!1
14 April 2019
A New Culture in the World of Financial Technology
As financial technology grows in scope and application, the world of finance is getting
increasingly automated and impersonal. The market is growing exponentially due to the mobile
age defined by apps and the internet. New trends in technological advancement such as online
banking, quantum computing, blockchain, social payment transactions, and e-store lending make
the industry remote and on the go. This new change has been caused by a plethora of effects,
such as a fears of a new generation scarred by a long history of student loans, recession, and
credit debt. While this new technology has many benefits for the industry and the consumer, does
this change take away from the person to person accountability of the world of finance?
Fintech as it’s called is the growing use of technology and mobile use for everyday
financial transactions. In the past years, such products have been growing as large banks and
venture capital firms alike invest in the future of the market. Fintech is working on making real
changes with solutions that can better address consumer needs by offering total accessibility,
convenience, and personal products. In this age, the pursuit of pleasing the younger generation
of consumers has been the main goal in order to fulfill the needs of clients who are native to the
digital culture. Over the next decade, the average consumer in need of financial services will
change dramatically as the Baby Boomer generation ages and Generations X and Y assume more
significant roles in the global economy. These generations are more adapted to technology and
most of their day to day work goes through the cell phone. Mobile apps are critical to success
nowadays and they can be found all over the industry.
!2
One of the most common forms of financial technology is online banking which works
by using online platforms to facilitate transactions and provide financial statements for budgeting
and personal finance.Besides beneficial tools such as budgets and financial statements, many
online platforms include online bill payment, electronic check cash, and peer transfers. Recently,
Goldman Sachs, a private investment banking group, has created a commercial bank using a
completely online platform. Marcus, as it’s called, promises extremely lucrative personal savings
interest rates at an industry high 2.25%. (Son, “Goldman Sachs Boosts Rates on Marcus
Accounts as Banks Fight for Deposits”). Other benefits include no minimum balance and
budgeting assistance. This extremely unorthodox approach doesn’t end there though. As a
thought leader of the technology market, Apple has partnered with Goldman Sachs and the
MasterCard credit platform to release a new credit card with benefits acquired by using its online
app. Elizabeth Schulze, another finance corresponded for CNBC, comments on another aspect of
Goldman’s role, acquisitions. “Acquisitions or partnerships with fintech start-ups could be
"appropriate," pointing to Goldman's acquisition of Clarity Money, a digital personal financial
management tool, in April ... Goldman is uniquely positioned to offer innovative technology
alongside a strong balance sheet, he added” (Schulze). These startups could benefit from the
large amount of capital and innovation from a company the size of Goldman Sachs. Such large
capital and resources partnered with large teams of researchers would allow for a deeper look
into the needs of the consumer.
Similarly to online banking, blockchain is a technology where transactions are protected
and processed across a platform of digital records accessed by peers across the network. This
technology has been revolutionary in promoting a new type of asset, cryptocurrency.
!3
Controversially, cryptocurrency has gained a large following of hopeful investors and analysts.
Many accredited investors struggle to advocate for a serious value of cryptocurrency, but this
doesn’t stop its form being used in other applications. “Though holders of digital currencies may
seize on the news that a major financial institution is issuing its own crypto as bullish for the
asset class, retail investors will probably never get to own a JPM Coin. Unlike bitcoin, only big
institutional clients of J.P. Morgan that have undergone regulatory checks, like corporations,
banks and broker-dealers can use the tokens” (Son, “JP Morgan Rolls out First US Bank-Backed
Cryptocurrency to Transform Payments Business”). Unlike the past year where bitcoin was used
as an asset investment class trading on an arbitrary market value, J.P Morgan is using blockchain
and cryptocurrency as a medium for facilitating fast transactions on a fixed value. While
currently only their large corporate clients have access to the system, it is still in early use and
has potential to used worldwide. Similar to Goldman Sachs meeting the accessibility needs of the
average consumer, JP Morgan is using blockchain in order to cater to the high speed needs of
larger clients. Even though these systems come with benefits, there is a legal and political
perspective that needs to be addressed. A whole new system for managing transactions, taxes,
and payment systems for merchants will be needed. Such legal systems will take money and
bureaucratic time in order to set forward, and it will be hard to tell if this system is one that will
pay dividends in the future after all the hard work.
