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The Platform Political Economy of FinTech: Reintermediation, Consolidation and Capitalisation



‘FinTech’ is the digital sector of retail money and finance widely proclaimed to be transforming banking in the global North and ‘banking the unbanked’ in the global South. This paper develops a perspective for critically understanding FinTech as a platform political economy that is marked by three distinctive and related processes: reintermediation, consolidation, and capitalisation. Through experimentation with the platform business model and building on the digital infrastructures and data flows of the broader platform ecosystem, a constellation of organisations – including start-ups, early-career firms, BigTech companies and incumbent banks – are engaged in processes of platform reintermediation. Changing the bases of competition in retail money and financial markets and encouraging oligopoly and even monopoly, the reintermediation processes of FinTech are presently manifest in strong tendencies towards platform consolidation. The imagined potential of FinTech has also triggered intensive processes of capitalisation, with platforms receiving significant prospective investment by venture capital, private equity funds, banks and BigTech firms.
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The Platform Political Economy of FinTech:
Reintermediation, Consolidation and
Paul Langley & Andrew Leyshon
To cite this article: Paul Langley & Andrew Leyshon (2020): The Platform Political Economy
of FinTech: Reintermediation, Consolidation and Capitalisation, New Political Economy, DOI:
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The Platform Political Economy of FinTech: Reintermediation,
Consolidation and Capitalisation
Paul Langley
and Andrew Leyshon
Department of Geography, Durham University, Durham, UK;
School of Geography, University of Nottingham,
Nottingham, UK
FinTechis the digital sector of retail money and nance widely
proclaimed to be transforming banking in the global North and banking
the unbankedin the global South. This paper develops a perspective for
critically understanding FinTech as a platform political economy that is
marked by three distinctive and related processes: reintermediation,
consolidation, and capitalisation. Through experimentation with the
platform business model and building on the digital infrastructures and
data ows of the broader platform ecosystem, a constellation of
organisations including start-ups, early-career rms, BigTech
companies and incumbent banks are engaged in processes of
platform reintermediation. Changing the bases of competition in retail
money and nancial markets and encouraging oligopoly and even
monopoly, the reintermediation processes of FinTech are presently
manifest in strong tendencies towards platform consolidation. The
imagined potential of FinTech has also triggered intensive processes of
capitalisation, with platforms receiving signicant prospective
investment by venture capital, private equity funds, banks and BigTech
FinTech; platform capitalism;
consolidation; capitalisation
FinTechis the recognised descriptor for an emergent and diverse sector of digital retail monetary
and nancial services. It is the object of media hype (e.g. Economist 2017, Hancock et al. 2018), a
focus for national nancial policymaking and regulation (National Economic Council 2017, HM Treas-
ury 2018, Brainard 2020), and is enthusiastically promoted within global development programmes
(e.g. Alliance for Financial Inclusion 2018, World Bank and the International Monetary Fund 2018).
FinTech has also generated a burgeoning academic-practitioner literature, emanating mainly from
business schools, industry commentators and consultancy rms (e.g. Delaporte et al. 2016,, pwc
2017 Blakstad and Allen 2018, Gupta and Tham 2018). Combined, this work maps a rapidly evolving
landscape, identies active business models, and ascertains the challenges that might limit future
expansion. Invoking the well-worn Silicon Valley tropes of disruption,distintermediationand
democratisationthat are ubiquitous in digital economy discourse, prevailing and powerful media,
policy and academic-practitioner accounts of FinTech typically emphasise how consumer-empower-
ing technological innovations are not only transforming banking in the global North, but also
banking the unbankedin the global South.
© 2020 Informa UK Limited, trading as Taylor & Francis Group
CONTACT Paul Langley Department of Geography, Durham University, Lower Mountjoy,
South Road, Durham DH1 3LE, UK @_paullangley
A rapidly growing body of social science research is exploring the main domains of FinTech
business. This work has mainly focused on digital and mobile payments (e.g. Maurer 2012,
ODwyer 2015,2019, Kremers and Brassett 2017), cryptocurrencies and distributed ledger technol-
ogies (e.g. Golumbia 2016, Tapscott and Tapscott 2016, Parkin 2019), asset management and
robo-advising(Haberly et al. 2019), and crowdfunding and peer-to-peer (P2P) lending (Langley
2016, Gray and Zhang 2017, Langley and Leyshon 2017a, Clarke 2019). Research is also interrogating
the FinTech sector more broadly, making connections with wider-ranging developments, including
technological transformations underway across wholesale and retail nance (Campbell-Verduyn
et al. 2017, Bernards and Campbell-Verduyn 2019), and continuity and change in the developmental
statesof China and East Asia (Gruin 2019, Gruin and Knaack 2020, Rethel and Thurbon 2019). In
addition, FinTech is being researched by social scientists concerned with revised global development
agendas that prioritise nancial inclusionat the bottom of the pyramid(BoP), and which serve to
extend the frontiers of neoliberal nancialised capitalism in the global South (Mader 2016,2018,
Aitken 2017, Gabor and Brooks 2017, Langevin 2019, Bernards 2019a,2019b).
Across this research, moreover, social scientists are beginning to oer analytical perspectives that
provide a counterpoint to the prevailing and powerful accounts of FinTech. Drawing on critical litera-
ture apprehending the digital economy more broadly, these perspectives serve to highlight two
facets of FinTech crucial to understanding its dynamics and pathologies. The rst is the use of tech-
niques of data aggregation and algorithmic analysis to extract value from users and their data trails
(ODwyer 2015,2019, Gabor and Brooks 2017, Langevin 2019, Sadowski 2019,Bernards 2019a,
2019b). Pivotal to the digital economies of surveillance capitalism(Zubo2019), data gures
strongly but somewhat dierently in FinTech. Transaction data produced by digital and mobile pay-
ments is aggregated and monetised by FinTech rms, going beyond a revenue model based solely on
fees levied on user transactions (Maurer and Swartz 2015). Combined with other contextual data,
transaction data is mobilised in retail nance for market segmentation (i.e. classifying customers
for advertising and sales purposes) and credit risk analysis (i.e. developing tailored credit products
and risk management tools) (ODwyer 2019). Indeed, transactional, geo-spatial, telecommunication
and social media data are combined by FinTech rms to produce new kinds of proxycredit risk
data (Aitken 2017). This is signicant, given claims that such proxies can render visible roughly 40
percent of the global adult population (1.7 billion people) who are currently unbankedand lack
credit histories and scores (Realini and Metha 2015, World Bank 2017). Promises of transaction
data-derived nancial inclusion often garner support in developing countries from state agencies
seeking to advance the surveillance and taxation of their populations (Jain and Gabor 2020).
