Fon Mathuros, Head of Media, World Economic Forum, Tel.: +41 79 201 0211, Email: fmathuro@weforum.org
· Technologies from big data to digital currency and mobile transactions are reshaping the financial industry
· While there is debate about their viability and the public’s awareness and understanding of them, bitcoin and blockchain technology could be the beginning of a revolution in the global monetary system
· The Annual Meeting of the New Champions 2016 is taking place in Tianjin, People’s Republic of China, from 26 to 28 June
· Follow the Annual Meeting of the New Champions 2016 (#amnc16) at http://wef.ch/amnc16
Tianjin, People’s Republic of China, 26 June 2016 – A technology revolution is disrupting the financial services industry and could make digital currency and blockchain transactions commonplace in just a few years, financial technology and fintech experts argued in a session on the topic at the Annual Meeting of the New Champions 2016. Technologies from big data analytics to mobile apps are reshaping the sector, resulting in new ways for companies to interact with customers and for consumers to manage their money and conduct transactions.
Global investment in fintech ventures hit $5.7 billion in the first quarter of this year, a rebound to the levels in 2014. About half the funding went to projects in Asia, primarily in China. “The reason funding is taking off now is that the four platforms – mobility, big data and analytics, blockchain and machine learning – are in their infancy,” said Catherine Wood, Chief Executive Officer of ARK Investment Management in the US. “Financial services is one of the largest industries that is still offline. It may be ‘electronified’ but it hasn’t been digitized, so we are only just beginning this technological revolution.”
Fintech is growing rapidly because “real problems are being solved for consumers,” reckoned Taavet Hinrikus, Chief Executive Officer of electronic funds transfer company TransferWise in the UK and a Co-Chair of the Annual Meeting of the New Champions 2016. “Companies are making a case for themselves and their sustainable business models.” Solutions such as digital remittances are typically much cheaper than banking transactions like wire transfers and are usually on mobile platforms, which means that they are inclusive and widely available, he added.
“In terms of mobile lending and other fintech solutions, China is leading the world,” Tang Ning, Founder and Chief Executive Officer of CreditEase in China, told participants. The peer-to-peer lending business took years before it began to grow significantly and investors took notice. “Venture capital is paying attention to the wrong things in fintech,” he asserted. “They have paid more attention to traffic and ‘eyeballs’, but equally important are the quality of credit and risk management – fundamental things to which investors should pay attention.”
A key factor in the growth of fintech has been the growth and increasing sophistication of big data analytics. “The quality of data is very important,” said Xu Haotian, Chief Executive Officer of Fangcheng Technology in China. “The fintech ecosystem is improving in China. There are more and more small and medium-sized enterprises doing mobile payments. There is more data and, as a result, people are acquiring more credit. This is one of the reasons why more money is pouring into fintech in China.”
In fintech, much attention has focused on bitcoin digital currency and the development of the underlying blockchain financial transaction technology, although few financial professionals have more than a cursory understanding of both. The mining of bitcoin, bitcoin payments and the blockchain process that underpins bitcoin are gaining currency because of open access and transparency, with bitcoin emerging as a separate asset class, Wood explained. “The liquidity isn’t there, but as we gain liquidity in bitcoin, the costs will drop dramatically and be minimized. As a digital ledger, blockchain is fully transparent. There is an audit trail. We are eliminating a lot of middlemen here. Fintech will be more of an answer to the problem of fraud than a cause of it.”
Tang Ning agreed. “We believe that it will take some time to build up awareness and liquidity. But when we invested in the peer-to-peer lending model in China, it was quiet and not crowded at all. People said we were crazy. Bitcoin and blockchain leaders will have to be crazy for some time still.” Indeed, not everybody is a bitcoin believer. “There is a fundamental problem,” Hinrikus insisted. “It is lacking a purpose and is pure speculation. I cannot really see a problem that bitcoin is solving.” He is, however, optimistic about blockchain technology. “There is something elegant and smart about blockchain and we will see many applications in future unrelated to bitcoin. There is a lot of clever stuff that we can do. I see things coming to life which are built around blockchain but not digital currencies.”
For bitcoin miner Chandler Guo, Co-Founder of Bitbank in China, the time for digital currency is coming very soon. In future, GDP may even be reported in bitcoin, he predicted. “Bitcoin will be the future of money. Everyone will have bitcoin. Bill Gates’s wealth will be measured by how much bitcoin he has. More and more finance companies will jump into blockchain. When you finally realize that this is the future, you will already be late.”
The World Economic Forum’s 10th Annual Meeting of the New Champions is taking place on 26-28 June in Tianjin, People’s Republic of China. Convening under the theme, The Fourth Industrial Revolution and Its Transformational Impact, more than1,700 business leaders, policymakers and experts from over 90 countries are participating in more than 200 sessions over the three days of the meeting.
The Co-Chairs of the meeting are: Navdeep Bains, Minister of Innovation, Science and Economic Development of Canada; Taavet Hinrikus, Chief Executive Officer, TransferWise, United Kingdom; Shirley Ann Jackson, President, Rensselaer Polytechnic Institute (RPI), USA; Travis Kalanick, Chief Executive Officer and Co-Founder, Uber, USA; Lei Jun, Founder, Chairman and Chief Executive Officer, Xiaomi, People’s Republic of China; Matthew Prince, Chief Executive Officer, Cloudflare, USA; Feike Sijbesma, Chief Executive Officer and Chairman of the Managing Board, Royal DSM, Netherlands; and Wang Chuanfu, Chairman, BYD Company, People’s Republic of China.
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