What Uber Can Teach Us About Fintech

fintech, Carrie Rodriguez, NPR Tiny Desk

I moved to Austin in 1996 to start a factoring and asset-based lending business for State Bank. It was an amazing transitional time for me, and the business was ultimately very successful and sold to two different banks eleven years later. Looking back, I can now say that while Ft. Worth will always have a place in my heart, it took almost no time for Austin to feel like home. It has a culture, an energy, and value on the outdoors that I connect with on a pretty deep level.

It also has amazing music. Personally, I’m a big fan of Carrie Rodriquez. She’s a local treasure, who also happens to be my cousin, and someone you should absolutely check out if you’re not familiar with her music. She recently performed an NPR Tiny Desk session that’s a great introduction if you have a few minutes. Put on some headphones and click the video shot above for the full clip.

But Austin has some problems, too. If you’ve followed the story behind Uber and Lyft, Prop. 1, and the eventual fallout after voters rejected the measure, you know that Austin and disruptive technology is a pretty huge topic of discussion right now. There are worthwhile points on both sides of the rideshare argument, but one of the intriguing things for me in that debate was the resemblance to what’s happening with fintech and the growing pains it’s going through.

To say there are a lot of skeptics regarding fintech might be a pretty big understatement. There are some really smart people out there, many with decades of experience in financial services, who think fintech is either doomed, over-hyped, or somewhere between the two. Do a quick search for “fintech” in the news and you’ll find opinions such as:

  • “They say millennials don’t like banks — I say, yeah, until that first paycheck. Then they direct deposit and they love Chase.” Jamie Dimon, courtesy of The Business Insider
  • “While fintech companies have done a remarkable job so far at creating an illusion, the cracks are now emerging.” Mark Tluszcz, CEO of Mangrove Capital Partners and Chairman of Wix
  • “It’s a sign that as various American industries are being disrupted by digital competitors, the banking industry — partly due to its vast funds, partly to it being more heavily regulated, and partly because traditional banks offer a broader range of services — will be able to stave off fintech’s recent surge in popularity.” Jon Marino, CNBC

Fintech isn’t going anywhere…

For me, fintech isn’t a question of “if”. A recent piece by The Economist summed up growing pains and additional challenges fintech providers are facing:

“A largely unregulated technology sector is bumping up against a heavily regulated finance industry. The result may be that advances in this area will be slow as regulators clamp down on anything that seems too anarchic. The big banks, conscious of the ability of regulators to fine them for aiding and abetting money-laundering, will proceed with caution.”

You’ll notice that there are no “fintech is dead” insights in that quote. There are lessons to be learned, of course. Valuations and capital efficiency are just two areas where these emerging technologies need to do a better job to truly move forward in today’s marketplace.

Those are challenges, however, and every emerging technology faces a mountain of them. In my opinion, fintech is here to stay, and I’m not the only one with this opinion. Earlier this year, the EY inaugural Fintech Adoption Index reported the following:

  • 15.5% of digitally active consumers currently use FinTech products
  • Payment services are the most popular product offering
  • FinTech users are younger, wealthier and increasingly urban

Additionally, and perhaps more importantly, the index reports that adoption of fintech technologies could actually double within the next 12 months, and more than 15% of polled active consumers had used at least two fintech services. That doesn’t sound like a segment on the brink of disaster.

Barclays’ (now former) VP of Entrepreneurial Partnerships, and the driving force behind the bank’s bitcoin efforts, Simon Taylor, seems to agree. On June 24th, Taylor is scheduled to leave the organization to join 11:FS, a fintech consultancy that looks to build a portfolio of blockchain investments and provide research services.

Larger, more traditional banks are also taking note. Last month, Wells Fargo introduced FastFlex, a new product designed to deliver online loans funded as soon as the next business day. This quick, fast, and easy solution is pretty clearly designed to address the growing competition fintech offerings have created, as well as the pain-points those solutions support.

Both Taylor and Wells Fargo are fairly clear indicators that fintech isn’t a fad. For me, they’re actually examples that do a good job of legitimizing what’s going on in the industry and why all businesses now need to figure out how to utilize these technologies to help scale while also better serving their clients.

For me and the rest of the Far West Capital team it’s even more simple. Fintech is another tool we can use to help improve on our brand promise – earn trust and deliver success with no surprises.

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