Pure Platform Banking is Economic Suicide

Fintech challenger banks remain far short of conquest, and questions are beginning to arise among knowledgeable observers about whether the would-be conquerors are quite as formidable as predicted. That may seem like a bit of good news for the thousands of traditional financial institutions nervously glancing over their shoulders at the oncoming invaders. But there is a continued squeeze on legacy financial institutions — smaller institutions in particular — from trends hitting both sides of the balance sheet. The Fintech models at the moment are going to struggle to be profitable. Ultimately these guys will either need huge scale at relatively low margins or they’ll have to build more of a traditional balance sheet model where they build the assets and liabilities and make the spread off of them.

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