The politics of FinTech: Technology, regulation, and disruption in UK and German retail banking
| Published date | 01 December 2021 |
| Author | Dermot Hodson |
| Date | 01 December 2021 |
| DOI | http://doi.org/10.1111/padm.12731 |
ORIGINAL ARTICLE
The politics of FinTech: Technology, regulation,
and disruption in UK and German retail banking
Dermot Hodson
Department of Politics, Birkbeck College,
University of London, London, UK
Correspondence
Dermot Hodson, Department of Politics,
Birkbeck College, University of London, Malet
Street, London WC1E 7HX, UK.
Email: d.hodson@bbk.ac.uk
Abstract
Recent studies suggest that Uber and other tech start-ups
disrupt markets through regulatory entrepreneurship. This
practice describes how such companies operate outside of
regulation or in legal gray areas before mobilizing their cus-
tomers in support of regulatory change. Financial technol-
ogy (FinTech) is sometimes called the “Uber of banking,”
but banking reveals different political dynamics than the
car-for-hire sector. Exploring the rise of online-only banks
in the UK and Germany, this article finds that start-ups such
as Starling, Monzo, and N26 challenged incumbents without
breaking or remaking regulation. The regulatory entrepre-
neurship approach, which sees FinTech as a difficult case,
and the state world of regulatory innovation, which views
policy-makers as seizing the opportunity created by new
technology to reassess their relationship with incumbents,
help to explain these findings. Its conclusions have rele-
vance for wider debates about the governance of health
care and legal services and the politics of disruption more
generally.
1|INTRODUCTION
Uber's extraordinary impact on the car-for-hire sector has renewed scholarly interest in the relationship between
technology, regulation, and disruption. Where Uber has succeeded, recent studies suggest, it has entered markets by
operating outside of regulation or in legal gray areas and used its loyal customer base to build pressure for regulatory
change (Pollman & Barry, 2016; Thelen, 2018; Tzur, 2019). Culpepper and Thelen (2019, p. 289) find that Airbnb,
Amazon, Facebook, and Google acted in a similar way, while recognizing that few tech companies achieve such an
“outsized role in modern life”and the political influence that this brings. Given differences in the pace and reach of
Received: 18 December 2020 Revised: 8 February 2021 Accepted: 22 February 2021
DOI: 10.1111/padm.12731
Public Admin. 2021;99:859–872. wileyonlinelibrary.com/journal/padm © 2021 John Wiley & Sons Ltd. 859
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