creative destruction of finance
TRANSCRIPT
The Creative Destruction
of FinancePaul Barter, @barterpaul, [email protected]
VP Research at T4G, Tech Strategy Prof at Schulich, Venture Advisor at MaRS
*not a real book, yet.
Late ’20sGood healthGood credit
EntrepreneurialNo real assets
Late ’50sGood healthGood credit
Preparing to retireNon-trivial assets
Imagine 2 People(from your perspective)
Abstracted, systematized, and centralized trust.
Giovanni di Bicci de' Medici
What is a Bank?
Whose trust?
Flow of cash
This brings us to today.
Capital is constrained
Basic assumption of finance
‘The world will be awash in nearly one quadrillion $ of
cheap capital by end of decade’
Basic assumption of finance
Incumbents are untouchable
“There’s a big role for Silicon Valley-style scorched earth entrepreneurship on Wall Street right now, and the people most likely to innovate are newcomers to the industry who have no real stake in the portions of it that need scorching”
“Banks, in particular, seem beset by boredom, unenthusiastic about actually making commercial loans, as many small and medium sized businesses will attest.
This reluctance is likely to erode banks' franchise permanently, as scores of alternative lending entities are being created to fill the void.“
Should we take these competitors
seriously?
General-Purpose Technologies (GPTs)
The next fortune.
What’s a general purpose technology?
What’s going on?
Why does it matter?
1. Invention2. Expansion3. Innovation
Information & Communication Technology(ICT)
Invention Expansion Innovation
*
*not a real book, yet.
What are some Financial Services?
Money transfer & PaymentsLoans & DepositsInvestments & ReturnsInsurance
Payments & Transfers
“PayPal could quite quickly become the largest consumer bank in the world.
You just need to take away the reasons that people remove money from the PayPal account.
And then it’s like, cool, why not just use it for everything?”
Loans & Deposits
Which narrative should you believe?
Investments and
Returns
Insurance
Where is there disruptive innovation?
Loans & DepositsMoney transfer & PaymentsInvestments & ReturnsInsurance
What about the giants?
Your margin is my opportunity.
425,000,000
800,000,000
What about the giants?
$60bn$160bn
What if…
+
+
Flow of cash
Where is there a real threat?
Loans & DepositsMoney transfer & PaymentsInvestments & ReturnsInsurance
How can incumbents
thrive?
Track the competition.
Accelerate
Be everywhere.
Test, track, and iterate.
And finally, don’t forget:
Go back to basics.
Shoot for the moon.
