start-ups on incumbent banks and finds that FinTech start-ups have posed big impacts on asset businesses, liability businesses and off-balance-sheet businesses. Besides, this paper points out the reasons behind the impacts from three aspects: changing background, substitution effect and complement effect by using theoretical analysis. The rise of FinTech start-ups brings not only challenges but also opportunities and possibilities of innovation for incumbent banks. This essay suggests incumbent banks embrace FinTech to enhance competitiveness and offer better financial services.