Will financial technology startups disrupt traditional banking?
Executive Summary
The surge of financial technology startups—or “fintechs”—is improving the speed and quality of customer service of lending, money transfers, wealth management and much more in the banking industry. As these firms become more prominent in the financial services sector, banks and regulators will have to adapt. Banks already are beginning to integrate these new services by investing in or partnering with fintechs and by developing similar technologies on their own. Regulators are rushing to understand the nature of these new firms and the potential benefits and threats they pose to the financial system. As the financial sector debates the future of fintech, here are some of the issues under consideration: Will fintech replace traditional banking? Are alternative lenders reshaping how people borrow? Is government capable of regulating the emerging fintech industry?
Resources
Bibliography
Books
Chishti, Susanne, and Jànos Barberis, eds., “The FINTECH Book: The Financial Technology Handbook for Investors, Entrepreneurs and Visionaries,” Wiley, 2016. Industry experts present a guide to some of the trends affecting “fintech” and the traditional banking sector.
King, Brett, “Breaking Banks: The Innovators, Rogues, and Strategists Rebooting Banking,” Wiley, 2014. The founder of mobile-banking service Moven explores how technology is disrupting the banking industry.
Popper, Nathaniel, “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money,” Harper, 2015. A New York Times journalist profiles the founders of the cryptocurrency bitcoin.
Vigna, Paul, and Michael J. Casey, “The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order,” St. Martin’s Press, 2015. Wall Street Journal reporters explain the rise of cryptocurrencies and why it matters for the economy.
Articles
Corkery, Michael, “As Lending Club Stumbles, Its Entire Industry Faces Skepticism,” The New York Times, May 9, 2016, http://tinyurl.com/
Gandel, Stephen, “Here’s How Citigroup Is Embracing the ‘Fintech’ Revolution,” Fortune, July 1, 2016, http://tinyurl.com/
Marino, John, “Big banks shift fintech strategy,” CNBC, April 11, 2016, http://tinyurl.com/
Micklethwait, John, “Jamie Dimon on Finance: ‘Who Owns the Future?’” Bloomberg Markets, March 1, 2016, http://tinyurl.com/
Moyer, Liz, “From Wall Street Banking, A New Wave of Fintech Investors,” Deal Book, The New York Times, April 6, 2016, http://tinyurl.com/
Rudegeair, Peter, and Telis Demos, “Slump Might Turn Anti-Bank SoFi Into a Bank,” The Wall Street Journal, July 12, 2016, http://tinyurl.com/
Sorkin, Andrew Ross, “Fintech Firms Are Taking On the Big Banks, but Can They Win?” The New York Times, April 6, 2016, http://tinyurl.com/
Reports and Studies
“Digital Disruption: How FinTech Is Forcing Banking to a Tipping Point,” Citigroup, March 2016, http://tinyurl.com/
“Fintech and the evolving landscape: landing points for the industry,” Accenture, April 2016, http://tinyurl.com/
“Opportunities and Challenges in Online Marketplace Lending,” U.S. Department of the Treasury, May 10, 2016, http://tinyurl.com/
Arner, Douglas, Jànos Barberis and Ross Buckley, “The Evolution of Fintech: A New Post-Crisis Paradigm?” University of Hong Kong Faculty of Law Research Paper, October 2015, http://tinyurl.com/
The Next Step
Government Regulations
“US Congress calls upon government to support blockchain and fintech,” EconoTimes, July 20, 2016, http://tinyurl.com/
Kar, Ian, “A digital payments pioneer was fined by US regulators for data security flaws,” Quartz, March 3, 2016, http://tinyurl.com/
Shaban, Hamza, “Apple And Google Are Teaming Up To Lobby For FinTech,” BuzzFeed News, Nov. 2, 2015, http://tinyurl.com/
International Impact
Bateman, Joshua, “China is disrupting global fintech,” TechCrunch, Aug. 14, 2016, http://tinyurl.com/
Kelly, Jemima, “Britain and Korea form fintech investment partnership,” Reuters, July 22, 2016, http://tinyurl.com/
