Once thought to be unfailingly secure due to their size, scope, influence and the high barriers to market entry, banks, insurance companies and investment houses have come under assault from a new technological wave that threatens their status quo, if not their existence. The technology is moving at such a rapid pace that, by 2020, as much as 25% of the financial industry’s revenue will be at risk. According to a PricewaterhouseCoopers (PwC) report titled “Financial Services Technology 2020 and Beyond,” the convergence of financial services and technology, which has come to be known as fintech, has become such a disruptive force in such a short time period that established financial institutions must quickly reconsider their business models or risk obsolescence in significant parts of the financial services value chain.

Technological advancements in other industries have ramped up the expectations of consumers, who now demand higher quality and more personalized services, seamless experiences and more value for their money in all interactions with businesses. Fintech promises to deliver the same for consumers in the financial services industry, but there is much more behind the push toward new business models than customer-friendly solutions.

The Sharing Economy

The popularity of mobile tech-driven companies such as Uber Technologies Inc. and Airbnb Inc. is evidence that a sharing economy is rapidly emerging. An increasing percentage of people are becoming comfortable with dealing directly with other people. The notion of peer-to-peer (P2P) engagement is taking hold in a broad swath of industries including financial services. P2P lending, led by companies such as Lending Club Corp. (NYSE: LC

) and Prosper Inc., is steadily growing its share of the consumer and small business lending market. Through crowdfunding sites, smaller investors can invest in the kind…