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The Future Of Finance: Banks, Fintech, Or Something Else?

I don’t think any of us saw traditional banks making a comeback while fintech gets pummelled in 2022, but here we are.


This article was originally written by MyWallSt. Read more insights from the MyWallSt team here.

Now, the overwhelming predicament is where should you place your chips for exposure to finance? 

The shift in finance

Traditional banks own the mortgage and IPO markets, but empty bank branches plague their business model. The value locked into DeFi protocols increased by 1,000% in 2021, but consumers can’t put trust in such a volatile unregulated market. Fintech, on the other hand, shapes up nicely.

Digital wallets, fee-free investing, and banking apps have changed the way we conduct our finances forever. What it really comes down to is who will we be borrowing, saving, investing, and using for transactions in the next ten years? The statistics are pointing in the direction of fintech as well:

  • Global digital banking is projected to grow at a 15.7% compound annual growth rate until 2026, valuing the total market at more than $30 billion
  • 50% of millennials in the U.S. shopped online for a deposit account in 2020
  • 2,927 U.S. bank branches closed on a net basis (closes v.s. openings) in 2021 — that’s a 38% increase from 2020

Legacy players have been fighting an uphill battle for years now; cultural changes, cost-cutting for overheads, and being forced to invest billions in digital infrastructure to remain relevant.

Fintechs, on the other hand, has been entirely predicated on its digital offerings from the get-go. The advantages are that they can focus on customer experience, accessibility, affordability, and user design. There’s no sense in saying big banks will topple overnight, but there’s a good chance we see fintech rebound yet and continue to claim more market share over time.

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Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

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