The Platform Political Economy of FinTech: Reintermediation, Consolidation and Capitalisation

TLDR

FinTech is the digital sector of retail money and finance widely proclaimed to be transforming banking in the global North and “banking the unbanked” in the global South. This paper develops a perspective for critically understanding FinTech as a platform political economy marked by reintermediation, consolidation, and capitalisation. By experimenting with the platform business model and leveraging digital infrastructures and data flows, a constellation of start‑ups, early‑career firms, BigTech companies and incumbent banks engage in platform reintermediation. FinTech’s reintermediation reshapes competition, fostering platform consolidation toward oligopoly or monopoly, while its perceived potential attracts substantial investment from venture capital, private equity, banks and BigTech, driving capitalisation.

Abstract

‘FinTech’ is the digital sector of retail money and finance widely proclaimed to be transforming banking in the global North and ‘banking the unbanked’ in the global South. This paper develops a perspective for critically understanding FinTech as a platform political economy that is marked by three distinctive and related processes: reintermediation, consolidation, and capitalisation. Through experimentation with the platform business model and building on the digital infrastructures and data flows of the broader platform ecosystem, a constellation of organisations – including start-ups, early-career firms, BigTech companies and incumbent banks – are engaged in processes of platform reintermediation. Changing the bases of competition in retail money and financial markets and encouraging oligopoly and even monopoly, the reintermediation processes of FinTech are presently manifest in strong tendencies towards platform consolidation. The imagined potential of FinTech has also triggered intensive processes of capitalisation, with platforms receiving significant prospective investment by venture capital, private equity funds, banks and BigTech firms.