Second, perspectives oered by social scientists stress how the FinTech industry deploys infra-
structures of digital technology and wireless telecommunication to connect with users, often in con-
junction with longer-standing payment and nancial architectures (Maurer 2012, Bernards and
Campbell-Verduyn 2019,ODwyer 2019). Grandiose and spectacular claims about FinTech are punc-
tured with reference to the mundane and backgroundedoperations of assembled socio-technical
systems (Bernards and Campbell-Verduyn 2019, p. 783), and emphasis is placed on the ways in
which these infrastructures frame monetary and nancial relations to create new opportunities
and vulnerabilities for users (e.g. Rodima-Taylor and Grimes 2019). Indeed, Clarke (2019, p. 866)
draws attention to the tendency for governmental programmes to present the kinds of nancial
service products now oered by FinTech as part of the basic infrastructuresof contemporary
societies. Justifying the development of products for marginal customers, this discourse makes it
possible for the FinTech sector to prot at the expense of people who become increasingly indebted
(Clarke 2019, p. 866).
This paper aims to extend existing social science research by developing a perspective for critically
understanding FinTech as a platform political economy; that is, as a political economy which is always
already constituted through the logics and logistics of platforms (Guyer 2016). In doing so, we will
broadly situate the understanding of FinTech within analyses of the digital economy as a platform
economy(Bratton 2015, Kenney and Zysman 2018,2020, van Dijck et al. 2019) and as platform
capitalism(Pasquale 2016, Srnicek 2016, Sadowski 2020). Although the notion of platformis cer-
tainly present in social science research on FinTech (e.g. Maurer 2015, Clarke 2019,ODwyer 2019),
it rarely provides the conceptual entry point (cf. Hendrikse et al. 2018). As Haberly et al. (2019,
168) observe in their study of asset management as one line of FinTech business, for all of the ana-
lyses of the impact of new technologies in nance; and of the digital platform economy outside of
nance; there has not been a systematic evaluation of the impact of the digital platform model.
Here we develop a perspective for understanding the political economy of FinTech as produced
by organisational leverage of the platformin retail money and nance. This perspective is directly
informed by our wider work that by combining insights from heterodox political economy, cultural
economy and science and technology studies (STS) theorises platform capitalismas the rise of a
distinctive and powerful mode of capitalist intermediation made possible by a host of socio-technical
achievements (Langley and Leyshon 2017a,2017b). It emphasises experimentation with the platform
business model underway throughout the FinTech sector, a model of capitalist enterprise that brings
together relatively well-established economic and socio-technical practices to create a new inter-
mediary logic of data-rich accumulation. It also stresses how the political economy of FinTech oper-
ates through the stack, a logistical assemblage of digital infrastructures and data ows that is
enclosed and controlled by BigTech platforms and which broadly comprises the platform ecosystem
(Bratton 2015, van Dijck et al. 2019).
Understanding FinTech as a platform political economy serves to foreground its commercial and
institutional conguration, and thereby re-orientates critical analysis of the constitutive role of data
and digital infrastructures in its operations. Once it is analysed from this perspective, we will also
show how FinTech is marked by processes of platform political economy that confound evangelical
claims that it disintermedates, disrupts and democratises retail money and nance. We identify and
elaborate upon the distinct and related processes of reintermediation, consolidation and capitalisa-
tion that are shaping the FinTech sector and its consequences for retail money and nance, but which
currently remain relatively under-researched.
The remainder of the paper is organised into three sections. The rst introduces FinTech and
further develops our perspective. The second addresses, in turn, the processes of reintermediation,
consolidation and capitalisation that are underway in the platform political economy of FinTech.
Our conceptual and analytical intervention intends to provoke further, in-depth research into the
strategies and practices of FinTech platforms. Our method here is therefore to interrogate media,
policy and academic-practitioner accounts of FinTech and the platform economy that provide for
the business knowledge of FinTech platforms. The third and nal part of the paper oers some con-
cluding reections.
Understanding FinTech
The portmanteau of FinTechoriginates from a project called Financial Services Technology Con-
sortiumstarted by Citigroup in the early 1990s. Today, in its broadest applications, the term
draws attention to the role of information technologies in global wholesale and retail nance
since at least the nineteenth-century (e.g. Buckley et al. 2016). FinTech is normally applied
more narrowly, referring to technological changes underway in retail nance since the 1950s
(Rubini 2017, pp. 23), and especially the emergence of a distinct sector of retail money and
nance after the 2008 global nancial crisis (e.g. Blakstad and Allen 2018, p. 4). Largely based
around telecommunication and digital technologies and big data, the contemporary FinTech
sector is accessed by users through mobile networks and smartphone applications linked to
cloud computing.
