Here’s why finance is about to be disrupted
O'Reilly's Next:Money event helps business leaders understand the fundamental shifts reshaping finance.
Learn more about Next:Money, O’Reilly’s conference focused on the fundamental transformation taking place in the finance industry.
Editor’s note: We’re approaching an inflection point in all things “money” — currency, transactions, markets, and capitalism itself. Fundamental changes in the financial industry, driven by technology but with implications for every business and government, are beginning to manifest, bringing both disruption and opportunity. We created O’Reilly’s new conference, Next:Money to help business leaders understand and act on this shift. Below, investor and entrepreneur Paul Kedrosky lays out the forces and patterns that are reshaping the financial industry.
Finance has the three main characteristics of an industry likely to be transformed by technology:
- It traffics in bits, not atoms.
- Its services are often delivered remotely.
- There is little need for human contact.
Unlike other sectors with these characteristics — e.g., media, advertising, and travel services — finance hasn’t been disrupted. Despite huge technological change and a series of financial crises, the league table of the largest financial firms today, both in the U.S. and around the world, remains much the same as it has always been.
Granted, the $1.2-trillion U.S. financial services industry isn’t homogenous. Its main components — banks, brokers, asset managers, markets, payment networks, insurers, and credit card companies — are very different, and have seen widely varying degrees of technology-induced change. In no sense, however, is this industry as transformed by new companies and new business models as one would expect, given its disruption-ready characteristics.
So, why haven’t entrepreneurs transformed finance? There are (at least) five reasons: Read more…