Party, Panic, Pay


“The FinTech party’s just getting started,” two entrepreneurs and innovators write, while a senior economic analyst notes that banking is ripe for disruption because many services “aren’t done very well.” This week’s FinTech news also brings a call for FinTech regulation and reports on mobile-payments friction. Meanwhile, Institutional Investor wrote the best summary of this week’s Blockchain Watch: “The frenzy around blockchain and distributed ledgers is unprecedented.” On to the links, with thanks to @paymentsnews for many of them:

Good news — FinTech could disrupt finance

Echoing common opinions of other FinTech thought leaders, Martin Wolf argues in the Financial Times that finance is “ripe for disruption by information technologies,” especially payment, savings, investment and insurance. Why? Because these systems aren’t done very well at banks today.

The FinTech party’s just getting started

Signs like extreme company valuations plus an abundance of “unicorn” companies point to another tech bubble that’s about to pop. Hannah and Matthew Granade analyze the data and argue that the FinTech sector is far from saturated, with little yet in the way of true innovation and many opportunities waiting. The consultants at McKinsey, meanwhile, break down FinTech investment by sector to show where the investment money is going.

Exploring banking as a platform model

Why haven’t banks changed much? Well, why should they? Their business model doesn’t bend with the ebb and flow of network effects, the traditional model has withstood the test of time, and the top-down approach to dealing consumers has been successful. It won’t much longer. “Banks and insurers run the risk of losing their dominant position as primary intermediaries for customer interaction and engagement,” argues David Brear. “Financial services industry incumbents need to transform into “fintech incumbents,” with a complementary platform business model to better compete.”

Bank or no bank, FinTech must be regulated

The lack of regulatory cohesion between FinTech companies and traditional banks is creating confusion for consumers, writes American Bankers Association president and CEO Rob Nichols for American Banker. “The features may be the same regardless of whether the company has a charter or not, but the confusion about who regulates whom — and in what ways — is leading to gaps in consumer protection.”

The broken world of mobile payments and how to fix it

It has been estimated that by the end of 2016, mobile payment transactions in the U.S. will surge by 210 percent. Yet security concerns, the lack of a global standard, and fragmented mobile technology, among other problems, areholding mobile payments back, writes John Rampton for TechCrunch.

Panic at the checkout: will EMV friction boost mobile payments?

Though more merchants have adopted the EMV chip cards, there continues to be a lot of confusion around using EMV chips for payments, says TJ Horan in the FICO blog. He asserts that the answer for secure, faster payments might be in mobile payments. But as Suman Kumar Chandra points out in BAI Banking Strategies, 85 percent of global consumer transactions are still done with cash, indicating that mobile payments still have a long way to go.