FinTech is also often categorised into several more-or-less discrete digital retail monetary and
nancial services. Book-length introductions, for example, often feature chapters dedicated to
each category of services (e.g. Flynt 2016), which typically also appears as inseperable from a particu-
lar group of companies that are introducing innovation into nancial services through the use of
modern technologies(Rubini 2017, p. 1). As the United Kingdoms HM Treasury (2018, p. 3) put it, The
term FinTechis used interchangeably to describe both technology-driven innovation across
nancial services and to pick out a specic group of rms that combine innovative business
models with technology to enable, enhance, and disrupt the nancial services sector. Narrated in
this way, FinTech includes: online and mobile monetary payments denominated in sovereign curren-
cies (e.g. PayPal, Braintree); bitcoin and other cryptocurrency exchanges (e.g. Bitpay, Coinbase);
online-only banks and banking apps (e.g. Atom, Monzo); crowdfunding (e.g. Kickstarter, Crowdfun-
der) and peer-to-peer (P2P) lending (e.g. Zopa, Lending Club); investment, saving and nancial plan-
ning, such as robo-advisors(e.g. Wealthfront, Betterment), automated saving apps (e.g. Digit, Dyme),
and interfaces and dashboards for money management (e.g. Mint, Money Dashboard); and, online
lending to dierent and dierentiated market segments, such as small- and medium-sized businesses
(SMEs) (e.g. Kabbage, OnDeck), low- or high-risk consumers (e.g. LendUp, Borro), and payday bor-
rowers (e.g. SafetyNet). An array of business-to-business (B2B) FinTech rms also service the industry,
concentrating on data aggregation and algorithmic analytics (e.g. Cigni, DemystData), applications
of blockchain and other distributed ledger technologies (e.g. Peernova, Mirror), and user experience
(UX) and user interface (UI) design (e.g. UXDA).
The Platform
Specialist and ostensibly innovative FinTech rms are platforms; that is, they largely correspond to a
distinct mode of capitalist enterprise that aggregates and analyses data and deploys digital infra-
structures in order to extract value from intermediation. Paraphrasing from Wood and Monahans
(2019, p. 1) account of the dierence between platform surveillanceand surveillance capitalism
(cf. Zubo2019), our point is not just that FinTech (like contemporary surveillance) happens to be
facilitated by platforms. Rather, over the last decade or so, the political economy of FinTech has
been fuelled by the ex poste rationalisation of the platformas the business model for the global
digital economy (Langley and Leyshon 2017b, pp. 203). It is through this model that more
sectors, rms, startups, app developers, and investors mobilisearound one plausible version of infor-
mation capitalism(Zubo2019: location 256 [Kindle edition]). As leading advocates of the platform
business model Parker et al. (2016, p. 278) put it, the bankers have heard the message that is spread-
ing through one industry after another, and, across the FinTech sector, they are looking to the plat-
form model as the chief disruptive mechanism.
During the boom of the 1990s, platform enterprises (e.g. social media companies, online
market exchanges) often developed without a clear commercial rationale (Feng et al. 2001, van Dijck
2013, Kenney and Zysman 2020). In contrast, the FinTech sector has gained traction amidst burgeon-
ing business knowledge and how toguides about the platform model, not to mention the backing
the model has received from venture capital and other investors (see below). Key features of the
model include, for example: so-called socio-technical layers(infrastructure, data, users) (Choudary
2015); the potential to rapidly scale upto market dominance with limited investment in xed
capital and other assets (Parker et al. 2016, Kenney and Zysman 2018); and, promising revenue strat-
egies which increasingly centre on value extraction from monetising combinations of user data with
platform readyexternal web data (Helmond 2015).
Within FinTech, rms specialising in payments and crowdfunding and P2P lending correspond
particularly strongly with the platform business model: they intermediate multi-sided connections
and relations between users and coordinate the network eects of connectivity(Srnicek 2016,p.
45). Start-ups providing online-only banking, investment, nancial planning or loans, meanwhile,
are typically business-to-consumer (B2C) platforms, or two-sided aggregator platforms that
connect users with product and service providers (e.g. banks, non-bank lenders) that partner with
the platform. While rates of formation appear to have slowed somewhat in North America and
Europe, by December 2019, Crunchbase, a widely recognised industry database, recorded a global
population of over 13,000 FinTech platforms.
Platform business experiments in FinTech extend well beyond start-ups and early-career rms,
however. Incumbent institutions in both the information and telecommunications (ICTs) and
nancial services industries are also leveraging the platform business model. Major incumbent
banks in the global North are now signicant actors, seeking combinations of old and new business
modelsto reinvent their internal data systems and online business channels (Hendrikse et al. 2018,p.
161). Banks are integrating legacy hardware and software systems into platforms. This may be geared
towards open innovationand ecosystemapproaches that, facilitated by Application Programmable
Interfaces (APIs) and characteristic of the Apple business model, centre on FinTech rms harvesting
data and building applications on bank platforms (Hendrikse et al. 2018). Indeed, such an approach is
being encouraged by open bankingregulations in the European Union and UK in particular (Efra
2019). To enable their in-house change programmes, however, banks are strategically engaging
with FinTech start-ups in other ways, including partnerships, minority investments, and acquisitions.
BigTech and the Platform Ecosystem
BigTech companies now also oer FinTech platforms to their users, and/or have formed separate
FinTech business arms or made strategic investments in FinTech partners (Moeller 2018). This
includes the Big Fourof Google (Alphabet), Apple, Facebook and Amazon (GAFA) in the global
North (Galloway 2017), and Baidu, Alibaba and Tencent (BAT) in China. The GAFA BigTechs all
oer payment platforms to their users, for example, such as Google Pay, Apple Pay and Amazon
Pay, while 1.5 billion Facebook users can make payments via Messenger. Meanwhile, the growth
of FinTech in China has been largely driven by the expansionary strategies of BAT (Economist
2017, Wang and Doan 2018). Indeed, the FinTech platforms of Alibaba and Tencent are arguably
the most signicant globally. Chinese consumers top EYs(2019) Global FinTech Adoption Index,
and mobile payment transactions by value ($790 billion) in China in 2016 were 11 times greater
than in the United States (Smith 2018). In 2014, Alibaba consolidated its FinTech operations into a
spin-ocompany, Ant Financial, which operates Chinas most popular mobile payment platform
(Alipay), and oers a host of digital banking, investment, lending and insurance services. Meanwhile,
Tencents WeChat messaging app oers a range of transfer and payment functions to its 890 million
users (Chandler 2017).
