posted by Collin Canright on January 11, 2018 - 8:58am
Chicago's FinTech development and investment reputation has been on the rise, and we're expecting big things in this city for 2018. Crain's Chicago Business suggests that Google is planning a major new center here, while city officials remain hopeful that it will make the first cut for Amazon's HQ2.
They are said to be drawn to the work ethic of the city's tech talent, its world-class universities, and its investment ethos. The history of Chicago's financial innovation probably doesn't hurt either.
"There's no fluff allowed in Chicago finance," says Doug Bobenhouse, newly appointed consultant at 11:FS. "You have to have a real business case. You need a real plan to make money."
As if to prove the point in other Chicago FinTech news, venture firm West Loop Ventures finalized an investment in New York-based online lender FinMkt. "A massive percentage of online loan applications are rejected. Instead of sending rejection notices, online lenders are integrating with FinMkt," writes partner Jeffrey Carter in his blog.
Challenger FinTech consultancy 11:FS announced Bobenhouse's new gig on its FinTech Insider podcast, State of the Union 4. The conversation covered trends in loyalty cards, core banking systems, payments, and the state of the technology business in Chicago.
In keeping with the hometown booster theme, this week's links start with Chicago-based Crunchbase reporter J.D. Rowley and includes predictions from area publications Banking Strategies and Transaction Directory.
2018: blockchain soldiers on
Growth in the cryptocurrency markets won't continue like Q4 2017. In what will "likely be a rocky year for crypto markets," Rowley expects:
- More countries’ central banks (will) experiment with blockchain implementations of national currencies or internal ledger systems.
- Collaborations between traditional financial institutions to develop shared blockchain infrastructure to start bearing fruit.
- Die-hard believers in open, unregulated blockchain systems will be (ineffectively) dismissive of these efforts.
2018 blockchain predictions – are you ready?
Simon Taylor of the 11:FS consultancy makes his blockchain predictions, starting with this assessment of 2017: "The dirty little secret of crypto is that for all its wild price increases, there isn’t any underlying economic value being derived…yet. The key word in that sentence is “yet”; it has the potential to, but we have to get from where we are now to somewhere better in 2018 otherwise we could see the thing unravel in a proper crash." His predictions:
- “Web 3.0” (decentralized technology) projects will gain traction.
- Institutions will need the knowledge and infrastructure to safely invest in and manage crypto assets.
- Initial Coin Offerings (ICOs) will get smaller and more legitimate.
- The first “pump-and-dump” ring will be arrested as organized crime.
- 2018 is the year crypto has to grow up.
From customer experience to bank branch significance
Banking consultant David Kerstein gives his banking predictions to Chicago's Banking Strategies:
- The "branch of the future" is here. . .and it’s still a branch.
- It’s all about the customer experience.
- The universal banker is the new standard.
- Technology will facilitate improved personal service, not drive self-service.
- It’s about agility.
Transaction News publishes its 2018 predictions
Vendors that provide payments and other transactions services give their outlooks for 2018. Some highlights:
- Financial institutions will need to onboard more vendors to help with technological complexity, not fewer.
- The need to meet customer expectations for great user experience will push technology budgets up.
- Card payments will continue to increase, and consumers will want increasing control over card management.
London’s FinTech sector is top area for VC investment in Europe
Despite Brexit, investors still think of London as Europe’s FinTech hub, reports Bank Innovation. The data come from London & Partners in a Pitchbook report, showing that "venture capital investment in UK’s tech sector reached an all-time high of £2.99 billion ($4.05 billion) in 2017." Total investment for 10 European cities is estimated at over £4.8 billion ($6.5 billion).
Quote of the Week
"If we fail to act on fintech, we are setting ourselves up for problems down the road. Not because the fintech folks are evil. . . but because we are behind the curve."
- Rep. Emanuel Cleaver, D-Missouri, in American Banker