Skip to main content

Fintech Revolution and Paypal: The Born–digital Business Model That Transformed Financial Industry

Steve Nash has twenty–five years across various business roles, leadership, strategy, strategic, entrepreneurship as well as philosophy

Fintech companies are those that combine finance and technology, as the name suggests, representing the digital combination of the two industries, creating synergies as well as disruption for the larger financial world.

Fintechs, are usually start-ups and once they become more established, they are able to leverage technology to make financial services more effective and efficient. So, FinTechs disrupt the financial services sector such as banking sector, by acting as new entrants in the financial industry, offering an alternative to the customers of financial services. They try to build revenue models similar to banks, such as offering much in demand payments services, attacking the market dominated by traditional banks.

With their totally digital models and lack of any physical centers or distribution offices, FinTechs become much more financially viable and at a distinct advantage as compared to banks due to lower costs of operations. As a result, FinTechs are able to operate at higher margins and pass on the benefits of lower costs to customers with lower transaction fees. Hence, they are able to offer an attractive proposition to customers. Most of the FinTechs are focusing on online transactions, retail banking, lending, money transfer, wealth management, and payment systems for small and medium businesses, the segments which are most price sensitive and likely to go for a FinTech service for lower costs, rather than traditional banks.

FinTechs often innovate themselves and offer very high levels of customer engagement through their new age technology platforms. By offering superior channels, connectivity and user experience to the end customer, FinTechs such as PayPal have been able to experience exponential growth, taking market share away from traditional providers.

And in response, the traditional players see themselves gasping for breath and enforced to come out with survival strategies to tackle the onslaught offer experience similar to that offered by these FinTechs.

PayPal: The born–digital business model that transformed financial industry

Who is PayPal? PayPal ‘is a leading technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. PayPal is committed to democratizing financial services and empowering people and businesses to join and thrive in the global economy.’

Founded in 1998, PayPal has pioneered the peer to peer model of payments for more than thirty years. As per the company website, ‘PayPal has remained at the forefront of the digital payment revolution for more than 20 years. By leveraging technology to make financial services and commerce more convenient, affordable, and secure, the PayPal platform is empowering more than 300 million consumers and merchants in more than 200 markets to join and thrive in the global economy.’

Scroll to Continue

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2022 Steve Nash

Related Articles