The FinTech sector is also reliant, more broadly, on telecommunication and digital infrastructures
that are largely enclosed and controlled by telecom giants and BigTech platforms (ODwyer 2015,
Sadowski 2020). FinTech in Africa is, for example, increasingly running on the telecommunication
systems and feature phonesof Chinese corporations (Pilling 2019). In the global North, meanwhile,
FinTech is a platform political economy made possible by the integration and operation of the six
layers of what Bratton (2015) describes as The Stack (i.e. Earth,Cloud,City,Address,Interface,
User). For a number of emergent digital economy sectors news media, urban transportation,
healthcare, and education GAFA and BAT have evolved into the infrastructural platformsof the
platform ecosystem(van Dijck et al. 2019). BigTech platforms, in short, provide the highly centralised
infrastructures upon which the sectoral platformsof FinTech are built and organised.
For specialist FinTech platforms, hardware and software have increasingly become xed costs
rather than capital investments (Kenney and Zysman 2018). Combined with the B2B o-the-shelf
services of white label platform providers and UX and UI designers, this has signicantly lowered
the barriers to market entry for start-ups. Accordingly, FinTech platforms are often described as
tech stacks(e.g. Gupta and Tham 2018), integrated assemblages of infrastructural elements
drawn from the platform ecosystem. The back-endof the tech stack of FinTech platforms is what
makes an app or a website run. Invisible to users, it includes cloud computing services (e.g.
Amazon Web Services (AWS), Alibaba Cloud) and data analytics (e.g. Google Analytics), which can
be combined and purchased from a single BigTech provider (e.g. Microsoft Azure and Microsoft
Azure Data Analytics). Search engines, app stores, and identication services taken from the platform
ecosystem are also critical to Fintech platforms. Meanwhile, the apps and interfaces that comprise the
front-endof the tech stack of FinTech platforms utilise Java or CSS programming code, often com-
piled from open source repositories maintained by BigTech (e.g. Bootstrap, AngularJS, ReactJS, Mate-
rialize). BigTech companies are important to the political economy of FinTech as platform providers of
retail monetary and nance services, then, but the constitutive signicance of the BigTech platform
ecosystem to the FinTech sector goes much, much deeper.
Processes of Platform Political Economy
Foregrounding the platform business model and platform ecosystem is key to a perspective that
explicitly attends to the political-economic dynamics of FinTech. A perspective that understands
FinTech as a platform political economy also draws attention to processes of reintermediation, con-
solidation, and capitalisation. These processes are yet to feature strongly in social science research,
even though they are presently shaping the development of the FinTech sector and its consequences
for retail money and nance.
Platform Reintermediation
In the global North, FinTech is widely held to be disintermediatingretail money and nance. Taken
to its conclusion, distintermediation could render banking intermediaries as mere clearing houses for
business undertaken elsewhere (Joyce 2019). Consider, for example, Blakstad and Allens(2018, pp.
49) account of what they call the FinTech Revolution. Prior to the global nancial crisis, a bloated
corporate banking industry dominated retail nance and paid little attention to consumers.
However, chastened by the crisis and emboldened by participation in the wider digital economy, con-
sumers demanded greater transparency and accountabilityin nancial services and a fragmented,
app-based and partially gamied interface with their service providers. In this rendition of the distin-
termediation narrative, banking intermediation is rendered outmoded by consumers, and the emer-
gence of FinTech platforms as the new intermediaries of retail money and nance is obscured.
A core feature of the platform business model is the intermediation of multi- and two-sided
markets (Gawer 2014). Start-ups, BigTechs, banks and other incumbent institutions experimenting
with this model in the FinTech sector are seeking to reintermediate(not disintermediate) retail mon-
etary and nancial relations. Financial intermediation typically entails the reduction of transaction
and/or information costs (type 1) and the creation of liquidity (type 2), and attempts at transformation
are better understood as acts of reintermedation rather than disintermedation (French and Leyshon
2004). Contemporary platform reintermediation by FinTech rms primarily centres on type 1 forms of
intermediation, but as rms scale they are also able to undertake type 2 intermediation. Indeed, what
Erturk and Solari (2007) describe as the reinventionof retail banking from the 1980s with fees and
charges for products and services overtaking earnings from interest rate spreads actually provides
the favourable institutional, social and economic conditions of possibility for platform reintermeda-
tion. Fees and charges have increasingly become a core source of banking revenues, accounting for
65 percent of after-tax-prots in global retail banking in 2016 (McKinsey 2016). As FinTechs undertake
platform reintermediation, they are partly taking their cue from a transformation in which the for-
merly vertically integrated retail nancial services of banks have already been unbundled (and re-
bundled) to generate product sales.
Viewed against the backdrop of the longer standing reintermediation of retail money and nance,
FinTech platform reintermediation is distinctive nonetheless. For so-called unbankedpopulations of
nancial nomadsin the global South (Realini and Metha 2015), FinTech enterprises might appear to
deliver nancial inclusion by providing users with monetary and nancial services for the rst time.
Here, however, platform reintermediation actually displaces and transforms informal (i.e. non-market)
monetary and nancial relations (ODwyer 2015, Rodima-Taylor and Grimes 2019). In the global
North, where incumbent banks are continuing to shrink branch networks in favour of online business
channels(Tiessen 2015), platform reintermediation by online-only and app-based banks certainly
includes promises of ease of access and reduced transaction costs. But when online banking is the
new normal, FinTech reintermedation is also as much about engineering frictionlessplatform infra-
structures for more eective and appealing user transactions so-called UX and UI design as it is
about oering lower fees and charges or better interest rates than the major banks (Ash et al. 2018).
