Conference Presentation, Keynote, Presentation
Any Company Can Offer Financial Services
- Nearly every company is expected to derive a significant revenue portion from financial services in the not-too-distant future, with consumer attendees in the sector projected to rise from 10% to 80% within five years absent job changes.
- New infrastructure enables startups to launch faster and cheaper, allowing companies previously unrelated to finance to enter the market; thousands of experiments are anticipated on this layer, with close to 2,000 fintech startups launching annually continuing this trend.
- Approximately 50% of Americans are expected to remain living paycheck to paycheck, accessing expensive, distinct financial systems despite broader industry transformations.
- Existing institutions face persistent barriers including brick-and-mortar legacies, long-term leases, and the training of thousands of employees; 75% of IT budgets at large banks are currently allocated to maintaining products not loved by customers.
- Current banking stacks require nearly two years to secure over a dozen partnerships before a new product reaches the market, though this is being streamlined by service providers reducing integration points for checking accounts, debit cards, and compliance to single interfaces.
- Companies like Shopify and Mindbody already derive almost 50% of their revenue from financial services, while tech firms like Apple, Uber, and Lyft aim to leverage these services to increase margin, reduce acquisition costs, or replicate the success of their primary hardware and platform offerings.
- Infrastructure providers such as Plaid, Blend, Synapse, and ComplyAdvantage are expected to accelerate product creation, streamline mortgage applications, and reduce compliance integrations from hundreds to one, enabling entrepreneurs to focus on distribution rather than infrastructure.
- Innovation in financial services remains challenging due to high regulation from multiple state and federal bodies, though technology is expected to improve money laundering detection and synthetic identity identification across auto, personal, and small business categories.
- Fraud detection requires continuous innovation as bad actors migrate to weaker system points, while the opportunity for disruption is viewed as massive in the US and even larger globally, despite varying international regulations and payment systems like those in Mexico where 80% of payments are cash.
- Consumers are expected to benefit from increased choice, better products, and affordability, with the industry moving toward universal access to affordable services and the potential for deeper consumer affection toward providers.
- Large institutions may replace legacy systems and spend less on maintenance by partnering with startups, while the majority of future innovation is projected to come from non-traditional entrants adding financial services for the first time rather than pure startups or incumbents.
- Specific improvements are anticipated in the not-too-distant future for student loan interfaces and earned pay access, driven by companies leveraging new infrastructure to remove friction such as faxing statements.