On September 7, 2016, attorneys from Davis Wright Tremaine LLP attended Next Money NYC 2016. Next Money featured speakers from across the payments industry and the BBVA Open Talent Pitch Competition where twenty fintech start-ups competed for two € 30,000 prizes. Here are our top takeaways from the conference:
- Blockchain Holds Potential to Reshape Digital Identity. Next Money speakers and Open Talent competitors highlighted the financial industry’s need for more robust mechanisms to develop and leverage consumers’ digital identities. The financial industry’s reliance on in-person and on-paper interactions with consumers fails to satisfy consumers’ expectations regarding accessibility of financial products. According to Open Talent competitors, financial institutions’ reliance on these outdated processes unnecessarily complicates financial institutions’ compliance with regulatory requirements, particularly know-your-customer and anti-money laundering regulations.
One of the winners of the Open Talent Pitch, Cambridge Blockchain, employs blockchain technology to reduce financial institutions’ know-your-customer compliance burden by storing client background checks on the blockchain. Cambridge Blockchain has the potential to greatly reduce the costs and inefficiencies created by reliance on outdated mechanisms.
Dave Birch, Director of Innovation of Consult Hyperion, also discussed digital identity and the blockchain during his closing keynote “What Does Identity on the Blockchain Really Mean?” According to Mr. Birch, the Internet of Things presents exciting ways to connect with others, but can also complicate consumer’s control of their digital identity. The use of the blockchain to develop and connect to the Internet of Things will further complicate this relationship because by its nature, information stored on the blockchain is almost always permanent. This permanency makes it more difficult for consumers to disconnect from the Internet of Things after connecting.
- Regtech Emerges to Support Business’ Regulatory Compliance. A number of competitors focused on helping the financial industry comply with the increasingly complex regulatory environment with innovations in the “regtech” space. Regtech solutions, such as Cambridge Blockchain, enable businesses to streamline compliance functions.
Regtech illustrates a larger shift in the fintech ecosystem away from consumer-facing payments solutions to business-to-business and business-to-consumer solutions. According to Next Money panelists, this evolution is a natural outgrowth of collaborations between financial institution and fintech. It also indicates fintech’s shift from a “disruptor” in the industry to a key player.
- Artificial Intelligence in Financial Services on the Rise. Panelists and competitors touted artificial intelligence’s potential to reduce the friction between users and financial services. Artificial intelligence was deployed by a number of competitors to combat fraud.