Practical analysis for investment professionals
12 November 2015

Weekend Reads for Global Investors: What’s in Your Financial Future, Banks or Fintech?

Posted In: Weekend Reads

One of the main takeaways from a career panel we cohosted with several CFA societies this spring was “do not work for a bank.” Judging from the recent announcements out of some of the largest European banks, the warning seems eerily accurate and timely.

The purpose of the career panel was to discuss long-term trends in the investment management industry that will impact people’s careers. For example, if people had been warned about the all but inevitable demise of the brick-and-mortar travel agency business, many might have sought alternative careers. Similarly, in the investment management industry, we have all seen sectors fall in and out of favor. So we assembled a panel of experts from different backgrounds in the hope that some of their insights could be of help to our members in their career decisions. This is the context for the “do not work for a bank” remark. One “hot” area that was identified, however, was financial technology (fintech).

Seven months later, both takeaways still seem to ring true.

On the heels of similar announcements by Deutsche Banks and Credit Suisse in recent weeks, Standard Chartered announced last Tuesday that it will cut 17,000 jobs worldwide. This comes to about 17% of their total employees. UniCredit reportedly is also considering taking similar measures to help boost profitability.

We have no reason to believe banks will follow the trajectories of travel agencies — or print media for that matter — but the industry does seem to have come under attack in the new era of the internet of things. (Of course these European banks’ troubled situations are more directly results of tightened capital requirements after the financial crisis, but that is a discussion for another day.)

Although fintech has been broadly defined by some to include the full spectrum of technologies that could improve productivity in the financial industry, I thought a more productive definition could be “internet technology solutions (and the firms that own and promote them) that represent alternatives to traditional financial intermediaries, such as banks, brokerage firms, and exchanges.”

Accenture reports that in the first nine months of 2015, US$3.5 billion of investments went into non-bank fintech investments in the Asia-Pacific region alone. Notable deals include those in the mobile payment and peer-to-peer lending areas. (Perhaps as a sign of things to come, when I spoke on multi-asset strategies at a wealth management forum in Shanghai a few weeks ago, a later panel was made up of some of the best known peer-to-peer entrepreneurs in China.)

A number of themes seem to have emerged from last month’s Money 20/20 Conference, where fintech start-ups meet their end users, with financial inclusion, mobile payments, and blockchain technology being the most notable.

The internet of things was also the theme at the Fortune‘s Global Forum earlier this month. Ignore it at your own risk.

Below is a list of links from the paragraphs above as well as some of the other interesting reads I have come across in recent weeks. Happy reading and enjoy the weekend.

Markets

Investing

Emerging Markets

The Soft Side of Business

And Now for Some Readings Truly for the Weekend . . .

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©iStockphoto.com/Christian Mueller

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About the Author(s)
Larry Cao, CFA

Larry Cao, CFA, senior director of industry research, CFA Institute, conducts original research with a focus on the investment industry trends and investment expertise. His current research interests include multi-asset strategies and FinTech (including AI, big data, and blockchain). He has led the development of such popular publications as FinTech 2017: China, Asia and Beyond, FinTech 2018: The Asia Pacific Edition, Multi-Asset Strategies: The Future of Investment Management and AI Pioneers in Investment management. He is also a frequent speaker at industry conferences on these topics. During his time in Boston pursuing graduate studies at Harvard and as a visiting scholar at MIT, he also co-authored a research paper with Nobel laureate Franco Modigliani that was published in the Journal of Economic Literature by American Economic Association. Larry has more than 20 years of experience in the investment industry. Prior to joining CFA Institute, Larry worked at HSBC as senior manager for the Asia Pacific region. He started his career at the People’s Bank of China as a USD fixed-income portfolio manager. He also worked for US asset managers Munder Capital Management, managing US and international equity portfolios, and Morningstar/Ibbotson Associates, managing multi-asset investment programs for a global financial institution clientele. Larry has been interviewed by a wide range of business media, such as Bloomberg, CNN, the Financial Times, South China Morning Post and the Wall Street Journal.

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