#fintechpolicy

FinTech 3.5 is supported by (1) high penetration of mobile devices (especially with broadband internet access) among the young and technologically literate, (2) the growth of the middle class, (3) untapped market opportunities, (4) a lack of physical banking infrastructure, (5) consumers increasingly valuing convenience over trust, (6) low levels of competition, and (7) weaker data protection requirements. The spike in the number of graduates with engineering and technology degrees in such economies as China and India has also played a role in planting FinTech firmly in the soil of those economies. http://www.cfapubs.org/doi/full/10.2470/rfbr.v3.n4.1

Given how quickly new competitors are arising, Citi can’t move too fast. Last year investors poured $19 billion into finance startups, up from less than $2 billion five years before. In March, research firm Venture Scanner said it was tracking 1,379 fintech companies, with combined funding of $33 billion. The opportunity for the startups is huge. Revenue in the North American consumer-banking business alone was $850 billion in 2015. It’s projected to grow nearly 50% over the next seven years, to more than $1.2 trillion. The most wrenching period for the big banks is almost certainly yet to come. In March, Citigroup’s own research department put out one of the direst assessments yet. The 112-page report, titled “Digital Disruption,” was produced for the bank’s investment clients and reads like a Jerry Maguire manifesto. The gist: Radical change is coming. Citi says that fintechs have nabbed $9 billion in business so far, a small percentage of what banks bring in each year. But in just four years, the Citi analysts predict, fintech revenues will leap more than 10 times, exceeding $100 billion. By 2023 fintech will account for 17% of consumer-banking services in North America, or $203 billion. http://fortune.com/citigroup-fintech/