This chart should give all established bankers pause, as the rebels are at the gates looking to overturn their business models:
This chart provides evidence as to why personal finance curricula need to remain current. In 2014, there was $12 billion invested in over 700 start-up companies looking to disrupt the financial establishment. I suspect the face of financial services will look a lot different a decade from now as these innovations spread and one likely outcome is the incumbent players purchase promising technologies to serve their customers better. Even if that were to occur, I suspect the way we transact our financial business will be very different.
This article from the Economist provides context for how fintech will/is changing the financial landscape:
The threat the startups pose is not that they will topple banks as linchpins of the economy. Most fintechers are not interested in the complicated, regulated bits of banking. The threat they pose to incumbents is that they might just seize the profitable add-ons, from loans to payments services and investment advice—anything that generates fees. It now seems increasingly likely that they will manage to “unbundle” at least some of these extra services banks offer their clients. That will leave today’s lenders with fewer revenues to maintain their costly rump services.
This Forbes article has a list of 15 fintech companies to look for in 2015. It might be a fun research project to have students dive deeper into one of these companies that they feel has the most promise. Here is a list of questions they could answer through their research:
- What segment of financial services are they operating in?
- What is the potential size of the market that they are serving?
- Who are their major competitors? Why do they think their solution is better?
- How many customers do they currently have? How have they found their customers (or how have customers found them)?
- What do you think about the quality of their product (students should try and demo the product)? Would you use it, why or why not?