Disruption of the Financial Services Industry: A Case Study of British Fintech Startup Revolut

Tadas Vilkinis & Tomas Vasciula

Student thesis: Master thesis


This thesis investigates the dynamics of financial services industry in the 21st century to answer the research question of why and how the industry disruption began and to suggest a response to disruption for incumbent financial institutions. To achieve this, the thesis takes a case-based approach, applying a combined theoretical framework to the case of British fintech startup company Revolut. The thesis challenges conventional strategy theories, such as Michael Poter’s Five Forces and SWOT, for being unable to explain emerging business phenomena, such as industry disruption, in the light of product and service digitalization. Instead, it utilizes more recent theories such as Clayton Christensen’s Theory of Disruptive Innovation, Lean Startup Method, and Rita McGrath’s Theory of Transient Advantage.
The thesis finds that incumbent financial institutions historically focused on sustaining type of innovations that target the most profitable customers, overlooking the less demanding customer segments. By engaging in disruptive innovation, Revolut among other fintech startups targeted those overlooked segments, offering a more convenient service at no charge, eventually causing the industry disruption. The thesis finds that Revolut achieved this by advocating ideas associated to the lean startup method and engaging in continuous innovation.
Given the findings, the thesis suggests a response to disruption for incumbent financial institutions. The key recommendation is to create a corporate culture where innovation is encouraged. The thesis argues that with the right corporate culture and values in place, incumbents will have three different options to successfully engage in disruptive innovation – via (i) a partnership with fintechs or large techs, (ii) an acquisition of fintech startups, or (iii) in-house innovation. The thesis also finds that large tech companies, such as Facebook and Google, may re-disrupt the financial services industry going forward due to general market shift towards “open-banking” caused by initiatives such as the European Union’s Second Payment Service Directive (PSD2).

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2018
Number of pages138