Is this the beginning of the fourth FinTech wave?

End of the year is the time for reflection and thinking. For me finally time to picking up this blog again and wonder why I stopped earlier?!

As I am too late for a 2017 write-up, I want to focus on the biggest story in the last week before Christmas: PayPal investing in Berlin FinTech Startup Raisin (Details).

The investment itself is already big news as PayPal is not known to do many startup investments in Europe. Additionally, the comment that PayPal will potentially also offer Raisin’s services to its own customers could be a game changer. Which FinTech startup would not be interested to offer their own services to such a big and most importantly digitally educated audience? This cooperation will give Raisin definitely a massive push in the tough competition with Deposit Solutions.

But the bigger picture is the development of a potential fourth wave in FinTech.

So far we have seen three waves:
1st wave: Attack of FinTech startups (2008 -2014)
2nd wave: Banks fighting back (2014-2015)
3rd wave: Cooperation of both (2016 – ongoing)

Especially banks were hoping that the third wave will be the last one and cooperation of banks and FinTech startups turn out to be the key to drive innovation in the financial service industry. However, to avoid a fourth wave the third wave had to be a successful time for most players on both sides. Was it like that?

I remember talking at a FinTech event at Vlerick Business School in Brussels in February 2017. My slides have been very similar to these ones on SlideShare from another event in Paris in late 2016, nevertheless, I had added one important additional slide:

FinTech startups and banks were working together because neither party was able to get the “home run” in banking with a new service. We have seen many many cooperations across the globe of these two very different parties, but cooperations remained complicated and a deal itself did not guarantee any gain (except a nice press release).
Many problems in these cooperations are due to the big different in nature of a startup and a bank, thus, cooperations with mature FinTech players like PayPal seem to be much more attractive?!?

If more players like PayPal (not necessarily from financial service industry, but with a similar customer base) will be opening up to FinTech startups, I am certain that the interest in working with banks will be decreasing among FinTech startups. Surely attractive banks will remain as desired partners, however, many banks will not be able to keep that status if more options are on the market.

2018 will give us the answer if we are seeing a fourth wave in FinTech…