Will Fintech Perish Or Prosper Under President Trump?
The election of Donald Trump and the impending Brexit have created new uncertainties around the fintech industry, one of the best performing industries in 2016. While Trump’s election has been great for financial stocks, especially bank stocks, it has not been so great for the other half of fintech, tech companies. To make things worse, the heart of European fintech, London, has promised to leave the European Union.
So in 2017, will the fintech industry perish or prosper? Surprisingly, the future for fintech looks quite bright.
As the CEO of a global fintech trade association, I am constantly meeting with the largest and most innovative companies in this space, like Facebook Inc (NASDAQ: FB), SAMSUNG ELECTRONIC (OTCMKTS:SSNLF), Mastercard Inc (NYSE: MA) and others. Executives from these firms paint a very different picture for fintech in 2017 than you might expect, given the perceived geopolitical headwinds. While most companies articulate the challenges in different ways, a clear picture emerges of what is coming up next for fintech in 2017.
Internet Of Commerce Things Flourishes This Year
Despite political and economic changes, the pace of technology innovation will continue to accelerate in 2017 – particularly in digital commerce and fintech. According to the research firm IHS Markit there will be more than 30 billion new internet connected devices by 2020. The key to making internet connected devices useful is commerce, the ability to discover, and then purchase anything you want, anywhere you are.
This phenomenon is called the Internet of Commerce Things or IoCT. These capabilities are the key growth driver for fintech. For example think of innovations like Square Inc (NYSE: SQ), Samsung Pay and Apple Inc (NASDAQ: AAPL) Pay.
In 2017, the Internet of Commerce Things will be everywhere: cars that pay for tolls and gas without you having to pull out your wallet; Samsung refrigerators will be able to automatically reorder milk; Amazon.com, Inc.'s (NASDAQ: AMZN) Echo is already in the home getting the things you need with voice commands.
The rapid rise of the Internet of Commerce Things means that the traditional lines separating industries are rapidly disappearing. Competitors are no longer just the leading companies in the same industry. Increasingly, competitors are simply the best companies, regardless of industry, that can monetize new products by being first to market with a new “internet connected” or software based version of a traditional commerce product. Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) started as an online search company that morphed into a digital advertising company displacing traditional print and TV advertising.
In 2017 it will be a leading company in the self-driving car industry potentially displacing traditional cars. Facebook started out as an online social network, but in 2017 it is transforming into a leading virtual reality company and commerce company. Amazon began as an online bookseller that is now the e-commerce leader. In 2017 it could very well emerge as a leading bricks and mortar retailer using software and AI to replace the traditional shopping experience.
Simply put, many of the best companies are vying to be the leader in the biggest business of all, commerce. In the US alone, consumer spending makes up over 70% of the economy. Whoever wins in fintech and digital commerce wins, period.
Trade Booms In 2017
In 2017, expect more trade in fintech despite conventional wisdom that predicts looming protectionist policies and potential trade wars. There is simply too much to lose economically from thwarting trade- on all sides. The United States remains the largest economy in the world and the biggest driver of international trade. If moderately higher US interest rates and additional US economic stimulus become reality, our economy may benefit from a stronger dollar, making it relatively cheaper for Americans to buy foreign made goods, especially online.
Simultaneously, promised US infrastructure spending may increase US employment and wages. A bigger, stronger US economy means more trade, especially digital commerce trade given America’s leadership in this sector.
Collaboration Is “In” Even Across Borders
Nationalistic tendencies definitely reemerged in 2016, but expect cross-border collaboration to increase. Despite America’s significant lead in the fintech sector, no single country has a monopoly on good technology ideas. This is a lesson that many of our largest companies have learned the hard way.
Banks and merchants across the United States, Asia, the United Kingdom and Europe continue to share ideas and create partnerships, especially in the area of online-to-offline commerce. Digital commerce is simply too big an industry for any single player to own the whole market. Creative collaboration is needed to win markets and win consumers.
For example, Samsung partnered with a US-based Quotient to embed digital card-linked offers in Samsung Pay wallets. Look for Samsung to do additional deals with US banks and merchants. Rakuten, the largest Japanese e-commerce merchant, launched a marketing platform for US merchants that enables them to sell more goods by offering targeted discounts using card-linking instead of traditional paper coupons.
The future looks bright for fintech in 2017. Increased trade and digital commerce will continue to take center stage this year. The US and global fintech ecosystem will continue to grow and collaborate, leading to more innovations that benefit US consumers, workers and our trading partners. The bottom line is this: expect fintech to prosper in 2017.
Silvio Tavares is the President and CEO The CardLinx Association, one the fastest growing global technology associations for payments companies, retailers and ad-tech platforms. Based in Silicon Valley, The CardLinx Association includes Facebook, Microsoft, Samsung, MasterCard, American Express, Airbnb and Hilton among others. Silvio is a frequent public speaker and technology commentator and has been featured on CNBC, The Wall Street Journal, NPR and many other publications. He was formerly a senior executive at both Visa and First Data and holds over 15 patents in digital commerce and payments technologies.
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