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Goldman Sachs: We are in the second wave of financial technology

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The next step in the development of financial technology will be the cooperation between large banks and startups.

As Jeff Gido, global head of financial technology at Goldman Sachs' investment banking division, said, this is actually the third wave of growth in the financial technology industry. Earlier this month, at the Goldman Sachs Financial Technology Annual Conference in New York, he described the three waves of financial technology development:

In the first wave, the regulatory system changed, and the shift in new technology and consumer preferences dominated large investments.

“The new regulations issued after the financial crisis have caused banks to no longer favor certain industries because the profitable space is not as good as before, which creates opportunities for the technology-backed online lending industry and other financial services to fill the gap. At the same time, big data, The growth in cloud computing and wireless network usage has made it easier for startups to enter the field," Gido said.

In addition, changes in consumer preferences have also contributed to this trend. Especially when the “Millennial Generation” accepted the “real-time mobile financial services that allowed them to get rid of the complicated procedures, trivial processes and delays of traditional financial services”. Gido believes that we are currently in the second wave of development in financial technology, "existing companies use brands and infrastructure to compete with startups."

He also talked about a startup called Zelle. Zelle is made up of several banks and provides P2P payment services. Goldman Sachs’ own online banking “GS Bnak” was established at the beginning of this year and is also a case of traditional players innovating to compete with digital service providers.

Gido pointed out that the third wave of development will focus on the cooperation between traditional players and financial technology startups.

He said: "The current financing environment is much more difficult. The strategy of single-handedly will make many startups difficult. For traditional financial services, the cost of developing their own technology is also great. This is what we started to see in this industry. The reason for more two-way conversations."

The third wave has actually begun. More and more financial technology startups are working on the B2B model, hoping to sell the company to traditional players or work with them. Startups want to leverage the vast, loyal customer base of existing companies to deliver flexible, innovative technology.

What is the most exciting place for people in financial technology? Gido pointed out: It is an insurance policy. This seemingly inconspicuous word carries enormous possibilities for innovation.

“We see a wide variety of things, from helping consumers buy insurance applications to companies that provide insurance for customers with special, limited goals.” More and more traditional players are starting to set up internal venture capital departments to invest in entrepreneurship. The company also recognizes their potential.

This article was compiled from the following foreign media articles:

Goldman Sachs: We're in the 'second wave' of fintech

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