Banks vs. Fintechs: Why all the billions in the world can't help Wall Street crush its digital rivals

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Getting acquired by a bank might seem like a dream scenario for a fintech founder. But at one West Coast digital-payments startup, it quickly became a nightmare. 

The ink had barely dried on the deal when cultural issues started to arise between bank leadership and the startup’s executives, said Robert Ruark, a principal at KPMG, a consultancy that worked with the bank on the acquisition. 

The fintech team found the pace of business at the bank painfully slow and its regulatory burdens heavy, Ruark said. Even the meeting schedule (complete with “inordinate time” spent on “introductions and pleasantries,” Ruark said) became a point of contention, as the startup execs complained they didn’t have time to get any work done. 

Things came to a head after the fintech founder’s digital-payments expansion plan was nixed — the latest in a series of projects that had been uniformly squashed by the bank, Ruark said. 

“All of a sudden, there’s more risk infrastructure and IT infrastructure,” Ruark added of burdens bank acquisitions imposed on fintechs. “And then they get dissatisfied and don’t want to work there.” 

This kind of culture shock is common, a KPMG report from March found.

“Banks are much larger and more established, heavily regulated, highly bureaucratic, technologically lagging, and focused on shareholders,” the report said. “Fintechs, by contrast, are autonomous, lean, entrepreneurial, lightly regulated, and technologically advanced.

“Given these stark differences, it’s no wonder that culture is constantly cited as a major source of failure for bank-fintech combinations.”

UBS is one recent example of the problems that can plague these unions. The Swiss bank grabbed headlines with its planned acquisition of the automated-investing app Wealthfront for $1.4 billion in early 2022. But the deal was called off less than eight months later in a move that revealed internal tensions over the CEO’s push to digitize a 160-year-old firm soaked in tradition.

Jamie Dimon, Chairman and CEO of JPMorgan, has vowed to “spend whatever we have to spend” to win the war with fintechs.


It’s just the latest evidence that banks — despite their deep pockets — are poised to lose their battle with fintechs over talent, technology, and ultimately customers unless they wake up to the fact that they are fighting the wrong fight. The battle is not with up-and-comers like Robinhood and Chime. It’s with themselves and their rigid, buttoned-down ways, which limit innovation and drive away the tech talent they so desperately want to recruit.

Insider spoke with more than a dozen current and former bank technologists, executives, consultants, and other industry pros who had studied or witnessed the battle between banks and fintechs. They all agreed that banks still didn’t get it after all these years of throwing money and resources at trying to defeat their fintech foes. The experts pointed to cultural issues at banks — from them not valuing back-office techies enough to being overly bureaucratic in their processes to lacking work flexibility — as being core to the problem. The only factor weighing against the banks that’s not within their control, the experts said, is the burden of government regulation. 

If anyone doubts banks’ desperation to beat fintechs, just look to Jamie Dimon, the head of JPMorgan, the US’s largest bank, who has vowed to “spend whatever we have to spend” to win the war with fintechs and emerge triumphant from the “very tough, brutal competition.”

It’s not just Dimon. An analysis of earnings calls and shareholder-conference transcripts on the investment-research platform Sentieo found that among six of the top US banks, the number of times the words “tech” and “digital” were used by executives skyrocketed from just 17 in 2011 to 81 in 2021.

But talking like a tech company and acting like one are two different things. Real transformation (as we all know from the multibillion-dollar self-help industry) comes from within. And banks are set to keep spending time, money, and effort on this perpetual battle until they open their eyes to their internal and cultural shortcomings. 

“If you’re an engineer and you have a choice of where you want to work, you would rather work in a place where the thing you’re building is directly contributing to the P&L or the alpha of that firm,” said Neal Pawar, a long time Wall Street tech vet who’s the chief operating officer at Qontigo, an investment-data fintech.

“In a bank or asset manager, technology is a means to an end,” said Pawar, who previously served as a tech exec at Deutsche Bank, UBS, AQR, and D.E. Shaw.

For the past couple of centuries, banks have proved they are not easy to replace. But that hasn’t stopped disruptors from trying. 

While banks still rule when it comes to deposits and customers, they’ve struggled to keep up with the sleek designs and ease of use made mainstream by fintechs from all angles — payments fintechs like Block and PayPal, digital wealth advisors like Wealthfront and Betterment, digital banks like Chime, and online brokerages like Robinhood. 

To compete, banks have written fat checks to acquire fintechs — tech, talent, and all.

Banks may see a reprieve with the current downturn devastating tech startups, but the jury is still out on whether they will do what it takes to keep tech talent when the economy rebounds and employment opportunities open up. While banks have the money, the smarts, and the willpower to beat fintechs, they are missing one key ingredient: a culture that lets techies thrive.

There is still a perception in banks that the tech side is almost second to the business side. Falguni Desai

At banks, technologists don’t receive the recognition, or have the decision-making power, they might expect from firms increasingly hanging their futures on the power of their technology and their ability to innovate. Programmers working for big banks report feeling undervalued compared with front-office investment bankers, traders, and other bankers, people interviewed for this story said.

It’s not just being treated as second-class citizens; it’s being paid like them, too. Banks have historically struggled to keep up with the inflated salaries and equity packages offered by fintechs and Big Tech companies, Insider has previously reported.

“There is still a perception in banks that the tech side is almost second to the business side,” said Falguni Desai, a banking and capital-markets strategist at Microsoft who was previously an equities- and electronic-trading strategist at Credit Suisse. 

There has been some acknowledgement of this from bank executives. 

Goldman Sachs, for instance — which has struggled to hang on to developers for its consumer bank, Marcus — is now trying to encourage technologists to “feel like they’re on the front line of the business,” Marco Argenti, Goldman Sachs’ chief information officer, said.