Computers have already played an instrumental role of finance in the last decade, but
their role continues to grow. Two important technologies that will affect the finance world in the
upcoming years are Quantum Computing and Artificial Intelligence. Quantum computing, a new
system of non-binary computation that is possible of making calculations greater than a
!4
traditional computer, brings a variety of new features to the financial industry. Wall Street used to
be synonymous with crowded trading floors, loud calling, and paper scattered throughout, but
now humans are being replaced with large quantum computing with high frequency trading
capabilities, or HTF, a growing transaction type that allows traders to making proxy trades in
high volume faster than most people (Sandrini). While quantum computers are controlling the
floor, AI is behind the scenes picking stocks and analyzing markets. According to a study
performed at the stock exchange in Istanbul, an artificial intelligence program forecasted the
accuracy of the stock exchange at 74.81% (Karymshakov). While the average experienced trader
can forecast at a current accuracy of 48.57% (Bailey, Et al.). This gap in accuracy is causing
many investment firms to ponder whether human analysts should be replaced with more
computer programs able to study a vast amount of factors in order to make more money. In the
future, as the oracle of AI, Kai-Fu Lee, puts it, “AI will increasingly replace repetitive jobs. Not
just for blue-collar work but a lot of white-collar work ... many jobs that seem a little bit
complex, chef, waiter, a lot of things will become automated … that's going to displace about 40
percent of the jobs in the world” (Kai- Fu Lee). AI is becoming increasingly intricate and will
eventually be able to replace a majority of “complex” jobs through a series of optimization
algorithms. Such a major change in the makeup of the workforce would make a more calculated
yet less empathetic financial experience, which hurts some of the benefits of better financial
gains.
One of the most popular fintech trends famous in pop culture and young generations is
peer to peer payment apps. Venmo, Cash App, Paypal, Zelle. These are all common apps for
exchanging money between friends. In situations where one might forget their wallet, it would be
!5
an easy transaction to transfer money from one friend to another as a way of paying back your
money. Wells Fargo to promote their payment app, Zelle, had a national pay your friend back day
where they opened their app free of fees in order to promote the app and build anticipation for its
use. “Venmo is a social media app. It’s for friends to share money with friends, electronically
zapping it from one bank account to another. And some regular givers moved their giving from a
service with a fee to this free-for-now app ... That’s a 2.9 percent savings on fees that we’re glad
to have ... but more important than that are the comments the Venmo givers include with their
gifts” (Hays). Hays is commenting on her church’s use of Venmo as a means of connecting
people and the large institution. Members of the church can make their donations by sending a
payment online through the social app. Along with the financial aspect of the transaction,
members can leave quick messages including commonly used emojis to promote a sense of
emotional support along with the financial support. Such use of Venmo helps the church by
receiving free fee donations, while also helping the parishioners get involved with their
donations and church on a personal level.
Financial technology makes sure that investing for your future isn’t for the rich anymore.
With the adoption of micro stock transactions and mobile trading, anyone who has some extra
money can begin investing with access to a plethora of information about investing on the
internet. With limited to no fees as well as easy accessibility it is easy join a industry usually
afforded to older and richer people. “With the age that we're in right now, mobile users want to
look at screens with fewer headlines and fewer numbers … The average age of Robinhood users
is 28-41, and most of them use the app to make their first stock purchase” (Quadri). Many
millennials are beginning to cut back on their expenditures and work to save some money to
!6
break out ever so slightly of the prominent cycles of debt and loan payments. The sleek design of
the app is more futuristic yet understandable compared to that of the traditional chart and data
filled trading platforms. Similar to the online bank Marcus, mentioned earlier, Robinhood is
completely online, with no physical location one can go to make trades or seek financial advice,
which caters to an on-the-go fast paced market.
Even though finance has gone mobile in order to appease younger generations, brick and
mortar institutions have gotten trendier to attract millennials. These youthful generations are
looking for new aesthetic away from the fears associated with a recent history of recession and
debt. A prime example of this new vibrant finance movement is Capital One. With 20 cafe
locations across the US, Capital One is redefining the average trip to the bank and meetings with
financial advisors. After opening coffee shop bank hybrids featuring a staff of “ambassadors”,
which are basically friendlier rebranded tellers, youth have flocked for a photo and stayed for
financial advice. This generation has came from a love for social media and the photogenic era.
