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Abstract
New technological innovations combined with the consequences after the last financial crisis created disruptive forces in the financial markets. Namely, during the last couple of years, vast number of FinTech start-ups have started to offer financial products and services, previously offered by the banks.
These types of non-banking financial firms are shaking the banks' comfort zone, since banks now have new competitors to worry about. But although it is heavily discussed that FinTech firms are a major danger for banks, they are even bigger opportunity for banks as well. Whether FinTech will turn out to be a threat or opportunity depends entirely on banks approach and desire for cooperation.
Key words: FinTech, bank competition, disruption, financial services,
1. INTRODUCTION
The last couple of years are showing increased level of disruptions in the financial markets. This disruption is in terms of the digital revolution which is taking place when it comes to financial services. The results from this digitalization of financial services is mostly felt by the banking sector because of the new form of entrants. Namely, banks are faced with new, technologically advanced, entrants in the financial market. These new entrants are a potential danger for banks because they are utilizing the latest technology and are becoming customer-centric service.
FinTech companies are operating with lower costs and are gradually taking over the customers from the banks. For these reasons it is said that these new companies are the biggest threat for banks. But at the same time they could be the biggest opportunity as well. Whether they will be a threat or opportunity depends on banks' future plans. Namely, banks could continue to conduct their traditional business activities and neglect this threat (thus losing market share bit by bit). Also, banks could be proactive and initiate some form of collaboration with FinTech companies.
2. THE FINANCIAL SERVICES ENVIRONMENT
The last couple of years are marked with disruptions and new challenges for traditional way of banking. Alongside the traditional methods for offering and performing financial activities and services the financial industry witnessed some major changes. These changes have occurred as a direct consequence of the financial crisis and advances in technological innovations.
After the global financial crisis, banks have been faced with numerous challenges....