Future Business Models in Financial Services: A Legitimacy-based Perspective

The ongoing COVID-19 pandemic has further accelerated the adoption of financial technology tools. With many aspects of fintech and its underlying technologies coming of age in the next five years, the industry will be at a crossroads. We argue that, with different players pushing for different business models and industry structures, the decisive battles will be those for legitimacy: business models can only prevail if their supporters can establish a generalized perception of appropriateness. This short paper analyses four scenarios that describe the potential future states of the financial industry and the business models that we expect to play dominant roles. We take a legitimacy-based perspective on future business models, indicating reciprocal influences among legitimacy, regulation policy, and industry configuration.