Financial Services-New technologies are disrupting the financial services industry, like they have in many other markets, whether Wall Street is ready for them or not. From peer-to-peer lending and robo-advisors to bitcoin and crowdfunding, financial technology or fintech is smashing old business models on its way to crowning new rulers in the world of money. And there is no turning back.
“Fintech is not only the future, but it is here,” said Amy Gutmann, president of the University of Pennsylvania at the April 3 launch of the Stevens Center for Innovation in Finance at Wharton. The business school is planting an official stake in the ground by establishing a center dedicated solely to fintech. “We have an incredible history and heritage in finance, but I think the best way for us to honor the history of the school is to leverage it for the future,” added Wharton Dean Geoffrey Garrett, at the event. (Garrett also wrote a LinkedIn post about the event.)
It’s helpful to think about fintech companies as fitting into any of three main business verticals — lending, asset and wealth management, and payments, according to David Klein, CEO and co-founder of CommonBond, which he said allows his firm to provide lower cost student loans. Layer on top three technology horizontals — front-end, middle ware and back-end — and pretty much any fintech company will fall into this grid, he said during a panel discussion among fintech disruptors and regulators at the launch event.
CommonBond fits into the lending space. Klein’s own experience with hefty student loans led him to found a company that he said offers lower interest rates and improved customer service. The firm, he added, can offer a better deal by underwriting the loan risk, which the federal government does not do. It also has lower operating costs by not having any physical stores, unlike banks. “We don’t have bricks-and-mortar locations and we underwrite so that has allowed us to lower the rate of interest for students going to school or refinancing,” he said.