The Economist's FinTech
posted by Collin Canright on November 7, 2016 - 10:13am
This week's issue of The Economist mentions FinTech as a factor in two economic trends in financial services and their relationship to technology: falling revenues for investment banks and shifting power for the City of London.
From my marketing-and-media frame of reference, what and how the magazine reports provides a significant indicator of what's important to the broad span of international financial executives and political operatives. Past articles focused on FinTech as an emerging trend. Now it's a competitive force.
"Investment Banking: Rebooting" focuses on how Goldman Sachs is buying and building software firms to stay relevant. The firm faces dramatically falling revenues in once lucrative lines of business and regulations designed to put banks firmly in an intermediary role.
"But that intermediary role is also under attack," The Economist reports. "Big fixed-income investors can underwrite many debt offerings directly. Fewer companies want to issue public shares. New competition has emerged in the shape of more than 300 "fintech" companies, a broad term for entities using technology to do what existing banks do with more people and at higher cost."
In "Brexit and the City: From Big Bang to Brexit," the editors suggest that despite the difficulties of Brexit, the City of London will still reign as the world's financial capital. "As for claims that nowhere else can compete, London will surely remain Europe's biggest financial centre. But finance is not static. Young people in the fast-expanding "fintech" business could shift almost anywhere."
That they could. To find out more about the global power of FinTech, we're planning a trip to London in early December. If you'd like to meet or know someone we should, let me know at email@example.com.
To round it all off, this week's issue of The Economist also reports on zcash, a new open-source cryptocurrency using the bitcoin code but improving key processes, while our Blockchain Watch includes a look at blockchain backlash on the part of established software firms.
Now, to this week's links:
FinTech Week in Chicago
It isn't official but it might as well be. We'll be attending the FinTEx Chicago Science Fair 5:30 - 7:30 on Wed. Nov. 9, which showcases Midwest FinTech firms. The next day, we'll be at the Morningstar FinTech Forum 5:00 - 8:00 on Thurs. Nov. 10, which showcases Morningstar's new local technology focus.
Is the OCC taking a step toward a “regulatory sandbox” for FinTech?
The agency will establish an Office of Innovation to implement a new framework for “responsible innovation,” a move which follows the decisions of international regulators in the UK, Singapore and Australia to examine FinTech firms more closely, according to Derivations Law. Here’s where you can find the OCC’s full recommendations.
Banks fight back: we can play the digital game too
Banks have the infrastructure to last over time, a trait that FinTech firms lack. Most people, including millennials, are more likely to trust a bank than a startup with their hard-earned cash. And banks are becoming savvier overall with their customer experience efforts. These and other factors are driving the collaboration between banks and FinTech companies and signaling that banks are perfectly capable of adapting to new technologies in order to compete, argues Robin Raskin in a story for the Huffington Post.
Venture capitalists get radical and invest in a … bank
FinTech investors are betting on a one-branch bank in Teaneck, New Jersey, a wager that could prove to be more lucrative than investing in a FinTech startup. The Wall Street Journal has the full story.
Where finance and technology collide: the World FinTech report 2017
Technology consulting firm Capgemini released a 2017 report and infographic that reveals the growing consumer distrust in FinTech firms and banks, remaining confusion at traditional banks on how to apply FinTech strategies and other surprising findings in the financial sector.
Let’s Talk Payments: FinTech Outlook for 2017
The popular payments news site partnered with Opus consulting released a detailed report on what’s to come for remittances, contactless payments, mobile wallets and other payments issues in 2017. Take a look at the full report.
Then and now, PYMNTS’ first seven years of tracking innovation
The online payments innovation news site reflected on payments innovation over the past few years, ranging from seamless mobile payment integration for in-store purchases to digital assistants like Siri and Google Home that help users with digital consumption. Here’s PYMTS.com’s walk down memory lane.
THE BLOCKCHAIN WATCH
Wall Street’s blockchain obsession hasn’t produced a global revolution so far, just a lot more consulting work
After all the hype surrounding blockchain over the past couple years, the actual application possibilities for banks and consumers remains to be seen. So far, says Joon Ian Wong, the hype has only brought big consulting bucks from banks.
Blockchain is solution looking for problem, says software giant CEO
Xero CEO Rod Drury thinks blockchain won’t provide an alternative to existing financial structures if it doesn’t demonstrate the traits of an accurate, irrefutable ledger, according to Cointelegraph. “I think it’s mathematically interesting but I think the nature of the world at the moment—surveillance culture and tribalism—means it’s very unlikely that a distributed view of the money supply is never going to happen.”