Hold on tight, as the transition to Fintech 2.0 is now underway.

Although there is no definitive history of fintech as it is still a developing field, it is helpful to consider the early pioneers as Fintech 1.0. These companies had different sizes, strategies, and outcomes, but they all offered solutions to specific financial pain points, such as micro-investing, peer-to-peer payments, and mobile banking.

While some Fintech 1.0 companies like Venmo, Robinhood, and Acorns were successful in dominating their niches, many struggled to find profitable business models. Moreover, Fintech 1.0 contributed to a fragmented customer experience, as users had to navigate multiple specialized apps.

Fintech 2.0 aims to address this issue by "rebundling" financial services and providing customers with a unified platform for managing their financial lives. This approach has the potential to save consumers time and money, but achieving it requires seamlessly integrating multiple financial products and managing associated risks.

New fintech startups are competing to become leaders in Fintech 2.0, leveraging their digital native advantage to quickly iterate and meet customer needs. However, legacy banks also have advantages, such as longstanding customer relationships, a wide range of products, and regulatory knowledge. Winning in Fintech 2.0 will require mastering different aspects of the overall financial experience.

To achieve success in Fintech 2.0, companies need to prioritize customer-centric thinking, cutting-edge technology, sophisticated design, bank charters, and market validation. Fintech 2.0 is about recognizing all of a customer's needs and finding ways to holistically meet them, requiring a deep understanding of and empathy for customers. Fintechs have an edge in developing advanced solutions on modern technology stacks, but legacy banks have access to tons of data and can close the gap if they make good use of it. Fintech startups lead in building user-friendly digital experiences, but high fees can be a constraint for legacy banks. Bank charters were a moat for legacy banks, but true digital banks are rare and can serve as test beds for technology, design, and innovation within a regulated entity. Market validation is already evident with gains for fintech companies, venture capital backing for neobanks, and a convergence toward Fintech 2.0. Overall, the goal is to build customer-centric, sustainable, and profitable business models that satisfy customers, investors, and regulators.