The financial services industry needs to address the 1.6 billion people without stable access to the sector, Basil Moftah, general partner at Global Ventures, said Tuesday at the Benzinga Global Fintech Awards.
“How do you bring them into the digital world with all the benefits that many of us have gotten used to?” he said during a discussion moderated by Crain’s Detroit Business reporter Nick Manes.
“I don’t think we’ll see 1.6 billion people join the world through traditional banking. They’ll join it through their mobile phone, and that will be the only way they can access financial products,” Moftah said.
Access In Fintech: Carver Edison founder and CEO Aaron Shapiro talked about building out diverse fintech ecosystems that accelerate the adoption of emerging, tokenizable assets.
“The big thing in fintech is access,” Shapiro said. “How do we provide access to all sorts of different asset classes — whether it be equities, real estate, art, wine, you name it?”
Partnerships help deals get done and accelerate the speed of adoption, he said.
ARK Invest analyst Max Friedrich echoed Shapiro’s comments on partnerships, and noted digital economy initiatives spearheaded by incumbent and emerging financial services providers.
“If the PayPal Holdings Inc (NASDAQ: PYPL) CEO and other big CEOs are talking about this, then this has made its way up there,” Friedrich said. “I think it’s really interesting looking at PayPal, one of the first fintech companies … in this position to really power the shift from offline to online.”
Firms like PayPal and Square Inc (NYSE: SQ) are working to integrate with existing fintech infrastructures, such as those operated by traditional brick-and-mortar retailers; scale adoption, further digitizing more of the economy; and lower costs on both ends of transactions, the analyst said.
“It keeps everything flowing.”
Disruption In Fintech: With the emergence of fintech-savvy institutions like challenger banks, regulating bodies have become concerned with the disruption of established institutions.
“A lot of these regulators are a couple of steps behind catching up on the fintech wave,” Moftah said.
“They understand that they want to bring informal economies into the formal world and make the economy digitized, but it’s a challenge for them to protect the regional financial institutions against disruption.”
In more liquid U.S. and European markets, financial institutions frequently go through evolutionary turbulence and are quick to adapt due their access to know-how and technology.
To further democratize financial services, Moftah urges institutions to encourage disruption.
“Fintech is cutthroat. It’s one of those areas where you have to keep innovating.”