The Creative Destruction of Finance


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A decade ago you could look up the address of the corner Blockbuster Video in the Yellow Pages. Today both companies are at best bit players. This is the nature of digital disruption.

“The Creative Destruction of Finance” isn’t yet a book, but it will be soon. All signs point to financial services as the next industry to be dramatically re-imagined by the internet. When the book is finally written, will your company be featured as a case study of successful change, or as yet another cautionary tale?

T4G's Paul Barter and Jeff DeChambeau examine the creative destruction of finance.

Published in: Economy & Finance, Business
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The Creative Destruction of Finance

  1. 1. The Creative Destruction of Finance Paul Barter VP Research Jeff DeChambeau Senior Analyst Presents
  2. 2. Late ’20s Good health Good credit Entrepreneurial No real assets Late ’50s Good health Good credit Preparing to retire Non-trivial assets A bit about us (from your perspective)
  3. 3. Jeff’s historical financial services options Today Earth formed 100,000 B.C. 0 A.D. 1980 1400 1800 20,000 B.C.
  4. 4. Abstracted, systematized, and centralized trust. Giovanni di Bicci de' Medici
  5. 5. Whose trust?
  6. 6. Flow of cashInterest rate
  7. 7. This brings us to today.
  8. 8. Basic assumption of finance Capital is constrained
  9. 9. ‘The world will be awash in nearly one quadrillion $ of cheap capital by end of decade’
  10. 10. “Banks, in particular, seem beset by boredom, unenthusiastic about actually making commercial loans, as many small and medium sized businesses will attest. This reluctance is likely to erode banks' franchise permanently, as scores of alternative lending entities are being created to fill the void.“
  11. 11. Should you take these competitors seriously?
  12. 12. What’s going on? Why does it matter?
  13. 13. Electricity is a General-Purpose Technology
  14. 14. 1. Invention 2. Expansion 3. Innovation
  15. 15. General-Purpose Technologies (GPTs)
  16. 16. Information & Communication Technology (ICT)
  17. 17. Invention Expansion Innovation
  18. 18. * *not a real book, yet.
  19. 19. What are some financial services? Loans & Deposits Money transfer & Payments Investments & Returns Insurance
  20. 20. Loans & Deposits
  21. 21. “PayPal could quite quickly become the largest consumer bank in the world. You just need to take away the reasons that people remove money from the PayPal account. And then it’s like, cool, why not just use it for everything?”
  22. 22. Payments & Transfers
  23. 23. Which narrative should you believe?
  24. 24. Investments and Returns
  25. 25. Angel networks Incubators Micro VC Crowdfunding Nascent HNW portals ? ?
  26. 26. Insurance
  27. 27. Where is there disruptive innovation? Loans & Deposits Money transfer & Payments Investments & Returns Insurance
  28. 28. What about the giants?
  29. 29. A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.
  30. 30. We see our customers as invited guests to a party, and we are the hosts. It's our job every day to make every important aspect of the customer experience a little bit better.
  31. 31. This product is listed on your site as containing 2 tubs, each weighing 3 pounds and 4.9 ounces, for a total weight of 6.6 pounds. However, the product has been downsized by the manufacturer and now consists of 2 tubs, each weighing 2 pounds and 10.3 ounces, for a total weight of 5.28 pounds. This is a reduction of 20%, which is quite large. I'm not sure what to do here, as I have already opened one of the tubs. Should I proceed with a return and attempt for a refund, and will the listing/price be adjusted? —“Bill” Hello, I'm sorry to hear about the problem with your Sour Power Strawberry Belts, 150- Count Tubs (Pack of 2). I've requested a refund of [20% the purchase price] $5.88 to your credit card. I hope this solution works for you. We look forward to seeing you again soon. —Amazon
  32. 32. Your margin is my opportunity.
  33. 33. 425,000,000 800,000,000
  34. 34. What about the giants?
  35. 35. They have completely different mentalities, stakeholders, and profit expectations.
  36. 36. They also have…
  37. 37. $60bn$160bn
  38. 38. What if…
  39. 39. + + +
  40. 40. Where is there a real threat? Loans & Deposits Money transfer & Payments Investments & Returns Insurance
  41. 41. How can you thrive?
  42. 42. Track the competition.
  43. 43. Focus on experience.
  44. 44. Be everywhere.
  45. 45. Test, track, and iterate.
  46. 46. And finally, don’t forget:
  47. 47. Go back to basics.
  48. 48. Obsess over customers.
  49. 49. Shoot for the moon.
  50. 50. 113 What can we do to help you?
  51. 51. Thank you! @T4G