FinTech platform reintermediation is also an important departure from reintermedation processes
centred on information costs. Platforms play a similar informational role to banks and non-banking
nancial intermediaries in the global North when they charge fees, for example, for establishing
the trust necessary to process a payment between users, conducting basic due diligence on the
SMEs that they list for P2P loans, and assessing the creditworthiness of consumers for loans
nanced by their partners. However, platform reintermedation is not merely a matter of extracting
direct rentin the form of fees and charges, but also turns on extracting indirect rentby accruing
user data and combining and analysing it with metadata (ODwyer 2015, Sadowski 2020). The role
of information in intermediation is transformed when it is regarded as data and as a resource and
source of value, not as a cost to others that is reduced and managed (for a fee or charge) on their
behalf. This novel data-driven and data-derived feature of platform reintermedation is pronounced
in mobile and digital payments, where business models increasingly concentrate on the monetisation
of transactions data to be used or sold for supply chain operations, market segmentation and/or
credit risk analysis (ODwyer 2019). But data-derived reintermedation by platforms elsewhere in
the FinTech sector from robo-advice on investment portfolios to loans to consumers excluded or
underserved by incumbent institutions is also variously grounded in claims to discover consumer
needs, oer better tailored products, and provide for improved analysis of credit risks.
Platform Consolidation
It is often claimed that FinTech new market entrantsare disruptingthe dominance of banks and
other incumbent providers, increasing competition in retail monetary and nancial services in the
global North (e.g. Flynt 2016). Developments in the US market for personal loans would seem to
support these claims, for example (Siegfried 2019). For policymakers and regulators in the global
North confronted by too big to failincumbents, FinTech represents an opportunity to increase
competition in nancial services. In the UK, for example, HM Treasury (2018, pp. 23) considers
Fintech to be a fantastic example of how competition can be a force for good, where govern-
ment, and regulators, have an important role to play in removing barriers to entry and growth,
particularly for innovative rms. If harnessed correctly to maintain consumer safety(Brainard
2020), regulators hope FinTech disruption could deliver renewed competitiveness to retail
markets for money and nance.
From a platform political economy perspective, equating the rise of FinTech with a wave of
competition-enhancing disruption in existing markets for retail money and nance is problematic.
Processes of consolidation rather than competition characterise FinTech because, fundamentally,
successful platform reintermedation turns on transforming and monopolising new market struc-
tures of retail money and nance. As Parker et al. (2016, p. 210 original emphasis) argue, compe-
tition in platform economies proceeds on the basis that rms that understand how platforms
work can remake markets, not just respond to them. Crucially, multi-sided platforms must
have strong demand economies of scaleor network eects: for users, the benets of a platform
increase as a function of the total number of users (Cusumano et al. 2019). The primary initial stra-
tegic objective for those experimenting with the platform business model in FinTech is thus to
rapidly recruit and retain user populations and their data, to leverage network eectsby
scaling up.
Ultimately, the consequence of these processes could be that FinTech replaces existing retail
money and nance markets with newly structured and platformed arrangements that have mono-
polistic and oligopolistic tendencies. BigTech-FinTechplatforms are already acknowledged by
some commentators to be the main threat to too-big-to-failbanks (McKinsey 2016, McWaters
and Galaski 2017). However, we would caution against assuming that retail money and nance is
only a BigTech banking license away from being captured (Delaporte et al. 2016). It is not necess-
arily in the interests of BigTech platforms to fully enter the banking industry due to the level of
compliance and political and regulatory oversight that would follow (Moeller 2018). Indeed, amid
political unease about the power of large digital platforms, the hostile reaction to Facebooks 2019
plans to create its own cryptocurrency (Libra) illustrates that BigTech rms may face enhanced
scrutiny and concerted political opposition as they seek regulatory approval for new nancial pro-
ducts and services.
We would want to stress, then, the variegated processes of FinTech platform consolidation pre-
sently underway across dierent markets and spaces. Centred on and around both BigTech compa-
nies and powerful incumbents, these processes of platform consolidation are having considerable
impacts on the organisation of retail money and nance. In China, for example, BAT companies dom-
inate FinTech by oering services to their vast populations of digital consumers and social media
users. They have taken advantage of the unique abilityof platforms to link together and consolidate
multiple network eects(Srnicek 2016, p. 95), rapidly scaling up the FinTech side of their business.
Mobile payments provided the bridgehead for the move by Alibaba and Tencent into FinTech, a
multi-sided market line of business in which network eects are especially strong. Subsequent expan-
sion has seen the introduction of complementary productsto their captured user populations, build
[ing] up ecosystems of goods and services that close ocompetitors(Srnicek 2016, p. 96). In 2013, for
instance, Alibaba launched Yuebao, enabling e-shoppers to transfer dormant cash from their
payment account on Alipay into a mutual fund investment account with rates of return above
those available from bank deposit accounts. By 2017, Yuebao had US$165 billion dollars of assets
under management (AUM), and had become the worlds largest money market mutual fund
(Wang and Doan 2018).
FinTech platforms operated by ICT and banking incumbents are also the focal point for processes
of consolidation. In Kenya, for example, the transformation of M-Pesa from a mobile payments plat-
form owned by incumbent telecoms giants into a platform for nancial inclusionis well underway
(Ndungu2018, p. 37). Meanwhile, in North America and Europe in particular, and as we noted above,
banks are building on their own economies of scale and scope by experimenting with the platform
model. As a result,
FinTech has evolved from startups that want to take on and beat incumbents, to a broader ecosystem of dierent
businesses looking in many cases for partnerships. FinTech startups dont just need capital, they need customers.
At the same time, incumbents need new approaches to drive change and deliver innovation. (pwc 2017,p.1)
For those articulating business strategies in platform political economies, such partnership-based
consolidation is crucial to successfully reintermediating and transforming markets. As Parker et al.
(2016, p. 211) put it, a platform enterprise no longer needs to seize every opportunity on its own
and can purse only the best opportunities while helping ecosystem partners seize the others.
pwc (2017) found that globally, by 2017, 45 percent of banks had partnerships with FinTech rms,
up from 32 percent in 2016, while 82 percent of incumbents surveyed stated that they would be
increasing their links to FinTechs.
