Why Bad Decisions Won’t Derail Fintech


Last week I talked a quite a bit about fintech, what people are saying about it, and what I think will happen moving forward. The short version is that while fintech is going through growing pains, I believe it provides a real opportunity for organizations to better-serve their clients.

Some of those growing pains are predictable. Figuring out how to make these technologies scale, and delivering the quality of tools and services that build trust are problems we expect to see with any new industry, and fintech is no different.

Other issues are a bit more subtle, though, and that’s what I’d like to talk about this week.

In the early days of Far West Capital I made a decision where I relied on data and didn’t trust my intuition. Lending Club is going through some pretty difficult times right now because of a series of bad (and in some cases unethical) calls where it was the human element that got in the way, and they ignored, altered, or suppressed information. And they’re not alone. A quick search in the news brings up the following headlines:

I don’t know what disconnect existed that made the decisions at Lending Club, Volkswagen, Valeant, or Microsoft possible, but I think the situation clearly illustrates that there are real opportunities for fintech as the industry moves forward.

A recent NPR story that covered Lending Club’s situation stated that the two primary lessons the industry should learn about fintech is that oversight is essential and that lending organizations need “skin in the game”.

I think both are true, but I believe that the real potential for fintech is its ability to shrink the distance between technology and human interaction. As the technology evolves and improves, bridging that gap will increasingly mitigate risk, inform decisions, provide transparency, and ensure accountability. And, ultimately, help organizations better serve clients, teams, and shareholders.

It’s still early, and it’s still learning, but I believe fintech is absolutely headed in the right direction.


Showing 2 comments
  • Felix Pineda

    Thanks Cole for sharing such clear view which I think it hits the central point: us humans, the best combination of science and art.
    Considering that technology is of huge help for decision-making, with or without the use of technology, many times we just decide to get into big problems and many times we also decide to get away from big troubles … pure human decision that technology can not replace … until when?

  • Ken Yager

    Fintech will evolve and survive in some fashion. Part of it likely have to go away, but it is a natural evolution. Factorings advances and other financial institutions have followed similar maturation processes. What happens next will be the thrill of it all.

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