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Why Are There So Many Fintech Companies and Payment Providers?



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Everywhere we look today, new payment providers or neobanks seem to appear overnight, each promising faster onboarding, lower fees, and better technology.


Most companies offering banking or payment solutions today are not based on real user or business needs but rather on the lack of knowledge that users have about how payments and banking actually work.



FinTech is business and their sales teams are trained to sell functions which businesses either won’t need or could get elsewhere for a fraction of the cost or risk, simply because they rely on emotional decisions (I trust him, we met). Often, in this environment, providers benefit from a market where users never ask the right questions - not because they don’t care, but because they don’t know what to ask.



Even though it feels like there are thousands of providers to choose from, the financial system is still controlled by a very limited number of institutions at the core. Only a small group of large banks and card acquirers handle the actual movement of money and custody of funds. The majority of so-called FinTechs and Neobanks are simply resellers who connect to this same infrastructure with a fancy app.



The main reason the market keeps rewarding poor setups and middlemen is that most business leaders and even finance professionals have never been trained in how payments and banking actually work. Every company that processes payments should ensure that at least one member of its leadership team understands this field at a professional level.


 
 
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