Here's what a Trump presidency means for US fintech
(BII)
Donald Trump's surprise win of the US election has already caused volatility among financial markets around the globe.
It's also likely that the Trump presidency will have an impact on the US fintech industry. Here are our initial thoughts:
Fintech investment will likely slow. A slow down in US fintech funding would track the trend seen in the UK in the aftermath of Brexit — at least in the near future. That's because economic uncertainty makes investors cautious. Trump's economic plan entails widespread changes that would take time to implement, and the direct and indirect impacts of the plan aren't immediately clear.
Less chance of fintech-specific regulation. Prior to announcing his economic plan in August, Trump repeatedly called for the scaling back or repeal of Dodd-Frank, and suggested abolishing the Consumer Finance Protection Bureau (CFPB), the most fintech-friendly of the US agencies. His final plan made no specific mention of either, but it did include the statement, "I will issue a temporary moratorium on new agency regulations." This could be a significant blow for fintechs, which have been calling for fintech-specific regulation in order to simplify their paths to compliance and stimulate further growth.
Restricted access to labor. Trump has been very vocal about his desire to significantly reduce immigration to the US. If he goes forward with his immigration policies, it could be a serious setback for the US startup scene, including fintech, which sources a large volume of its skilled workers and entrepreneurs from outside the country. For example, 51% of US unicorns, or startups valued at over $1 billion, including fintechs Stripe and Oscar, were founded by immigrants, according to a study by the National Foundation for American Policy.
Regardless of how the situation plays out under President Trump, there is no denying that the world has still entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.
No firm is immune from the coming disruption and every company must have a strategy to harness the powerful advantages of the new fintech revolution.
The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world: The most contentious conflicts (and partnerships) will be between startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology & processes:
Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks provide a valuable service, but online-only banks can offer many of the same services with higher rates and lower fees
Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing much faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful
Traditional Asset Managers vs. Robo-Advisors: Robo-advisors like Betterment offer lower fees, lower minimums and solid returns to investors, but the much larger traditional asset managers are creating their own robo-products while providing the kind of handholding that high net worth clients are willing to pay handsomely for.
As you can see, this very fluid environment is creating winners and losers before your eyes…and it’s also creating the potential for new cost savings or growth opportunities for both you and your company.
After months of researching and reporting this important trend, Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has put together an essential report on the fintech ecosystem that explains the new landscape, identifies the ripest areas for disruption, and highlights the some of the most exciting new companies. These new players have the potential to become the next Visa, Paypal or Charles Schwab because they have the potential to transform important areas of the financial services industry like:
Retail banking
Lending and Financing
Payments and Transfers
Wealth and Asset Management
Markets and Exchanges
Insurance
Blockchain Transactions
If you work in any of these sectors, it’s important for you to understand how the fintech revolution will change your business and possibly even your career. And if you’re employed in any part of the digital economy, you’ll want to know how you can exploit these new technologies to make your employer more efficient, flexible and profitable.
Among the big picture insights you'll get from The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry:
Fintech investment continues to grow. After landing at $19 billion in total in 2015, global fintech funding had already reached $15 billion by mid-August 2016.
The areas of fintech attracting media and investor attention are changing. Insurtech, robo-advisors, and digital-only banks are only a few of the segments making waves. B2B fintechs are also playing an increasingly prominent role in the ecosystem.
It's not all good news for fintechs. Major hurdles, including customer acquisition and profitability, remain. As a result, many are becoming more willing to enter partnerships and adjust their business models.
Incumbents are enacting strategies to ensure they remain relevant. Many financial firms have woken up to the threat posed by fintechs and are implementing innovation strategies to stave off disruption. The majority of these strategies involve some interaction with fintech firms.
The relationship between incumbents and fintechs continues to evolve. Fintechs are no longer viewed exclusively as a threat, nor can they be ignored. They are increasingly viewed as partners, but that narrative alone is too simple — in reality, a more nuanced connection is taking hold.
This exclusive report also:
Assesses the state of the fintech industry.
Gives details on the drivers of its growth.
Explains which areas of fintech are gaining traction.
Outlines the range of current and potential models for fintech and incumbent interaction.
The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry is how you get the full story on the fintech revolution.
To get your copy of this invaluable guide to the fintech revolution, choose one of these options:
Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
Purchase the report and download it immediately from our research store. >> BUY THE REPORT
The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the fast-moving world of financial technology.
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