Investors put a record $4.5 billion into financial start-ups in Asia last year, four times as much as the previous year. But how are disruptive business models and technology innovations transforming finance in Asia and the world? ARK Invest CEO/CIO, Catherine D. Wood addressed this topic during the ‘Fintech Fizz’ session at the World Economic Forum’s Annual Meeting of the New Champions in Tianjin, People’s Republic of China on June 26, 2016.
Please watch the clips below for Catherine’s outlook on fintech. The entire panel session can be viewed here.
Where is the funding for fintech going and why is it going there?
“Financial services is one of the largest industries in the world that is still offline. It may be ‘electronified,’ but it hasn’t been digitized to make use of data. We really are just beginning this fintech revolution.”
How are you going to convince people that bitcoin is the way ahead?
“There is nothing mathematically metered out there in today’s modern monetary policy. ARK has written a paper highlighting bitcoin as the first of its kind in a new asset class because we have enough history now of bitcoin to analyze this as investment managers. We can look at the financial characteristics of bitcoin and see that it is uncorrelated to any other asset class. That is very interesting to us. We can also look at this in the emerging markets that are resorting to something like bitcoin for access and affordability.”
Using bitcoin for remittances is an absolutely horrible experience. Will there ever be a significant role for bitcoin in remittances?
“Right now, that is correct because the liquidity isn’t there. As we gain liquidity in bitcoin, the costs will be de minimis. We face friction because it is so young, but as the liquidity grows I think the costs will drop dramatically.”
In the future, bitcoin/blockchain may solve problems, but does it solve real problems today?
“Blockchain is a digital ledger that is fully transparent. It is eliminating a lot of middlemen so anything with friction, take real estate for example, will benefit. A lot of problems will be solved with this kind of system.”
Will bitcoin be around within the next 10 years?
“Yes! But frankly, all disruptive innovation is met with skepticism. All we (ARK) do is focus on disruptive innovation. We think the fact that people are questioning it and skeptical of it is a very good sign.”
Will Fintech be just as vulnerable to fraud as conventional banks or will there be more transparency?
“Fintech is going to be more of an answer to the problem than a cause of the problem.”
Regulators are interested in Fintech. Do you think there is too much or too little regulation?
“Regulation isn’t always bad. The fact that regulators are looking seriously at bitcoin means that they are taking it seriously.”
Do you think that financial technology is really going to be that incredible disruptive technology that it appears to be so that commercial mainstream banking and financial institutions that we know now will no longer exist?
“Banks aren’t going to disappear. It’s a little bit like old technologies though. The mainframe is still around, right? There is so much inefficiency in the system right now that the technologies will help squeeze that out to the benefit of the end consumer.”
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