October 17, 2017
Depending on your perspective and predisposition, the future of FinTech is exciting and terrifying for the exact same reason: change. Incumbents, FinTechs, and tech giants like Amazon, Apple & Google are relying on new technology to lead consumers and businesses to a new era of financial services. Will it happen? Yes. However, we seem to focus a lot on the technology. Ask yourself what the top words that come to mind are when you think of FinTech. I’d imagine it’s something like blockhain, AI, ML, cloud, UX/CX, robo-advisors, digitization, and mobile-first. It’s as if the tech is the evolution. It’s not – at least not for financial services. The tech in FinTech only has to be leveraged in the right way to make a difference to customers. That's it. That’s the only requirement. For that matter, it doesn’t even have to be cutting-edge, new tech – at least not for most customers. Evolution is about survival, nothing more or less. That’s what makes FinTech so exciting (and terrifying) – everyone has a singular mission: to be a part of the future. Today, we look at two very different futures in FinTech from last week:
"FinTech is not a disruptive force (and blockchain is not a disruptive technology). Rather, it’s the history of institutional banking repeating itself. And the further into 2017, the more apparent it is that the global market is extremely limited for ~8K FinTech startups to have a sustainable future altogether. In the years ahead, the success denominator in FinTech will be its scale. Only the ones able to score powerful partnerships will step into the next phase of development – institutionalization, which is a short track to becoming another financial institution and the very same type of organization tech entrepreneurs are now so passionate to call obsolete.
Financial services are not new. The sheer complexity of doing business within the current infrastructure makes survival acutely difficult. The quick shift from FinTechs are the future, banks are doomed to FinTech + bank partnerships are the future is not mere coincidence. Technology has created a lot of new industries in the last 20-30 years but FinServ isn’t one of them (at least not yet – see the next article). Partner, merge, acquire is the survival playbook for FinTech. Very few can and will forge their own lineage.
Regardless of your personal feelings on Julian Assange and WikiLeaks, this tweet is something to think about – true or not. About 10 years ago, this idea wasn’t even possible. Now, depending on where you live in the world, you can buy almost anything with Bitcoin (or just hodl it). It’s proof that a parallel system to store and transfer value is here and viable. Will Bitcoin survive? Maybe. That’s not the point. The crypto-cat is out of the bag. It’s not as easy to use or as fast as Visa, PayPal, AmEx, or any traditional banking system. However, it’s got a large network; it’s good enough, and it’s decentralized. Those are decent odds for survival.
P.S. How many of you are wishing you had been investing in Bitcoin since 2010?
Thank you for your time this week! Share with your friends and see you next week!