Editor’s note: This is the first of a three-part package about the fintech revolution that’s continuing to sweep across the economy with serious implications for the banking industry. The two related stories focus on an emerging startup and how to build a successful fintech company. 

RESEARCH TRIANGLE PARK – Given a boost by the COVID-19 pandemic and required social distancing, fintech technology continues to revolutionize commerce, so much so that the future of brick-and-mortar banks is in question along with many traditional retail outlets.

And this financial technology revolution – highlighted by the possible IPO by Charlotte-based AvidXhcnage and a possible valuation of $7 billion – drew a lot of attention at this week’s virtual CED Venture Summit.

The first iteration of fintech corresponded to the first stage of the Internet, which was just the process of getting things online, said Pat Scheper, senior vice president and head of venture banking at Live Oak Bank, in an interview with WRAL TechWire. “But then mobile came and further disrupted everything, and things keep moving closer and closer to the end-user—that’s true for everything, not just finance.”

The result is that the mobile phone in your pocket is now also a wallet, a further reduction of the importance of a brick-and-mortar bank location, said Scheper, a trend that accelerated with the onset of the global pandemic.

The increasing use of contactless payments, the prevalence of digital tools integrated into mobile banking and online banking, and other consumer-facing innovations from the past two decades have reduced the importance of physical locations, said Scheper.

Related stories

The fintech revolution: Durham startup LoanWell targets B-to-B and is finding success

Building a fintech: If you want success working with banks, be a partner


In fact, the founders of Live Oak embraced the idea of internet-based banking to launch Wilmington-based nCino – now a public firm and growing internationally.

“Fintech is all about bringing finance forward into the next wave of our collective existence,” noted Scheper in an interview.  “Finance is about moving money.  Money is a store of value to enable exchange.  And exchanging value is one of the abstract ideas humans created a long time ago that has enabled our success as a species.”

And change continues.

Retail banking to be more complex

“We need like 1/15th, 1/20th, of what we have,” warned Joe Maxwell, the managing partner at FINTOP Capital, which invests in business-to-business financial technology companies, during a panel discussion. “I use bank parking lots when mall parking lots are full.”

But that doesn’t mean the future of finance will be 100% digital, he noted.  “At some point in the lifecycle, you’re going to need a human being, you’re going to need someone to walk you through a complex transaction.”

From the bank’s perspective, said Maxwell, the customer that needs assistance navigating a complex transaction just also happens to be the most valuable customer. Given the historical efficiency that financial institutions seek to create, the future of retail banking—and a bank’s human capital that staffs a physical location—may well be oriented toward the complex.

“I think we need to wake up, with the financial institutions in this country, and realize that the light at the end of the tunnel is a very large train, going very, very fast,” said Maxwell.

Fintechs have to change, too

Yet change is not required only on the banking side of the ledger.

Financial institutions that don’t change, whatever their reasons, run the risk of financial consumers identifying other options that will better meet their needs—facilitation of moving money, facilitation of exchange.

Financial technology companies, whether focused on consumers, or the end-user, or structured to build software to sell into existing businesses that better expand financial services to consumers, are set up to facilitate a massive shift in how the industry is currently structured.

“I think that fintech, if it truly removes friction, ultimately makes things easier on the consumer,” said Scheper.  “So for those who are underbanked, my hope is that it removes barriers to access in the very near term.”