Scaling Fintechs: Unveiling How Ecosystem Dynamics & Business Model Adaptation Contributes to Scale-up Success

Abstract

This paper explores the underlying patterns and factors contributing to successful scaling in the dynamic environment of fintech. With a selection of 11 fintech founders and executives from some of the leading ventures in the Norwegian ecosystem, in addition to four industry experts, the study follows an exploratory qualitative approach, adopting semi-structured interviews coupled with data from the case companies covering the three-year growth period from 2020-2023. The study shows that specific ecosystem determinants inhibit fintechs in their transition from start-ups to scale-ups, making novel business model configurations crucial for a successful transition. In the transition towards becoming a fintech scale-up, the focal firm undergoes a scaling phase of three consecutive years with rapid growth in turnover or employees, characterized by an internal transformation towards a mature company as it gains traction in its marketplace. While the ecosystem determinants as the government, traditional financial institutions, and technology developers are found to be important contributors to fintech startup formation, they have inhibiting contributions during the scaling phase. Fintech start-ups must therefore resort to novel business model configurations, emphasizing customer-centricity, modularity, and technical scalability to ensure sustained scalability while minimizing human intervention in the value delivery. These results have important theoretical and practical implications as they extend the understanding of scale-ups within fintech, as well as how the ecosystem determinants influence their performance during the scaling phase. The study adds a new perspective to the scale-up phenomenon in a fintech context, and how ecosystem determinants influence the scalability of the business model to facilitate scaling.