“Emphasis on leisurely technique heightens the excitement and also the sense of the unattainable
by proffering colored photographs of various completed recipes” (McBride 38). In the same way
food has become a photogenic experience causing people to flock to the most instagram friendly
restaurants, banking locations are pulling on the same effect to get millennials in the door. Social
media presence and viral marketing are other tools that banks are using to attract. As Edward
Kessler writes in Social Media and the Movement of Ideas, “The less personal nature of online
communication, makes it easier for information to be distorted or misinterpreted” (Kessler 30).
Social Media use as well as online news platforms associated with financial technology can be
used dangerously to spread false claims for a hidden agenda. Especially when it comes to
!7
financial advice, investors should be weary when information comes to the internet because
some companies promote certain stories or investment options as a way to gain profits. By going
in person to see a financial advisor, who is usually paid based on your success, you are more
likely to receive accredited advice and personal attention.
In its current state, consumers should be cautious with their use of financial technology.
The world needs to move forward with its technological advancement, but people should not be
so ready to jump all in without first checking the risks. Many people use and benefit from online
banking and stock trading, peer payments, and AI daily, and these products and services add a lot
of value to the industry. However, because of the high risk of financial services, there should be
government regulation to hold online financial platforms accountable for their advising to
consumers. However, when properly maintained and monitored, these trendy financial mediums
can be helpful in coaching one of the most at risk for debt generations ever. Millennials are in
desperate need of financial support and these apps can provide the financial literacy and tips they
need.
Word Count: 2093
!8
Works Cited
Bailey, David H. and Borwein, Jonathan and Salehipour, Amir and López de Prado, Marcos.
“Evaluation and Ranking of Market Forecasters” 31 May 2017.
Hays, Katie. “When Our Church Went Venmo.” Christian Century Foundation, 5 Dec. 2018.
Karymshakov, Kamalbek, and Yzat Abdykaparov. “Forecasting Stock Index Movement with
Artificial Neural Networks: The Case of Istanbul Stock Exchange.” Trakya University
Journal of Social Science, vol. 14, no. 2, Dec. 2012, pp. 231–241. EBSCOhost,
search.ebscohost.com/login.
Lee, Kai-Fu. “Facial and Emotional Recognition; How One Man Is Advancing Artificial
Intelligence.” CBS News, CBS Interactive, Jan. 2019, www.cbsnews.com/news/60minutes-ai-facial-and-emotional-recognition-how-one-man-is-advancing-artificialintelligence/.
Kessler, Edward. “Social Media and the Movement of Ideas.” Directions and Stimulus Materials.
2019. PDF.
Manchiraju, Srividya. “World Payments Report 2018.” Capgemini, 2018.
Mcbride, Anne e. “Food Porn.” Gastronomica, vol. 10, no. 1, 2010, pp. 38–46. JSTOR,
www.jstor.org/stable/10.1525/gfc.2010.10.1.38.
Quadri, Nimah. “Is Robinhood a Millennial Obsession?” Yahoo! Finance, Yahoo!, 23 Aug. 2018,
finance.yahoo.com/news/robinhood-millennial-obsession-180406875.html.
Sandrini, Jerome. “Quantum Computing in Financial Services.” Atos Quantum Computing, May
2018, atos.net/wp-content/uploads/2018/05/Atos-Quantum-FS-white-paper.pdf.
!9
Schulze, Elizabeth. “Goldman's Digital Retail Bank Has Won over 100,000 UK Customers with
the Promise of Higher Rates.” CNBC, CNBC, 21 Nov. 2018, www.cnbc.com/2018/11/21/
goldman-sachs-marcus-is-shaking-up-retail-banking-in-the-uk-.html.
Son, Hugh. “Goldman Sachs Boosts Rates on Marcus Accounts as Banks Fight for Deposits.”
CNBC, CNBC, 15 Jan. 2019, www.cnbc.com/2019/01/03/goldman-sachs-boosts-rateson-marcus-accounts-as-banks-fight-for-deposits.html.
- - - . “JP Morgan Rolls out First US Bank-Backed Cryptocurrency to Transform Payments
Business.” CNBC, CNBC, 15 Feb. 2019, www.cnbc.com/2019/02/13/jp-morgan-isrolling-out-the-first-us-bank-backed-cryptocurrency-to-transform-payments--.html.