The Pitfalls of A "Winner-Takes-All" Mentality In FinTech

February 7, 2020

It is a fintech-eat-fintech world and in Singapore, the invasion has no end in sight. Almost half (43 percent) of fintechs in Southeast Asia choose the Lion City as their springboard for growth and expansion[1], but there are over 1,200 local fintech startups[2] across the region eyeing the grand status of becoming the next unicorn.

The desire to achieve celebrity status in the fintech arena has been spurred by competition, which has accelerated in the past few decades as consumer-friendly, frictionless tools permeate the conservative and highly regulated finance industry. But the reality is that not all start-ups will be valued at more than a billion dollars. The very premise of being a unicorn is being a prodigy, which means not everyone will achieve the same status.

Support for start-ups shows no signs of slowing down. Globally, fintech investment is increasing, with nearly US$20 billion deployed this year[3]. The Association of Southeast Asian Nations Financial Innovation Network (AFIN) also supports the needs and developments of the fintech community in the region through increased cross-border cooperation and resources[4]. Rather than realising a claim to fame, this must fuel the drive for fintechs to keep their eye on their North Star-the customers.

A winner-takes-all mentality comes with undue pressure to the startups who are trying to make a difference in the world. The birth of a startup usually begins with the addressment of a customer pain point: whether it’s realising that the act of remittance or sending money to a loved one back home shouldn’t be so complex, or simply helping the financially excluded populations to gain access to savings, loans and payment services were solutions designed with a purpose and sometimes, this purpose gets lost in the kerfuffle of growth and expansion.

Not All FinTechs Are Funded Equally

A report by Accenture released in August found that fintech investments in Singapore nearly quadrupled to US$453 million in the first half of 2019, up from US$118 million compared to a year-ago period. This makes Singapore the largest fintech market by funds in APAC, behind only China and India[5].  The vibrant tech ecosystem helped to create a conducive environment where some fintech players flourished and thrived.

Ride-hailing firm Grab recently announced that it will invest $500 million in Vietnam over the next five years[6] to expand its current offerings in the country, including transport, food delivery and payments. Rival Gojek is eyeing similar expansion plans in Southeast Asia and is currently on track to raise $2 billion by end of 2019[7].

Brands like these receiving large financial backings may deter new players from entering the industry as the companies that get to scale first is likely to stay on top while smaller players get slowly knocked out of the game.

As with any industry, those that constantly have their name up in lights set the scene for others. In a winner-takes-all economy, top contenders have tremendous power to dictate industry movements, leaving smaller players to fight even harder to get a foot in the door.

Too Big, Too Fast

A “growth-at-all-costs” mentality has also caught on. When fintech companies start using their investment dollars for quick growth instead of innovation and R&D, problems can arise[8].

The realities of the market and demands of investors often strong-arm fintechs into producing short-term returns. As competition increases, fintechs may feel pressured to make riskier decisions in a bid to increase profit and market share. However, the need for speed and growth must be weighted against the importance of sustainable growth. The real winner in the race for fintech dollars will be those who go further by looking past technological innovations and efficiency to deliver tangible benefits for end-users.

Displacing Importance of Customer Service

The winner-takes-all mentality is a self-serving one, and this could displace the one person that the whole ecosystem revolves around: the customer. Mass rollouts of initiatives and slow to respond services are key pain points for customers and brings about the catch-22 debate of personalisation and the importance of human contact even in this digital economy.

In the UK, leading fintech bank Revolut saw an increase in complaints from customers from 2015 to 2018, with customers citing slow responses and accounts being frozen without any reason. Critics said that this could be due to the fact that Revolut has been growing too fast[9]. In response, Revolut now plans to expand its customer support team[10].

Growth-For-All Mentality

The upheaval of the financial services sector as a result of increased competitiveness and products has reiterated the need for companies to innovate with customer centricity in mind. The fintechs that rose quickly were those that met their customers’ inherent needs, something their competitors did not manage to grasp in time.

The winner-takes-all mentality is not all bad – it develops an ecosystem of competitiveness and a brand culture to create the best products in the market to drive brand dominance.  To avoid the pitfalls, fintechs must instead adapt a more collaborative mindset, putting the customer in the center of every product innovation.  In doing so, competition will be kept healthy, encouraging more innovative and diverse solutions as well as collaborations and partnerships. These will then overflow to customers as they will be offered better and more diversified choices that work for them, no matter where they stand on the financial spectrum creating a win-win situation for everyone.


  2. EY ASEAN FinTech Census 2018
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