The fear that fintechs - smaller and better able to evolve with the emerging digital economies - would be able to scoop up big banks' most valuable customers has faded in the past three to five years. In fact, according to World Economic Forum project leader Jesse McWaters, many fintechs have struggled to achieve scale in the face of high switching costs. He is visiting Australia this week, and spoke to Banking Day to revisit his previous report, circulated a few months ago. McWaters concedes that most fintechs are unlikely to be able to grow bigger. "Meanwhile incumbent financial institutions were able to catch up faster than many expected, treating the proliferation of fintechs as a supermarket for capabilities and using them as acquisitions and partnerships to rapidly deploy new offerings," he says. Likewise, the fear that the big cashed-up technology firms might destroy traditional banks has not come to pass. "In the US only six per cent of iPhone owners use Apple Pay," McWaters says. "In the UK where the government has mandated an easy system for switching [between] current accounts and has encouraged the creation of many challenger banks as global first new bank entrants - but over the last five years we have not seen a significant change in customers' tendencies to switch banks." There are several clear reasons, McWaters believes: "On the one hand customers have been reticent to switch providers. "On the other hand, the incumbent institutions have reacted faster than expected in replicating the capabilities of fintechs." "The best example of this is in robo-advisory - it's been transformative to wealth management over the last three years with many incumbent players becoming very good at deploying this product. Now we find ourselves in a world with the largest pure play Robo advisory firm in the United States, Betterment, has US$10 billion in assets under management - that is certainly a significant number. "But then Vanguard more recently introduced its own robo-advisory product and have been able to leverage their brand and their customer relationships to build up US$70 billion in assets under management," McWaters says. This doesn't mean that there haven't been instances where fintechs have been very successful. They tend to fall into two categories: neatly targeted at areas where customers have been frustrated by their experiences with institutions and centred around very specific pain points; and specific markets where fintechs have been able to deploy enormous value. The best example of that is the combination of Ali pay and WeChat in China.An area where fintechs work well with banks is in reducing costs or increasing functionality.  Examples are Ripple and some of the various regtech offerings. Sometimes you will see previous competitors that are looking to build B2B offerings, such as OnDeck which has an established small business lending capability and has formed a very widely publicised partnership with JP Morgan in the United States (and with Commonwealth bank in Australia) collaborating to originate small business credit. "One thing that the World Economic Forum try to get beyond with its integral port is outside the