Fintech Companies Now Set the Pace for Banking Change
Global spending on banking technology transformation reached $124 billion in 2024, according to IDC’s Financial Services Technology Forecast. Fintech companies — not traditional technology vendors — are capturing a growing share of that spending. Banks are increasingly choosing cloud-native platforms built by fintech startups over legacy solutions from established IT providers like IBM, Oracle, and Infosys, because the newer systems offer faster deployment, lower total cost of ownership, and better integration with digital channels.
A McKinsey analysis of 150 banking transformation projects found that those using fintech-built platforms completed implementation 40% faster and at 30% lower cost than those using traditional technology vendors. The speed advantage matters because digital banking customers are expected to exceed 3.6 billion by 2028, and banks that cannot modernise quickly risk losing customers to competitors that already have.
Where Fintech Is Having the Greatest Impact
Core banking is the most significant area of fintech-led transformation. Thought Machine, Mambu, 10x Banking, and Finxact are replacing mainframe-based systems that have run bank operations for 30 to 40 years. Thought Machine alone now powers banking operations for Standard Chartered, Lloyds Banking Group, and Atom Bank. Its Vault platform processes transactions in real time and supports unlimited product configurations through smart contracts — capabilities that legacy cores cannot match.
Payments infrastructure is the second major area. Companies like Stripe, Adyen, and Checkout.com process trillions of dollars in annual payment volume using technology they built from scratch. Stripe processed $1.1 trillion in 2024, making it one of the largest payment processors in the world. These fintech-built systems handle multiple currencies, real-time settlement, and complex routing decisions at a scale that would have been impossible on previous-generation payment platforms.
Why Banks Choose Fintech Over Legacy Vendors
Three factors drive the preference for fintech solutions. First, fintech platforms are cloud-native, meaning they run on infrastructure from AWS, Google Cloud, or Azure rather than requiring banks to maintain their own data centres. This reduces infrastructure costs by 40 to 60%, according to Accenture.
Second, fintech platforms use APIs as their primary integration method. This allows banks to connect new systems to existing ones incrementally, rather than requiring a complete replacement. The 23% annual growth rate in fintech revenue reflects the willingness of banks to pay for this kind of flexible, modular technology.
Third, fintech companies innovate faster. The average time to launch a new banking product on a fintech platform is four to six weeks, compared to six to twelve months on a legacy system. In a market where customer expectations change quarterly — driven by consumer experiences with companies like Apple, Amazon, and Google — speed is a competitive advantage that banks cannot afford to sacrifice.
The Regulatory Dimension
Regulators are also pushing banks toward fintech-led transformation. The Bank of England, the European Central Bank, and the Federal Reserve have all published guidance encouraging banks to improve their technology resilience. The Bank of England’s operational resilience framework, which took full effect in March 2025, requires banks to demonstrate that their critical services can withstand technology failures. Banks running on outdated systems find it harder and more expensive to meet these requirements.
In the EU, the Digital Operational Resilience Act (DORA), effective January 2025, imposes specific technology risk management standards on financial institutions. Banks using modern fintech platforms report lower compliance costs because these systems were designed with regulatory requirements built in, rather than bolted on after the fact. The 30,000 fintech companies now operating worldwide include hundreds focused specifically on compliance and regulatory technology.
The Transformation Ahead
Only 30% of banks globally have completed significant core technology transformations, according to Celent. The remaining 70% are in various stages of planning or early implementation. This means the opportunity for fintech transformation providers is still in its early stages. Fintech venture funding has grown more than 10x in the past decade, and banking infrastructure remains one of the most heavily funded categories. The banks that complete their transformations first will operate at structurally lower costs, launch products faster, and serve customers better than those still running on technology built before the internet era.
