closer ties between regulators and innovators. New York is a three-hour train ride from DC, yet you’d be surprised at how few conversations really happen. Contrast that with the regulatory sandbox in the U.K.—I should also throw Toronto into those mixes. But fostering an environment where it’s an open dialogue between regulators and innovators is a tremendous asset that a number of areas around the world have.
Outside of regulatory, I think there’s a lot of interesting technology serving underbanked and pre-prime in South America as well as payment technologies in [Central and] South America.
And then I mentioned Toronto. Toronto’s been this sort of quiet fintech capital for decades. Depending on who you speak with, and this is contentious, many think it’s the birthplace of A.I. And so long as you have the brightest engineers coming out of Waterloo and the banks all on one street in the same city, it’s a place that I would plan to be digging into to uncover the next great fintech company.
X: What do you see happening with the regulatory environment related to fintech in 2017?
JZ: With the new administration, we’re in a “wait and see” if things are going to change. The mild concern with deregulation is that if we enter into a period of prolonged success for our financial institutions, the risk is they become increasingly myopic. If you’re making money, if bonuses are sky-high, are you really motivated to say, “Who are our competitors? What potential fintech companies could be eroding our value proposition? Let’s go hunt them out and try to partner with them and learn from them.” That’s an aspect of deregulation that I think concerns me, but that’s also very much a “wait and see.”
X: Any other trends you’re seeing in fintech at the moment?
JZ: The robo-advisor space has been well-covered and is arguably frothy and well-served. That said, I still think we’re just scratching the surface. I know people kind of roll their eyes when they hear the term robo-advisor these days in some circles, or at least in my circles, but I still think there’s a lot of opportunity there.
I think another general theme in fintech is around customer service. This is a lesson that the incumbents know very well and it ties into customer trust. It’s the importance of customer service. Millennials push for a mobile-first experience, but if you boil that down, what they really want is an immediacy of accurate answers and an immediacy of solving their problems. Fintech companies like Lemonade that have sort of perfectly blended an A.I. chat experience with human customer service to provide some of the quickest insurance applications and claim resolutions out there, is just a tremendous theme. Any fintech company that focuses on service first, I think, is going to be successful.