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Full stack fintech: Will finance have its Uber moment?
In the world of fintech startups there is an important distinction to be considered: Is a business full stack and partial stack?
The distinction is important because the emergence of full-stack startups could be the biggest threat to industry incumbents. Unsurprisingly, banks are so far throwing most of their support behind partial stack fintech startups.
In his blog, Andreessen Horowitz and general partner Chris Dixon predicts a full-stack movement in the fintech space, similar what has been seen in other sectors. But so far fintech start-ups are predominantly partial stack: taking new technologies and then selling or licensing them to big banks.
The new approach is to offer an end-to-end solution, cutting out existing players. This is full stack. Think about what Uber has done to taxis, Netflix to cable, or what Tesla is on the verge of doing to the motor industry.
If a fintech start-up can pull off a full stack solution, it is hard to replace. That said, the barrier to entry is high and the startup would need to be good at many different things - from software and hardware, to marketing and logistics - to make it a success.
If there is a movement in this direction though, the banks should be nervous.
Photo: me and the sysop