Our media partner finletter presents the re:publica topic track FinTech and explains what it’s all about.
Digitalization is shaking up the banking sector: new players are challenging the old-timers, startups with hip-sounding names launch one product after the other onto the market, old regulatory guidelines are being called into question, and the EU is discussing new rules for a changing market.
The fact that there is an established term for this exciting field, FinTech (short for financial technology), offers grounds to be somewhat hopeful. But there is a lot going wrong in this digitalization process, in a similar fashion as happened in the music or media industries, with their many missed opportunities: the majority of the classic market players are looking to preserve their acquired rights, or trying to simply place a digital framework over the same old products.
And the bill is in the mail: according to a Citigroup market forecast, 30 percent of the jobs in the European and US banking sector will be cut over the course of the next ten years. McKinsey predicts 25 percent for the closely-related insurance sector. It’s clear that not all of these jobs can be absorbed by the FinTech and InsureTech sectors, as these are both, for the most part, made up of many small players.
It then seems like perfect timing that a new technology should come along and give both old and new actors in the finance sector hope: the blockchain, a kind of decentralized database technology. Most prominently to date, it has given rise to Bitcoin, the equal-parts loved and feared cryptocurrency. It even has the big guys emulating it now: Goldman Sachs, for example, just recently announced a patent on its own cryptocurrency based on blockchain technology. For anyone wanting to get acquainted with the field, we recommend the workshop "The blockchain: a crash course and challenging consensus" by Jaya Klara Brekke and Elias Haase, in which they will give an introduction and discuss the advantages and dangers involved. For those who want to get more hands on and start spending some Bitcoins from their digital wallet, the user workshop "FREE BITCOINS!!1! click here!" by Friedemann Brenneis, Christian Rotzoll and Annalena Kurth, is the right place for you.
True believers say the blockchain (also known as distributed ledger) is as groundbreaking as the invention of the internet itself and has huge democratic potential. Bitcoin was only the first and, up until now, best known application. From a neighborhood lawn mower rental to a decentralized property registry, countless possibilities are imaginable. Shermin Voshmgir covers the potential for deeper structural change for society in "Blockchain, Smart Contracts & The Future of Democracy": money without banks? Companies without managers? Government without politicians? Brave new world!
This makes evident that blockchain carries within it a huge potential for breaking up banking and bureaucratic structures. The technology would make it possible to decentralize administration and make it more transparent – and save banks a lot of money doing so. No wonder almost every major bank is experimenting with blockchain at the moment.
FinTech is already starting to cover other areas as well: for instance, the interesting possibilities that data collection offers in association with crowdfunding. In Jermain Kaminski’s session "Using Crowdfunding Data to Predict Venture Capital Investments and City Innovation", he discusses the interesting insights that analysis of user support on crowdfunding platforms can provide. They not only allow for the identification of coming innovations, but also provide evidence on the levels of creativity in cities.
Find out more about all further sessions in and around the topic of FinTech at our track site.