The Great Convergence: When Banks Build Like Fintechs and Fintechs Scale Like Banks

The rise of embedded banking and digital ecosystems has reshaped the financial services landscape. While the concept of collaborating with specialist partners is widely celebrated, in practice, these partnerships often serve a tactical role, bridging product or capability gaps and accelerating time-to-market, rather than reflecting a long-term strategic vision.

Many incumbent banks have followed a predictable pattern: they start by partnering with fintech specialists to test new offerings, and once the value is proven, they acquire these companies to fully integrate their capabilities. Others choose to build these services internally. As a result, today’s incumbents are increasingly offering solutions that were once exclusive to fintechs, e.g. Buy Now Pay Later (BNPL) services, acquiring and issuing services, Banking-as-a-Service (BaaS), even stablecoins.

At the same time, a reverse trend is unfolding. Fintechs that launched with a narrow, specialized focus are steadily evolving into full-service financial institutions:

Klarna started with BNPL and is now expanding into a broader financial services portfolio.
Stripe began as a payment processor and has built a near-complete toolkit for merchants.
Shopify, initially an eCommerce platform, now offers financial services to its users.
Revolut grew from a travel card solution into a full-fledged global bank offering everything from crypto to investment products.

These converging paths (banks becoming more fintech-like, and fintechs evolving into banks) raise a fundamental question: Is success in financial services dependent on end-to-end control and a comprehensive product suite? Or is the drive toward broader offerings simply a response to the lure of additional revenue, operational synergies, and better customer retention?

Revenue growth is a powerful motivator, but it’s far from the only reason fintechs are expanding their product portfolios. Three additional forces are accelerating this trend:

Regulatory Arbitrage as a Launchpad: Many fintechs start by exploiting regulatory gaps (e.g. BNPL) or lighter licensing requirements (e.g. EMI or MiCA license). But as they scale, full compliance becomes essential, nudging them closer to traditional banking models.
Brand Trust and Customer Expectations: Consumers eventually demand the security, stability, and service breadth associated with banks. To build lasting trust, fintechs must evolve their offerings accordingly.
Capital Pressure and Profitability: In a world of tightening venture capital, recurring and predictable revenue streams become critical. Full banking capabilities, like deposits, lending, and wealth management, offer just that.

Despite this growing focus on full-service models, many financial institutions still overlook the powerful synergies that lie at the intersections of product lines. Unlocking these could elevate customer value, boost automation, and improve profitability:

Credit + Investment: Credit-Lombard loans,where investment portfolios are used as collateral, remain largely reserved for high-net-worth clients and involve significant manual processes. But fully automating such "cheap credit" products could make them more accessible, flexible, and low-risk, enabling real-time credit issuance, dynamic collateral management, and proactive risk mitigation.
Daily Banking + Credit: By analyzing income and spending patterns, banks could proactively tailor credit products to individual needs, forecast liquidity gaps, and deliver preemptive credit offers. Integrating real-time transaction monitoring could enable just-in-time working capital loans or factoring solutions for businesses.
Daily Banking + Investment: Surplus funds could be automatically invested based on cash flow forecasting. Term deposits could align precisely with predicted liquidity needs. Fund allocations across current accounts, savings, and investment products could be optimized for yield and liquidity. Even micro-hedging tools could be embedded into everyday banking for cross-border users like freelancers and digital nomads.

As the boundaries between banking and tech continue to blur, the next frontier is already forming:

Agentic AI: The integration of AI agents into financial services could revolutionize how decisions are made and services are delivered and potentially changing completely the role of a bank in the future and reshape digital ecosystems completely.
Super Apps: Players like Revolut and N26 are evolving into all-in-one financial platforms, integrating payments, lending, investing, insurance, crypto, and more.

Ultimately, future banking success may hinge on a bank’s ability to offer "risk management as a product, embedding intelligent, proactive, and data-driven risk services across every touchpoint. The winners will be those who not only offer a wide range of services but also master the art of integrating them meaningfully, securely, and seamlessly.

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