Platform Capitalisation
A further and related process of platform political economy is also shaping the development of the
FinTech sector and its consequences for retail monetary and nancial order. A signicant and integral
feature of platform capitalism is that digital platforms are highly capitalised by investors (Srnicek
2016, Langley and Leyshon 2017b, Kenney and Zysman 2018). During the decade or so between
the global nancial crisis and the present nancial dislocations of the Covid-19 pandemic, platform
capitalisation took place in a low interest-rate and unconventional monetary policy environment
which was manifest, more broadly, in rising corporate indebtedness and increased investor appetite
for risk (IMF 2019). Cheap money and risk-embracing investors were drawn to platforms by the rela-
tively coherent and powerful framing of the future possibilities of the digital economy provided by
the platform business model, and the demonstration of powerful platform eectson existing market
structures by BigTech giants (Waters et al. 2018).
Processes of platform capitalisation have been extensive in FinTech. Relative to other emerging
digital economic sectors, FinTech appears to be particularly conducive to the progressive promises
of new technology and the application of big data analytics (e.g. advanced machine learning) (cf.
Rubini 2017, Geiger 2020). FinTech also seems to have especially promising revenue prospects,
not least because of retrenchment by re-regulated retail banks during the recent decade (Christo-
phers et al. 2017) Currently, the FinTech sector accounts for the greatest share of 400 or so unicorns:
that is, globally, there are more privately-owned FinTech rms valued at over US$1 billion than there
are similar rms in any other sector (Stalder and Miller 2018).
Popular and prevailing accounts of FinTech tend to regard the scale of investment in the sector as
a kind of vote of condence, an indication of its likely future success in transforming retail money and
nance and banking the unbanked. Rubini (2017, p. 5), for example, details the boom in investment
in FinTech start-ups, such that, from 2015 to 2017, global investment amounted to US$122 billion,
with the lions share in 2017 split roughly equally between the US and Asia (Hardin 2017). The rst
half of 2018 saw a further US$57.9 billion worth of investment in FinTech. As Rubini (2017,p.4)
has it, the start-ups that received funding are hungry and ambitious and want to disrupt the
banking sector. We would suggest, in contrast, that the capitalisation of FinTech platforms is actually
a dynamic and diverse process that is variously intersecting and supporting the processes of platform
reintermediation and consolidation.
Globally, VC investment in FinTech platforms has featured successively larger rounds of funding
for smaller numbers of rms. Evidenced by the growing number of FinTech unicorns, this is a
common feature of the cycle of VC investment because fund portfolios are expected to contain
only a minority of investments that will ultimately pay-oafter ve to 10 years (so-called home
runs) (Feng 2001). But it is especially pronounced for digital economy rms, as it is widely accepted
that their investment costs are likely to be much greater than revenues for longer periods as they
attempt to scale up to secure positions of strength in radically restructured markets. Related,
private equity and other later-stage investors have become more prominent backers of FinTech
rms (Sarch et al. 2018). Srnicek (2016, p. 88) neatly describes the processes that capitalise on the
promise of monopolistic and oligopolistic futures for platform reintermediation as VC welfare,not
least because rounds of equity investment maintain platforms as they seek to establish protability
and overcome incumbents.
Two further features of FinTech platform capitalisation have also sustained the sector in ways that
intersect with processes of platform consolidation. First, in contrast with the era, it has
become widely accepted that the so-called liquidity event(when early-stage investment is
cashed-out) is not necessarily an IPO. The liquidity event for FinTech start-ups is more likely to be
an acquisition, especially by an incumbent nancial institution, ICT company or BigTech platform.
In 2018, for example, there were eight liquidity events in the US FinTech sector worth over
$US100 million, six of which were acquisitions of this kind (Stalder and Miller 2018). Second, in
China in particular, it is important to note that a signicant share of VC investments in the FinTech
sector have not been made by traditional VC funds, but by the Corporate Venture Capital (CVC)
arms of BigTechs. BigTech is thus investing in FinTech platforms through CVC, as well as through
in-house programmes and acquisitions funded via their balance sheets (Waters et al. 2018). The
rise of CVC is not exclusive to China: CVC funds (such as Google Ventures) account for roughly ve
percent of total VC investment in the US. But CVC is especially important to Chinese venture invest-
ment (Yang 2019), with the CVC arms of Alibaba and Tencent specialising in technology investments
and accounting for 4050 percent of the total (Sender 2018). The FinTech investments of the CVC arm
of Alibaba include, for example, Paytm, the leading payments platform in India.
The emergence and growth of FinTech is registering amongst social scientists. A burgeoning body
of research has started to oer critical perspectives, challenging the prevailing and powerful ima-
ginaries that presently animate the industry. Such critical perspectives tend to emphasise how
FinTech is constituted through data aggregation and analysis and reliant upon telecommunica-
tions and digital technology infrastructures. Our aim in this paper, in contrast, has been to
develop a perspective for critically understanding the political-economic dynamics and tendencies
of FinTech, a perspective that explicitly species how FinTech is constituted as a platform political
economy. This is not to deny the undoubted importance of data and infrastructures to the oper-
ations of FinTech, but rather to situate these facets of FinTech in the sectors novel and rapidly
evolving commercial and institutional settings. Placing the platform business model and platform
ecosystem front-and-centre provides for a fresh perspective on the role of data and digital infra-
structures in the workings of FinTech. Existing critical research certainly points to the importance
of data aggregation and algorithms for the business of FinTech, but the promises and practices of
data need to be understood in the context of experimentation with the platform as a model of
capitalist intermediary enterprise. Equally, existing research highlights the socio-technical and
infrastructural character of FinTech, but omits how its tech stacksare built on the platform eco-
system which is largely enclosed and controlled by BigTech.