David Solomon, Chairman and CEO of Goldman Sachs

Photo by Michael Kovac/Getty Images

“They don’t want to feel like they’re in the back office,” Argenti said at a forum hosted by The Wall Street Journal last year, referring to bank engineers. 

But on Wall Street, old habits die hard, and Goldman has struggled to make Marcus, a big fintech bet, a success. Despite Wall Street’s increasing reliance on technology, tech isn’t the star of its show but a supporting actor. And star programmers would rather work at a place where their efforts get the full spotlight treatment. 

Technologists can also feel stifled by the work culture of the average bank. Heavy regulatory burdens and risk controls mean pushing back against the tech ethos defined by Mark Zuckerberg’s “move fast and break things” motto. But even when it comes to less-controversial details, like flexible work schedules, many banks have shown an inability to let go and innovate

Since the beginning of the pandemic, Wall Street leaders have been at the helm of a push to get their employees back to their desks. Young bankers and traders learn the trade largely by working closely with more-experienced practitioners, these leaders have said. But the apprenticeship argument doesn’t exactly apply to technologists, whose work mainly requires them to be on the computer writing code.

One JPMorgan tech employee in London told Insider last year, after the bank called him back to his desk, that he didn’t understand why he was expected to sit by himself in the office while every other member of his team was on another continent. It seemed pointless, he said. (A person close to the bank said this person’s experience was an anomaly and that most of the firm’s technologists worked in the same location as their managers.)

Data indicates that programmers, by and large, want the freedom to be flexible about where they work. In a 2022 survey of software engineers by Terminal, an engineering-talent company, about three-quarters of respondents said they “prefer to work remotely most of the time,” and nearly 70% said they were more productive when doing so.

Being forced back to the office isn’t the only issue.

Red tape is another source of frustration for fast-moving programmers, KPMG’s research found. Some of that is due to regulation, some to sheer size. Plus, the technology at fintechs is often a lot newer, so it’s easier to change, bolt new products onto, and work on as a developer. 

“Comparing a Bank of America or a JPMorgan Chase to a small fintech, well, of course, you’re going to see more bureaucracy, more red tape, because it’s several hundred, if not thousands, of times the size of that fintech,” said Michael Roberts, a professor at the Wharton School of the University of Pennsylvania who teaches a course on finance and data science.

To be sure, Wall Street’s embrace of the public cloud, which offers developers ready-to-use software tools and automation, is helping banks strip themselves of legacy tech.

Goldman Sachs and Capital One tech execs are using the cloud to improve the overall developer experience. At Wells Fargo, the cloud allowed the bank to launch a mobile app in 10 months, something that would’ve taken “multiple years” previously, Ather Williams, the bank’s senior executive vice president and head of strategy, digital, and innovation, told Insider.

“Most programmers just want to write code — they want to code, they want to solve problems, they want a digital-product manager that will launch products. Traditionally, that’s been very difficult in banks,” said Williams, who was hired in late 2020 and leads a team designed to bridge the bank’s tech and business teams.

Every time you want to make a change to a system, you’ve got to have 19 different people sign off on it. A technologist for a bulge-bracket bank

But advancements with the cloud cannot completely unshackle banks from 30-year-old tech and ingrained bureaucratic processes. A technologist who works at one of the nation’s largest banks complained to Insider about a project underway last year aimed at replacing a more than 30-year-old system. The project plodded along for more than two years without an end in sight, the person said said.

“You get people that are OK with that kind of pace, and you get others that get into it and a couple months later, they’re fed up with it,” the person, who spoke on condition of anonymity to talk freely but whose identity is known to Insider, said. “And they leave because they cannot handle all of the bureaucratic BS, and they can’t handle the pace.”

“It’s a constant back-and-forth with technology and business because one doesn’t understand the other,” the person said. The communication between the two groups was rocky, to the detriment of their work. “Every time you want to make a change to a system, you’ve got to have 19 different people sign off on it,” the person added.

So where does all this leave banks?

It’s not to say that Wall Street bosses aren’t whip-smart — many of them are — or that banks’ efforts to embrace technology have been in vain. It’s more that the very things that make Wall Street, well, Wall Street are preventing it from embracing the ethos of Silicon Valley. 

Banks will likely never be first to market for, say, a new messaging technology that allows customers to buy things and send money to friends and family. They’ll be playing a lot of catch-up; they’re unlikely to snag the best tech talent; and their efforts to buy or build new tech will sometimes run into trouble, as it did in the case of JPMorgan’s Finn, the bank’s digital-only bank that shuttered two years after launch.

But maybe that’s not a bad thing.  

After all, one major benefit banks have going for them is their staying power, especially during tough times. While Big Tech companies have implemented hiring freezes and layoffs, and fintechs have seen their stock prices and valuations plummet, banks are hanging in and, in some cases, still hiring technologists by the boatload.

Because let’s be real: Big-bank bosses never need to raise the white flag. They have the money, smarts, and willpower to fight infinitely, even if all they ever do is tread water — keeping pace with the competition, rather than beating it out.

Meanwhile, bending their culture to meet the demands of their tech staffers stands to be both dangerous and costly.

KPMG said in its report on the matter: “Sometimes the smartest deals are those not done, particularly due to cultural concerns.” And for banks insisting on moving forward, prepare to spend heavily to make it work.     

As much as they’d like to be the cool kids on the block and embrace techies’ hoodies and Converse sneakers, bankers are more comfortable in suits, ties, and loafers. And perhaps, for Wall Street, that’s the moral of the story. 

Maybe it’s simply time to stop trying to be something they’re not.

Do you work in tech on Wall Street? Get in touch with Bianca Chan via email at or the encrypted messaging app Signal at 646-376-6038.