We all know that Davos is where the world's private powers go to consolidate and deal help cure global ills, but sometimes Davos can reveal some chinks in the armor of finance's most bold-faced names.
Like this year when everyone made a big show of talking about Fintech...
Fintech was every banker’s buzzword at the World Economic Forum, as leaders of the world’s largest financial companies both touted the potential of new innovations and leaned on regulators to control the startups threatening parts of their business.
Deutsche Bank AG Chief Executive Officer John Cryan predicted the disappearance of physical cash within a decade. Bank of America Corp. CEO Brian Moynihan said his firm now spends $3 billion a year, more than 5 percent of total expenses, on coding. JPMorgan Chase & Co. and Banco Santander SA announced an investment in ex-banker Blythe Masters’ blockchain startup.
All the big banks are, like, basically Fintech companies now. They are totally in the mix, not only understanding Fintech but DOING it.
They even had panels about Fintech...
At the conference devoted to the official theme of “the Fourth Industrial Revolution,” one panel titled “The Fintech Revolution” featured no startups, while “The Transformation of Finance” had as its disruptor Dan Schulman, CEO of PayPal Holdings Inc. Its $38.7 billion market value is already bigger than that of Deutsche Bank.
At Davos, PayPal is a startup.
And that makes some sense because the big banks don't want to see these upstarts going about their business without the same strict regulations that make their lives so tough.
Still, some bank chiefs tried to splash some cold water on the bold talk. Morgan Stanley’s James Gorman said regulation is still a bigger deal for banks, and bemoaned the “near hysteria” surrounding fintech.
The biggest banks also called for a level playing field with new entrants that offer banking services to consumers. New rules are likely to lag changes in the industry, Moynihan and Standard Chartered Plc CEO Bill Winters said.
“It’s a disruptive development that will challenge regulators along the way,” Winters said. “Payment systems have to be regulated. They need to be observed.”
And if anyone knows about how much of a bummer rules can be, it's Standard Chartered.
But according to Bloomberg, Winters, Cryan, Gorman, Moynihan and the rest of the super executives attending Davos were also treated to some very pro-disruption thoughts from EU regulators and got an earful about the 12-digit figures that traditional banks stand to lose in the coming Fintech revolution.
So, since they know all about Fintech, the big fish had only one possible further question to put their minds at ease; "It's just a bubble tho...right?"
Tim Levene, co-founder of Augmentum Capital, which invests in fintech companies in the U.K. and Europe, said he was even getting questions about whether the burgeoning industry is already a bubble.
As Masters’ Digital Asset Holdings raised $52 million from investors and won a contract to radically speed up settlement in Australia’s stock market, several bankers said blockchain, the type of technology her firm uses, was still several years from having a real impact on payments or securities markets.
“It can’t be a bubble because it hasn’t happened yet,” Levene said. Still, he added, “if I had a dollar for every time I heard the word fintech this week, I’d have a much bigger fund to invest.”