We certainly hope that the intervention made here will provoke further research into the platform
political economy of FinTech, especially in the form of detailed analytical case studies of FinTech plat-
forms. Given the constraints of a paper of this kind, we have necessarily only been able to very briey
discuss a few specic and illustrative examples. Our intervention may also further encourage and
deepen the analysis of the development of platform political economies beyond the FinTech
sector, such as the allied InsurTechsector and the sectors that provide the focus for van Dijck
et al. (2019) and Fields (2019). Attending to the constitutive signicance of the platform business
model and platform ecosystem, such research should also be attuned to the distinct and related pro-
cesses of reintermediation, consolidation and capitalisation that we have shown here to be shaping
the FinTech sector and its consequences for retail money and nance. These processes are relatively
under-researched by social scientists of FinTech, despite the ways in which they confound the power-
ful claims to disintermedation, disruption and so on that are usually made on the sectors behalf.
Interrogating specic instantiations of the platform business model and tech stacksbuilt on the
platform ecosystem, analytical studies of FinTech platforms also need to pay particular attention to
processes of platform political economy. Start-ups and early-career FinTechs, BigTech companies and
ICT and banking incumbents alike are all engaged in processes of platform reintermediation. Rather
than enhance competition in existing retail money and nancial markets, platform reintermediation
seeks to produce new market structures that will secure new oligopolistic and monopolistic positions.
FinTech enterprises are thereby conducting their business strategies and operations amid intense
processes of platform consolidation increasingly dominated by BigTech rms and incumbents. Plat-
forms are also in the grip of processes of prospective capitalisation that, over the decade running up
to the presently unfolding Covid-19 pandemic at least, have variously selected and sustained those
FinTech platforms deemed worthy of further and greater volumes of investment.
Disclosure Statement
No potential conict of interest was reported by the author(s).
Notes on Contributors
Paul Langley is Professor of Economic Geography at Durham University, UK. His publications include Liquidity lost (Oxford
University Press, 2015), The everyday life of global nance (Oxford University Press, 2008), and World nancial orders
(Routledge, 2002). His present research focuses on the emergence and stabilisation of new forms of nance in the wake
of the global nancial crisis, including FinTech,green nance, and social nance.
Andrew Leyshon is Professor of Economic Geography at University of Nottingham, UK. His publications include Money
and nance after the crisis, co-edited with Brett Christophers and GeoMann (Blackwell-Wiley, 2017), Reformatted:
code, networks and the transformation of the music industry (Oxford University Press, 2014), Alternative economic
spaces, with Roger Lee and Colin Williams (Sage, 2003), and Money/Space, with Nigel Thrift (Routledge 1997). His
present research focuses on crowdfunding and the platform economy.
Paul Langley
Andrew Leyshon
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Buy now, pay later (BNPL) is a new, increasingly popular form of short-term credit used for everyday items. While critics are concerned that these typically unregulated products pose risks for financially vulnerable people, many BNPL companies argue their app-based products are more responsible than other forms of credit. In this study, I use Davis’ (2020) mechanisms and conditions framework of affordances and Light et al.’s (2018) walkthrough method to analyse how three popular BNPL products (Afterpay, Klarna and Zip) define responsible lending and spending. I argue these BNPL companies claim they are more responsible than credit cards because they are more inclusive and have fairer loan terms, and that these claims are made possible by the platformed nature of BNPL products. At the same time, these BNPL companies define responsible consumers as those who make their repayments on time. This redefinition of responsible consumption encourages increased spending and normalises the use of BNPL credit for that consumption. These products, which challenge traditional regulatory responses to consumer credit, are disproportionately used by lower-income families, who are increasingly reliant on credit for everyday purchases.
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Using a sample of China’s A-share listed companies from 2011 to 2018, this research examines the impact of financial technology (FinTech) on financing constraints experienced by enterprises. Results show that the development of FinTech can significantly reduce firms’ financing con- straints, and this effect is partially mediated by facilitating firms’ direct and indirect financing, and by promoting inter-bank competition. The mitigating effect of FinTech is more pronounced in non-state-owned enterprises, in small- and medium-sized enterprises, and enterprises in the more highly developed eastern region of China. The direct mitigating effect of FinTech on reducing financing constraints is stronger for companies with a higher level of innovation or a lower level of social responsibility performance. Theoretical and practical implications of our findings are discussed.
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The platform economy and its leading firms, such as Amazon, Facebook and Google, are reorganising the geography of value creation and capture on both a local and global scale. This article argues that economic geographers have underappreciated the implications of the platform on space. First, we demonstrate the concentration of platform giants in terms of location on the US West Coast and in terms of their market share in various services, such as search, maps and online sales. Platforms are simultaneously intermediaries, two-sided markets, data aggregators and leading users of artificial intelligence (AI). Second, we use a labour taxonomy to demonstrate the extensive reach of these platforms in terms of the labour markets that they serve and shape. To illustrate these changes in the geography of value creation, we present case studies of Amazon and Google Maps to show their effects on the location of economic activity. Third, we elaborate on our contention that platforms are at once intermediaries and data hubs. AI is likely to reinforce the power of these platform leaders because they have the largest data sets, the most computational power, enormous teams of the best AI researchers and vast reservoirs of capital that they can use to make acquisitions. We conclude by identifying areas for future research and calling upon economic geographers to consider the implications of the platform economy in reshaping the space of economic activity.
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Digital credit scoring is driving a number of significant transformations in Chinese economy and society, catalyzing financial liberalization, deepening financial inclusion, and shifting economic power beyond the previously state-controlled commercial banking system. Yet the significance of financial technology is informed in turn by locally specific traditions of governance and regulation. This article critically interrogates the rise of Chinese fintech, reconceptualizing it as a process of financialization that is embedded in a Chinese systems- oriented authoritarian governance tradition. On the basis of documentary sources, Chinese- language secondary literature, and fieldwork conducted from 2016-18, it argues that in addition to disrupting existing practices of financial intermediation, the emergence of novel digital credit scoring technologies is enabling new forms of algorithmic governance to be exercised over the process of financialization, which in turn represents an important component in the construction of China’s neo-statist authoritarian capitalism. These findings have broader implications for how we understand the importance of new financial technologies in an era of big data, contributing to contemporary debates in international political economy, economic sociology, and Chinese studies.
