Bloomberg Markets was nice enough to publish an interview with me this week, mostly on finance and banking topics. Since the interview is correct but abridged, took place in early April, and is just coming out now, I offer a few additional thoughts.
Unbundling banks: I think banks are getting unbundled with or without Silicon Valley or Bitcoin due to market changes plus regulation.
Any big bank executive will tell you: Over time, the ratio between what non-banks can offer vs what banks can offer is steadily increasing. Post-crisis reforms like Dodd Frank are accelerating the unbundling, whether that’s what regulators intended or not.
But Dodd Frank is a double-edged sword: It also makes it harder for new entrants to the core banking system. Banks both protected and restricted.
Bitcoin and regulation: Since the interview in early April to the present, there’s been substantial movement by many regulators on Bitcoin. There are plenty of discussions and disputes between market participants and regulators but overall, I think a lot of progress is happening.
Finally, much like the Internet 20 years ago, Bitcoin as a technology can and will be adopted by both incumbents and new market entrants. We are seeing a rapidly escalating level of engagement and interest in Bitcoin and cryptocurrency by large financial services companies. The opportunity is clear and present for both big companies and startups to use new technology to improve financial services broadly.
Since the interview, the other huge earthquake to hit the financial services industry is the launch of Apple Pay. Between Apple Pay and Bitcoin, I predict more changes coming in financial services and banking in the next 3 years than in the last 20 years.