Writing for Project Syndicate, international economist, Dambisa Moyo discusses the state of traditional banking in a world of transforming technological innovation.
Digital startups have penetrated areas traditionally dominated by the financial industry, and banking. Moyo urges that financial-services companies are not safe from the transformations wrought on by technological innovation, however there is reason to believe that finance will prove resilient.
Startups such as, Acorns, which is an app that automatically allocates a proportion of everyday purchases to a preselected investment portfolio, are rapidly expanding and transforming the investment and savings market. Moyo explains, “According to research by the digital ad agency Fractl, approximately 85% of millennials are saving a portion of their paycheck – a larger percentage than their predecessors.” The process of lending is also being transformed by the surge of digital technology. Crowdsourcing, and peer-to-peer lending give borrowers the opportunity to circumvent many hurdles of the traditional banking system, such as credit ratings.
Moyo explains that these startups do have significant constraint on the size and type of financial transactions they can offer, and “as a result, the digital revolution’s assault on the traditional banking industry is by no means overwhelming. In finance, at least, technology firms should not be viewed simply as a threat, but as a source of productivity-boosting innovation.”
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