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While contemporary technological disruption is increasingly conceptualized in terms of the logic and paradoxes of the digital platform economy, discussions of “FinTech” have only engaged to a limited extent with these debates—particularly from an economic geographic standpoint. Here we fill this gap by proposing an adapted Global Financial Network (GFN) framework for conceptualizing the organizational and geographic logic of the digital platform economy in finance, and applying it to examine the impact of the digital platform model on asset management. As we will show, asset management is being profoundly disrupted by what we dub digital asset management platforms—or DAMPs—which encompass services including index fund and ETF provision, robo-advising, and analytics and trading support. Like other digital platforms, DAMPs do not so much leverage technology to enhance their competitiveness within markets, as to radically restructure the market itself. Also, like other platforms, their rise has produced a winner-take-all paradox of centralization through democratization that defies predictions of technology-enabled industry decentralization. However, the logic and implications of the rise of DAMPs diverges, in other respects, from non-financial digital platforms, as finance has long possessed an informational intensity and regulatory and organizational fluidity characteristic of the digital platform economy. Consequently, the digital platform model has mostly developed endogenously in asset management through incremental innovation by major financial firms—in a process that has reinforced the position of leading incumbent asset management centers, and above all New York—rather than being introduced from the outside by upstart technology firms and clusters.
Digital platforms are a nearly ubiquitous form of intermediary and infrastructure in society. By positioning platforms in the geographical political economy/ecology literature, this paper provides a critical analysis of platforms as a dominant form of rentier in contemporary capitalism. In doing so, I extend this work on rent theory beyond applications to land and nature so that it also includes platforms and data. I argue that the rapid rise of the “X‐as‐a‐service” business model across nearly all sectors of the economy is creating rentier relations by another name. This model is premised on the platform latching onto and inserting itself into the production, circulation, or consumption process, thus creating opportunities to capture value. To better understand the operations and implications of platforms, I outline three key mechanisms: data extraction, digital enclosure, and capital convergence.
Traditional notions of financialisation require updating to study the reorganisation of finance around digital infrastructures. We introduce the concept of digital financialisation, defined as the often-coerced merging of two hitherto separate aspects of citizens’ lives – interactions using digital technologies and financial transactions – into a new hybrid realm. This realm is undergirded by an infrastructure that harvests citizens’ data, which companies can monetise and governments can use for political surveillance. In developing countries, the state plays a key role in creating surveillance infrastructures, often using coercive means in the name of financial inclusion, as the demonetisation and Aadhaar projects in India show. Unlike the industry-finance conflict in ‘analogue’ financialisation, digital financialisation involves domestic and cross-border conflicts between tech and finance companies for control of the hybrid realm. The state mediates these conflicts. In India, it deploys a narrative of technocultural nationalism to cultivate its domestic political constituencies and downplay its reliance on foreign technology.
This paper reflects on the relationship between high-tech disruption narratives and uncertainty. My main argument is that an economic sociology of the future is incomplete without addressing the ‘demonic’ or rather eschatological elements apparent in the promissory twin rhetoric of disruption and inevitability that a number of contemporary technology firms employ. The conjuring up of liberatory high-tech futures implicates a political-philosophical perspective of the end game. It utilizes at once the productive power of uncertainty to create visions of ‘absolute riches’ and societal gain but at the same time narrows these futures down to one inevitable alternative to the status quo. Through the examples of two Silicon Valley disruptor firms, I argue that these eschatological narratives need to be opened to social scientific critique in order to examine their potential societal consequences above and beyond the narrow geographic confines of ‘the Valley.’
In recent years the development of cryptocurrencies and wider implementations of blockchain technology have been valourized as digitally decentralized networks that dissipate control evenly among their peers. With Bitcoin, the first blockchain-based cryptocurrency, monetary policy is enacted via software built through an open source consensus model. This promotes a techno-decentralist ideology that promises to democratize societies by eradicating centralized points of control in economic systems. Contrastingly, this paper demonstrates how Bitcoin's production process operates through strict authoritative channels. The overall political framework for altering the Bitcoin code is described as senatorial governance: a (de)centralized model of bureaucratic parties who compete to change the monetary policy (codified rules) of the protocol. This model shows how Bitcoin is not an autonomous system but is assembled and maintained via human discretion.
This article interrogates recent policy pronouncements around the promotion of emerging financial technologies (fintech) as means of enabling financial inclusion. It is argued that situating this emergent ‘turn to technology’ in the context of a longer-running pattern of failed efforts to promote the development of financial markets for the poor in the Global South offers us a useful lens on the dynamics of neoliberalism. The article develops this analysis by drawing together interlinked discussions of ‘neoliberal reason’, highlighting the central role played by the diffusion of market institutions in neoliberal projects with Marxian discussions highlighting the crucial underlying role of labour in enabling the operation of markets. In this context the appeal to ever-more fine-grained information with which to allocate credit underlying the turn to technology can both be read as yet another attempt to ‘re-engineer’ the market, and also seen as a doomed project. Empirically, this argument is fleshed out through an engagement with key framework documents around financial inclusion and technology from the World Bank and G20.
Online platform lending is typically understood as a challenge to incumbent banking institutions. Since its inception platform lending has been closely associated with particular financial and digital technological innovations that are thought to be changing how people engage in lending and borrowing around the world. In this article, I emphasize the deeply political aspect of these innovations. I claim that the platform lending model is built on the ostensible ‘infrastructural quality’ of credit providers across a number of national contexts. This helps explain why platform lending has emerged in its current form and why the firms involved tend to have a certain attachment to and association with the perceived merits of financial inclusion policy initiatives. The article further seeks to show that this infrastructural quality is politically contestable. When the politics of claims to infrastructure are taken seriously it is possible to demonstrate how platform lending, in spite of the ‘alternative’ and ‘democratizing’ discourses that surround the sector, is in fact built upon a particular set of political state and business-led agendas that essentially further entrench widespread dependence on debt.