Cartoon: Incumbency advantage
“Incumbency advantage” by Iantoons
This new cartoon illustrates the dominating position of incumbents in the financial services industry that inhibits new entrants from taking market share.
Despite pouring $466 billion globally into the fintech market since 2014, there is only one fintech (Shopify, which was formed in 2006) that has a market cap over $100 billion.
Meanwhile, the incumbents just sit at the top of the market getting ever larger.
Despite the promises of paradigm shifts and killing off dinosaurs, the fintech market is only $250 billion in size… or less than 1% of the $28 trillion global financial services market.
Some of the reasons are in plain sight, including customer inertia, concerns around trust and the heavily regulated nature of the industry.
One additional consideration is that all fintech companies reinforce the current system. The one exception is decentralised finance (DeFi), but this is even more stymied by regulation and trust issues at the moment.
With these structural moats, perhaps the best chance for the next $100 billion fintech company is one of the payment companies growing into new revenue streams, such as Stripe or Adyen.
For example, Stripe’s acquisition of Nigeria-based Paystack and China-based BBPOS suggests that there could be space to accrue market share and value away from the competitive incumbent market in the United States.
You can find more Iantoons cartoons here.
