A fintech shakeout will see a lot of Pets.coms cleared out of the way, fintech expert Jesse McWaters warned Monday, in an allusion to the company that infamously didn't survive the dot.com stock crash of the early 2000s. But at the end of day, he added, there are going to be diamonds in the rough that do survive. The problem? “It’s going to be hard to figure which ones the survivors will be,” McWaters told an FDIC fintech forum.
McWaters leads the Disruptive Innovation in Financial Services research project for the World Economic Forum, the consortium that brings together financial leaders from around the globe every January in Davos, Switzerland. He predicted that fintech will improve the stability and soundness in the banking world, as it enables greater collaboration and data sharing among banks for improved visibility of fraud, cyber dangers and systemic risk.
He added the technology will also bring forth a proliferation of specialized lending products by banks. For example, McWaters said, one could be a boutique loan for florists that takes 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 since then, long standing financial services giants have taken the lead in fintech, he said. McWaters pointed to Vanguard’s success at attracting $75 billion to its hybrid robo/human advisory service. That far outpaces assets at fintech startup leader Betterment.
On another fintech development, he said Americans have resisted paying with their cellphones because they are comfortable using credit cards in their traditional wallets.