How can commercial banks have 90% of the market when they lack innovation, are slow-moving, and culturally bureaucratic?

The answer to this logical but puzzling question is multifaceted. Keep in mind banks come in all sizes and each type of banks has strengths that FinTechs lack. Any combination of these points may explain why banks still dominate the market.

1. FIRST MOVER ADVANTAGE - Banks have been around a lot longer than FinTechs so they had ALL of the market before FinTechs showed up on the scene. It's incredibly hard to displace an entrenched provider regardless of how slick your UI is.

   
   

2. CLIENT LETHARGY - Clients of banks simply can't be bothered to move. They may have multiple services with a bank like credit lines, mortgage, checking accounts, cash management, payments, foreign exchange, etc. Having all of these services makes it hard to compel a client to carve out one service and move it to a FinTech.

   
   

3. SAFETY - The universal branding of "BANK" implies safety and soundness. One's money is safe with a bank compared to a FinTech. Banks have capital and deep pockets that can weather hard times. FinTechs, especially early stage ones, seem like "fly by night" operations compared to banks.

   
   

4. LOCAL PRESENCE - Banks are in every community, on every street corner. Banks are typically highly vested in the communities they serve. This local connection builds brand loyalty. FinTechs, on the other hand, will likely NOT have an office in your hometown or even your state.

   
   

5. CONVENIENCE - Banks broad product offering is incredibly convenient for clients. Why change if it ain't broke? Establishing a new financial relationship with a FinTech involves introducing new processes and systems which in turn introduces new risks. These things can eliminate any cost savings a FinTech dangles out to a prospective client.