Panel
Modern Money: How Technology and Culture Are Changing How We Save, Spend and Invest
Milken InstituteLena Rao, Greg Baxter, Mike Cagney, Rebecca Lin, Adam Nash, Don Kwan, Greg D, Craig O, Stephanie Wong, Jr., Matthew Accarrino, Jr., Stephanie Hirschhorn, Jr., Rebecca Garcia, Matthew Panzarino, Zhang Zhuoijia, Caroline O
- Millennials and those aged 25 to 40 are expected to demand superior products, better rates, and digital experiences rather than traditional branch services, with 60 million individuals in this cohort currently underserved by banks.
- A significant risk exists regarding the underwriting of millennials who avoid credit cards in favor of debit or prepaid options, potentially creating a "huge challenge" for banks as these consumers mature and require loans.
- Approximately 70 million baby boomers controlling $15 trillion in liquid net worth are approaching retirement within a 10-year window, presenting a major economic challenge and a generational shift opportunity similar to the 1970s.
- The U.S. financial services market is projected to undergo consolidation, with the current 7,000 institutions expected to decrease significantly within the next 5 to 10 years.
- Incumbent financial institutions are anticipated to invest in or acquire fintech firms, while partnerships are viewed as a more viable strategy than direct acquisition for accessing new customer segments or balance sheet capacities.
- Marketplace lenders are predicted to expand into the deposit side of the business to secure retail capital, facing potential regulatory hurdles regarding FDIC insurance requirements that could disrupt their business models.
- New financial service brands are expected to be built over the current decade as millennials enter the workforce, with a trend toward massive unbundling and experimentation lasting 10 to 15 years before re-aggregation occurs.
- Regulatory frameworks are evolving to support consumer-friendly innovation through initiatives like the CFPB's "Project Catalyst," "Disclosure Waiver Authority," and anticipated "no action letters" to reduce uncertainty for startups.
- Cryptocurrency regulations are expected to eventually address Patriot Act, KYC, and AML compliance issues, balancing financial inclusion in emerging markets against counter-terrorism financing concerns.
- The banking industry is shifting toward risk elimination, with some institutions opting out of infrastructure, SME lending, or high-risk country relationships, creating openings for non-bank competition.
- Technology is forecasted to enable lower transaction fees, reduced borrowing costs, and expanded access for the unbanked, with specific trends in automation, artificial intelligence, big data, and real-time payments expected over the next five years.
- Financial inclusion remains a key opportunity in emerging markets for the 2 billion people without bank accounts, with digital currency and advanced data usage predicted to solve remittance and payment gateway issues in the near future.
- Fintech providers with significant assets are expected to leverage their economic weight to force industry-wide reaction, lowering costs and offering personalized investment strategies that outperform standard target date funds.
- Building a $100 billion business requires disrupting the entire ecosystem beyond traditional bank origination, though obtaining new banking charters remains difficult due to strict FDIC, Fed, and OCC regulations.
- Risks associated with technology, including cybersecurity threats, are identified as critical concerns that must be managed alongside the benefits of automation and data intelligence.