Panel
The Future of FinTech
- An "Uber moment" in finance is anticipated soon, driven by new business models rather than technology alone, with a "violent" pace of disruption requiring bold action from all industry participants.
- Consumer behavior is expected to shift significantly within three years as Millennials prioritize trust in technology brands like Google and Facebook over traditional banking institutions.
- Fintech companies are expected to challenge every aspect of retail and business banking, having expanded from 90% of U.S. investment in Silicon Valley six years ago to approximately 60% distributed throughout the country today.
- Industry focus is shifting from technology-centric approaches to addressing specific needs such as income inequality, the unbanked population, and the $100,000 lending gap left by traditional banks.
- Large banks are identified as having core systems dating 30 to 40 years old, creating a critical opportunity to replace infrastructure to become nimble, though they are expected to transform into back-office providers, balance sheet providers, and utility-like entities over the next decade.
- The banking role is predicted to change dramatically within 10 years, with the bottom 95% of retail banking potentially served by the "wolves" while banks focus on business banking and the top 5% of retail clients.
- Financial services are forecast to become embedded in lifestyle practices and utilities, featuring invisible API integration and usage-based pricing models such as insurance paid by the mile or by biometric data.
- Mobile technology and smartphones, currently held by half the world, are viewed as the fastest method to deliver basic financial services to underbanked populations and solve liquidity issues in real-time.
- The sector faces risks including a potential venture capital bubble burst causing a domino effect of failures, the erosion of the American middle class, and the removal of human discretion in credit decisions by impersonal algorithms.
- Regulatory changes and the CFPB's Catalyst Project are expected to create opportunities for pure-play providers to perform regulatory arbitrage and for banks to partner with innovative startups rather than disappearing.
- Cryptocurrency and global financial systems by tech giants like Facebook are seen as having potential to evolve over the next five to ten years, though their maturity and exact evolution remain uncertain.