6 Big Hairy Fintech Trends for 2016 and Beyond (Page 2)

  • JJ Hornblass
  • December 20, 2015
  • 1

4. Income Disparity Is Real.

Consider these facts since the late 1970s to now:

  • The top 0.1% of families in America have gone from owning 7% of national wealth to having about 25%;
  • The income share of the top 1% of families has gone from less than 10% to more than 20%; and
  • A number of studies show that, contrary to long-standing optimistic notions, according to standard measures of intergenerational mobility, the United States ranks among the least economically mobile in developed nations.

All this points to a reality of income disparity not seen in America before. This is mentioned not for political reasons, but to recognize that this income disparity is real and has deep implications for financial services in the coming years, especially since the disparity is expected to continue to progress. Thomas Piketty, an economist, argues in Capital in the Twenty-First Century that in capitalism, financial inequality increases as long as the rate of return on capital is greater than the rate of economic growth.

As capitalists, we see this as an opportunity, not as a call for income distribution, as some suggest. As the cost of financial services comes down, the ability to facilitate more equitable products and services to a wider community increases. While this might not reverse Piketty’s formula, it could help — and offer profit opportunities for financial services providers.

5. The Weather Matters More.

“The weather is so nice outside” has deeper implications today.

Quietly, and regardless of whether you believe it, the business of predicting the weather has gotten a lot better. Over several years, an accumulation of algorithm improvement and technological advances has meant weather forecasting ability “has been increasing in accuracy by about an additional day per decade for those made several days into the future.” In other words, every decade or so, the forecasting has added another day of accurate weather predictions.

As Samuel Arbesman, the scientist-in-residence at Lux Capital, argues, improved weather forecasting is important for a number of reasons. “First, understanding weather is vital for a huge number of human activities, from transportation to improving agricultural output, to even managing disasters,” he writes. “Being able to foretell what the weather holds affects nearly every aspect of our lives.”

It also has obvious financial services implications, and not just from a mortgage standpoint. A better understanding of weather creates opportunities for refinement in commercial lending, insurance, risk management, underwriting, and credit enhancement. It allows for a tying of finserv with weather realities in a way impossible just 20 years ago.

6. Images and Technology Will Continue to Converge.

Much has been said about what we would call the Age of the Image. The number of photos taken has nearly tripled since 2010. In late 2014, it was estimated that 1 trillion photos would be taken in 2015. Now, it is too early to get a count for photos last year, but it is not too much of a stretch to say that projection might be low.

Now, this is not a laurel for remote-deposit capture. We see image-related technology in its nascency today.

Innovations in data visualization underscore the value of visual imagery in representing intangibles. … Computers find non-linear patterns in space and time embedded in huge datasets. Programs such as spatial mapping make these complex connections vivid. … Today, interactive maps show dynamic networks in process, not frozen instants of artificial stasis. As technology opens new avenues for exploration of relationships, disciplines across academia embrace fresh questions in emerging forms. To focus on intangibles, these questions demand the power of imagery.

It is within these vast oceans of images that financial services can find trigger points, opportunities, intangible implications that we cannot yet today foresee. Even consider the notion of “disclosures” today, and how they could evolve into something more meaningful when synthesized into images.

Here’s how Victoria Wyatt, an associate professor of history in art at the University of Victoria, put it:

In fact, immersion in visual imagery mirrors how we really experience reality: constantly constructing meaning from invisible relationships in our visual field. The famous metaphor about perception, “You can’t see the forest for the trees,” hints at this process, but it misses the greater paradigm shift. The forest remains a visible entity. We need to discern the invisible, intangible ecosystem that underlies our forest and drives all that happens here.

If “discerning the invisible, intangible ecosystem that underlies our forest” doesn’t apply to finserv, we don’t know what does.

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JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at hornblass@gmail.com or 212-564-8972.

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