van der Beek, Wim, “Fintech isn’t disrupting Africa’s financial industry—it’s building it,” Quartz, Aug. 3, 2016, http://tinyurl.com/
Partnerships
“FinTech Group AG and Rocket Internet collaborate to launch strategic technology partnership,” EconoTimes, July 27, 2016, http://tinyurl.com/
Shen, Lucinda, “J.P. Morgan Is Bringing Some Fintech Startups In-House,” Fortune, June 30, 2016, http://tinyurl.com/
Whitehouse, Kaja, “Fintech strikes again; Regions partners with start-up,” USA Today, Oct. 4, 2015, http://tinyurl.com/
Technological Innovation
Desai, Falguni, “The Great FinTech Robo Advisor Race,” Forbes, July 31, 2016, http://tinyurl.com/
Kuznetsov, Nikolai, “How Fintech Is Changing The Way We Handle Money,” Huffington Post, July 28, 2016, http://tinyurl.com/
Wadhwa, Tina, “There’s a big misunderstanding about technology’s impact on Wall Street,” Business Insider, Aug. 10, 2016, http://tinyurl.com/
Organizations
American Bankers Association
1120 Connecticut Ave., N.W., Washington, DC 20036
1-800-BANKERS
http://www.aba.com
Trade association for the banking industry.
Consumer Financial Protection Bureau
1700 G St., N.W., Washington, DC 20552
855-411-2372
http://www.consumerfinance.gov/
Government agency that oversees consumer financial products.
Electronic Transactions Association
1620 L St., N.W., Suite 1020, Washington, DC 20036
202-828-2635
http://www.electran.org
Trade association for the payments industry, including traditional banks and online small-business lenders.
Federal Trade Commission
600 Pennsylvania Ave., N.W., Washington, DC 20580
202-326-2222
https://www.ftc.gov
Government agency charged with stopping anti-competitive, deceptive or unfair business practices.
Financial Innovation Now
c/o Franklin Square Group 1155 F St., N.W., Washington, DC 20004
202-251-3322
https://financialinnovationnow.org
Alliance of tech giants, including Amazon, Apple, Google, Intuit and PayPal; the group’s executive director, Brian Peters, is a partner at Franklin Square Group, a Washington, D.C.-based tech lobbying firm.
Financial Services Roundtable
600 13th St., N.W., Suite 400, Washington, DC 20005
202-289-4322
http://fsroundtable.org
Financial industry trade group representing large banks, insurers, asset managers and credit card companies.
Fintech Innovation Lab
(No physical location available)
info@fintechinnovationlab.com
http://www.fintechinnovationlab.com
Accelerator program located in New York, London, Hong Kong and Dublin for fintech startups. The program is run worldwide by Accenture, a consultancy, and the U.S. program is also run by the Partnership Fund for New York City.
FinTech Sandbox
(No physical location available)
info@fintechsandbox.org
http://fintechsandbox.org
Boston-based non-profit that provides 6 months of access to data and support for eligible fintech startups.
FinTEx Chicago
(No physical location available)
info@fintex.org
http://fintexchicago.org
Non-profit industry association for fintech companies based in Chicago.
Independent Community Bankers of America (Washington office)
1615 L St., N.W., Suite 900, Washington, DC 20036
800-422-8439
http://www.icba.org
Industry representative for small and midsized banks.
Innovative Lending Platforms Association
(No physical location available)
Info@innovativelending.org
http://innovativelending.org
Trade association for three prominent small-business lenders: OnDeck, Kabbage and CAN Capital.
Marketplace Lending Association
Info@marketplacelendingassociation.org
http://www.marketplacelendingassociation.org
Trade association for three major online lenders: Lending Club, Prosper Marketplace and Funding Circle; it is scheduled to open a Washington, D.C., office soon.
Office of the Comptroller of the Currency
400 7th St., S.W., Washington, D.C. 20219
202-649-6800
http://occ.gov/
Independent body of the U.S. Treasury Department that oversees national banks.
DOI: 10.1177/237455680218.n1