A fintech shakeout will see a whole lot of Pets.coms cleared out of the way, World Economic Forum Disruptive Innovation in Financial Services Project Lead Jesse McWaters predicted Monday
But at the end of day there are going to be diamonds in the rough that survive, said McWaters, alluding to one of the most infamous companies in the dot.com stock crash in the early 2000s that didn’t.
“It’s going to be hard to figure which ones the survivors will be,” McWaters told an FDIC fintech forum.
At the session, the leader of financial innovation research for the consortium which brings together financial leaders from around the globe every January in Davos, Switzerland said fintech holds the promise of safer banks and specialized loans for florists.
Stability and soundness in the banking world will be improved as fintech enables greater collaboration and data sharing among banks for improved visibility of fraud, cyber dangers and systemic risk, McWaters explained
He added the technology will bring forth a proliferation of specialized lending products by banks.
McWaters said one could be a boutique loan for florists to take into account their busy and slack periods.
The international fintech expert said the narrative has changed since 2013 when the feeling was a couple of guys and girls in garages would becoming dominant new players in financial services thanks to technology.
“At the time, many workers hated their banks. They wanted to run to the exits for the developers of any new apps,” McWaters recalled.
But what has happened is long standing financial services giants have taken the lead in fintech, he said.
McWaters pointed to Vanguard’s success at far outpacing Betterment by attracting $75 billion to its robo adviser.
On another fintech development, he said Americans have resisted paying with their cellphones because they are comfortable using credit cards in their traditional wallets.
FDIC Chair Martin Gruenberg opened the forum by saying the potential of fintech to aid financial inclusion is of to the interest to the agency.
“Just as graduating from school and getting a first job are milestones, a bank account, too, is a key step on the road to financial well-being,” the FDIC chief.
He noted a bank account gives households the key ability to safely deposit and store income, make payments toward monthly obligations such as rent or a mortgage.
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