Machine Intelligence Will Shake Up Banking, But the Disruptors Won’t Be Fintech Startups

By Urs Rohner and Howard Yu

Artificial intelligence and machine learning are being woven into the fabric of every aspect of our lives. The financial sector, historically faced with inefficiencies, is already undergoing transformative change. But unlike Facebook or Amazon, financial providers can’t simply “move fast and break things”. A new playbook for fintech is soon to emerge.


In cash-abundant Silicon Valley, there is a myth that any college dropout with a hoodie and a half-baked idea can raise venture funding. They are young and limitless. They aren’t biased by industry norms and so can freely reinvent the world as we know it. They are Steve Jobs. They are Mark Zuckerberg. They are Bill Gates. If we live in a world of accelerated change, they move at an accelerated pace. These seemingly small-scale innovators can sometimes be devastatingly dangerous: Netflix destroyed Blockbuster, BuzzFeed decimated Time, Uber threatened GM, and Amazon trampled BestBuy. Understandably, the financial sector has fallen victim to the fear of immediate disruption. According to a recent study published by PwC, more than 80% of financial institutions believe their business to be at risk of disruption.1 Existing sources of revenue and profit can no longer be taken for granted. Accordingly, 56% of the respondents said they had put disruption at the heart of their strategy. And yet, a close-up examination of the life of a typical fintech startup paints a very different picture.

In July 2017, BNP Paribas finalised its acquisition of Financière des Paiements Électroniques (FPE), a fast-growing fintech startup that focuses on simple, online retail banking services. Since its launch three years ago, FPE has opened more than 630,000 accounts. All its success notwithstanding, the startup is anything but disrupting big banks –it has been acquired and now is safely ensconced inside BNP.

All this is consistent with a broader trend: more companies have disappeared because of mergers and acquisitions than any other reason.

This is hardly atypical. At Credit Suisse, we sought to understand exit strategies in fintech. We discovered that the most common ones for startups were acquisitions or quick imitations by incumbent banks. PayPal, once a disruptor itself and now an incumbent, is investing substantially in buying up potential rivals, particularly those in the global payments and merchant transfer space. When not being acquired, fintechs are expanding their reach into unrelated sectors that only seem tangentially financial. Square, a payments provider, is now offering meal delivery with Fastbite in an attempt to compete against Uber Eats. Ultimately, we expect most startups to end up turning into conventional financial institutes, like Zopa, the first peer-to-peer lender with the initial ambition to disrupt the established finance sector but that ended up paying for a banking license to provide traditional banking services.

All this is consistent with a broader trend: more companies have disappeared because of mergers and acquisitions than any other reason. Between 1978 and 2012, the number of companies less than a year old as a share of all businesses declined by 44%.2 And in the financial sector, as we shall see below, individual startups face additional hurdles beyond what others faced in the e-commerce Internet world.

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About the Authors

Urs Rohner has been the Chairman of the Board of Directors of Credit Suisse Group AG since 2011 and was its Vice Chairman from 2009 until 2011. In 2004 he was appointed a member of the Executive Board of the Group and served as General Counsel and as COO. Mr. Rohner graduated with a law degree from the University of Zurich. He is admitted to the bars of the Canton of Zurich and the State of New York.

Howard Yu is an IMD Switzerland Professor of Strategic Management and Innovation. He specialises in technological innovation, strategic transformation and change management. He is a two-time prize-winning case writer awarded by the European Foundation for Management Development.  He received his doctoral degree in management from Harvard Business School. Prior to his doctorate, he worked in the banking industry in Hong Kong.



1. PricewaterhouseCoopers. “Redrawing the lines: FinTechs growing influence on Financial Services”. PwC. Accessed November 30, 2017.
2. Buchanan, Leigh. “American Entrepreneurship Is Actually Vanishing. Here’s Why”. Accessed November 30, 2017.
3. “What AlphaGo Means to the Future of Management”, MIT Sloan Management Review, (accessed May 28, 2017).
4. Christof Koch, “How the Computer Beat the Go Master”, Scientific American, March 18, 2016,
5. Cade Metz, “In Two Moves, AlphaGo and Lee Sedol Redefined the Future”, Wired, March 16, 2016,
6. Andrew McAfee and Erik Brynjolfsson, Machine, platform, crowd: harnessing our digital future (New York: W.W. Norton & Company, 2017), 18-20.


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