Jane Gladstone, the recently appointed president of Promontory Interfinancial Network, has been working in Fintech investment banking since the 1990s. Gladstone established a Fintech merger and acquisition (M&A) and advisory service during the 90s, while working at Morgan Stanley.
Gladstone, the former senior MD at Evercore’s financial services corporate advisory business, predicts that there will be “hundreds of Fintech failures precisely because too many companies got funded.”
As reported by American Banker, Gladstone has always thought that financial services are a “completely digital” product.
“The financial services world makes money, which is largely digital except for cash. At some of the largest financial services companies I was advising, their tech budgets were enormous; they were often measured in the billions. The potential for disruption in a sector where the product was already digital seemed patently obvious.”
While offering advice and recommendations on how to run a successful Fintech business, Gladstone noted:
“One of the recurring mistakes that I’ve seen over the year is that to be a successful fintech, you need the financial services part, the tech part and the innovation part. You can’t have one without the others.”
She pointed out that many startups try to “reinvent all of financial services.” However, she claims that they tend to forget about or overlook regulatory issues or don’t give enough thought to the way market structure would work with their new products. Many soon realize that it can be a lot more challenging to “reinvent” an entire sector or industry that’s already very “fast, complex and regulated.”
While sharing insights on how the world should respond to COVID-19, Gladstone pointed out that Fintech companies like PayPal and Stripe or others that handle online payments are benefiting from the ongoing migration of cash to digital money – which has been accelerated due to the pandemic.
“Cash had been in a kind of vegetative state and a coma for years where people were still using it. It wasn’t growing, but it wasn’t really shrinking. This has been the shot in the arm that contactless payments have needed in this country. It’s actually become unsafe to transfer dollar bills.”
Going on to discuss the challenges in the modern world, where many people are tech-savvy while others struggle to use digital platforms and services, Gladstone remarked:
“The digital divide (the divide between those that can and can’t effectively use technology) is a real problem. And, I do think that Fintechs have done a better job at having a value proposition for the unbanked….It’s a big problem for our society, not just because it means people might not be able to feed themselves in a situation like this, but also, educating our children if they don’t have access to online learning is a big, big problem.”