With a better business model you can charge lower fees - keeping users from switching to competitors.
But more importantly this type of business model is an exceptionally effective deterrent to defend off existing businesses. That's because the incumbent typically responds either not at all or too late.
Here's the magic - the incumbent’s failure to respond, more often than not, results from thoughtful calculation.
How could that be?
Most startups fail. So it's correct to underestimate startups. You can't accurately predict the threat of some unproven upstart. This leads to denial.
Having a successful business model reinforces the incumbent's worldview. An executive in this position can't help but experience some confirmation bias. Often they ridicule the startup's new business model.
As the threat of the startup grows, the incumbent may go through a period of fear and anger. Internally, it's a conflicting process. On one side is the pressure to do something, and on the other is the pressure to avoid damaging the legacy business model.
Inevitably, the executives don't see a justifiable payoff to warrant damaging the legacy business model. They may dabble in shallow solutions, but fail to commit in a way that meaningfully answers the challenge.