A couple of times on this blog, we’ve mentioned in passing a German startup named Number26. This mobile-first venture has grand ambitions—it calls itself Europe’s ‘most modern bank’ and is launching new initiatives at a fast pace—though it’s still a small player in a small field.  That said, firms like these are gaining market share and, in some cases, substantial VC backing. Most importantly, they’re worth watching not only because of what they’re doing but what they represent.

In sum, they offer a peek into the possible near future, one that encompasses a new generation of small but focused challengers taking on the established order. They do things very differently in a range of areas, from the technologies underpinning the business model to the entire market approach.

For example, BankMobile, another player in this field, claims credit for being the “first bank in the country to offer free checking and savings accounts without any fees.” Then there’s Simple, which promotes the “whole idea of banking re-made with beautiful design, built-in tools for budgeting and saving, and genuine human goodness.” For its part, Number26 boldly claims that it’s creating “the bank of the future.”

That means placing its mobile app at the center of all transactions and interactions. This single piece of software offers an entry point into a variety of offerings, some its own, and many others from partners.  As just one example, earlier this year the company struck a deal with England-based TransferWise, a rising peer-to-peer money transfer firm. That gives customers of Number26 easy access to currencies from nations around the world.

The strategy seems to be paying off: In less than three years, the startup has already reached far past its home base and gained a noticeable footprint in such competitive markets as France, Italy, Ireland and Greece, as well as some smaller countries where it has a chance to become a major contender in the local banking industry.

But there’s another sign of success worth monitoring: financial support. Number26 earned early attention in part because one of its early backers was venture capital star Peter Thiel, who made his billions with such ventures as PayPal, which he co-founded, and Facebook, which he backed with several rounds of investments. Now, Number26 is getting a new round of attention with a new round of backing totaling $40 million from several VC firms. For a company this size that’s a substantial boost, and the new funds will be used to strike more partnerships and offer more services to more markets.

To be clear, the firm is focused primarily on markets in Europe. But if Number26 doesn’t bring its business model to the US, other ventures like it surely will, and some have already.

It will be interesting to see how this plays out. The financial services industry has always been relatively (and that’s a key word) stable because the barrier to entry is so high. The technology industry builds on releases from disruptive startups to grab huge market share with astonishing speed, and existing platforms become obsolete virtually overnight. That’s why there are new entrants in the technology top 10 on a regular basis. By contrast, it’s virtually impossible for an upstart in the financial services field to dislodge the likes of Citigroup and JP Morgan Chase.

These new entrants probably change that equation right away, but they have the potential to make a major dent. They’re not pure financial services providers, and they’re not tech firms per se—they’re a curious hybrid that draws on the best of both worlds. And their strengths are distinctive.

They’re lean and aggressive, with a much smaller body count than their traditional rivals. While established institutions lack flexibility, these companies rely on a scalable network infrastructure that can be adjusted easily to take advantage of everything from market shifts to new partnerships. They form strategic alliances with other fintech vendors to offer new services, all through a constantly changing mobile app. They’re ready and willing to abandon cherished norms in order to benefit from a changing business environment. And the more VC backing they get, and the more capitalized they become, the more of a threat they represent.

These are the undeniable characteristics of the next wave of financial services providers. How does that match up with current options?

Written by Jack Dougal