Innovation and Disruption in the Financial Technology Industry
Jason Oxman (’96) discussed the FinTech industry’s future at the Review of Banking & Financial Law Symposium.
Scholars of financial law and industry professionals gathered at Boston University School of Law for the FinTech Symposium on February 27, 2017. Financial Technology, or FinTech, is an industry that utilizes innovative technology in order to deliver financial services to consumers.
The symposium was hosted by the Review of Banking & Financial Law and BU’s Center for Finance, Law, & Policy.
Jason Oxman (’96), CEO of Electronic Transactions Association (ETA)—a nonprofit global trade association that represents the business interests of the payments technology industry—gave a keynote speech discussing the innovations and disruptions the FinTech industry has seen throughout the years.
FinTech broadly describes financial services innovations that utilize both the advanced technologies and the “disruption” mindset of startup companies. However, the financial industry has proven difficult to disrupt, as incumbents hold a huge advantage in their ability to navigate strict financial laws and regulations. Meanwhile, lawmakers wrestle to make room in the financial sector for young companies, while ensuring consumers are protected and financial crises are avoided.
“What’s interesting about the payments industry, and the reason we’re all gathered here today at a FinTech Symposium to talk about the payments industry, is the definition of the industry has changed significantly over the last few years,” Oxman said.
Oxman’s lecture highlighted these changes the payments industry has seen as technology has grown and evolved. The industry, he said, is based on “universal, ubiquitous, safe, and secure electronics by merchants on behalf of consumers.”
From the creation of the credit card to mobile payments, the industry has gone through multiple changes as technology pushes innovation. Oxman argued that the industry is seeing its most significant period of innovation in payment system history.
Change, Oxman said, benefits consumers, merchants, and the economy. Networks have served as the foundation of the industry and have helped to connect consumers with more than eight-million merchants now accepting electronic payments. Innovations in the industry, such as mobile payments, may be threatening to incumbents, but Oxman argued that innovation helps the industry’s network grow.
“It’s not a replacement of the card, it’s a form factor change,” he said. “So it’s disruptive to the makers of plastic molding that make plastic credit cards, but for the rest of the industry, this is a great development and that’s why all the banks and processors and card networks are partnered with the technology companies.”
Oxman noted that along with innovation, legislation is important for allowing the industry to grow. Regulatory agencies, he said, hold the power to impact the future of FinTech. Agencies, like the Consumer Financial Protection Bureau (CFPB), are considering regulations that may inhibit the business and growth of the payments industry, Oxman said.
For example, the CFPB recently introduced regulations that works to restrict the pre-paid card business, eliminating overdraft on pre-paid cards. “We represent pre-paid card providers and we think those services are valuable to consumers,” Oxman said.
For payment industry entities, like the ETA, agency restrictions may affect innovation. However, Oxman believes the pace of change in the industry will continue to increase.
“As the FinTech space expands to include not just payment, but also lending, deposit activity, and financial services even beyond that, I think you’ll see that the pace will continue,” he said. “The level of innovation that is taking place is because we are embracing it as an industry—the fact that it benefits consumers, merchants, and the economy if we move forward.”
Reported by Greg Yang (CAS’17)
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