US has ‘tech edge’ amid expected growth for fintech industry: Milken Institute exec
Milken Institute Center for Financial Markets FinTech Director Nicole Valentine joins Yahoo Finance’s Allie Garfinkle at the 2023 Milken Institute Global Conference to discuss the impact of the regional banking crisis on fintech and the outlook for fintech in the US and internationally.
Video transcription
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SEANA SMITH: The regional banking crisis triggered by the collapse of Silicon Valley Bank has also affected fintech companies such as Venmo, Stripe and Square. Their valuations have fallen and raising capital is more difficult. Yahoo Finance’s Allie Garfinkle was at the 2023 Milken Global Conference to find out how fintech is doing in these uncertain times.
ALLIE GARFINKLE: Milken 2023. I’m here with Nicole Valentine. Nicole, thank you so much for joining us.
NICOLE VALENTINE: Thanks for having me on Yahoo Finance. I am happy to be here with you.
ALLIE GARFINKLE: So I want to start by testing out a thesis with you. Coinciding bank collapses, Silicon Valley Bank, Signature, First Republic, have these bank collapses made fintech more important than ever?
NICOLE VALENTINE: It has. And the beauty of fintech is that fintech is not afraid. Fintech is not afraid of a crisis. It actually looks directly at a crisis and figures out how to innovate. They look at what – are there ways we can build?
What are the ways we can innovate and get things done? And a crisis for fintech is just another opportunity to figure out what’s next, how are they going to reach their customers, how are they going to deliver value, and how are– how are they going to be more sticky in a moment like this.
ALLIE GARFINKLE: And can fintech emerge stickier from these collapses? What would it look like?
NICOLE VALENTINE: Well, for one, fintech is expansive. And what I look at – when I look at different phases of a business cycle, this theme is about thriving. I’m talking about thriving in a fast-moving world, making sure everyone thrives. But there are three stages. It is to survive. It is being built. And it flourishes.
So fintech is always building. Fintech always builds on top of new technology. So we are talking about generative AI. We are talking about blockchain. This is how fintech continues to move through cycles. That doesn’t stop the builders, and it doesn’t stop them from coming out of a room and saying, what’s next?
ALLIE GARFINKLE: So talk me through what the outlook for fintech is because you’ve been all over the world and actually talked to people about fintech. So I would be curious about here in the US and more generally.
NICOLE VALENTINE: So that’s interesting. When you look at different markets, every market – you meet a market where it is. So I spent a lot of time this year in Singapore. We have been to the Middle East, Abu Dhabi. We focus on Africa. And we are obviously focused on the US, Latin America. And we’re out here looking at the different ways people are attacking and attracting fintech innovators, investment and where they are.
So I would say that for the US we are a very mature market. We have a technical advantage. We have investment advantages. And so you’re going to see a lot of fintech coming out of the US, and people don’t stop here.
When you look at the Middle East, you look at a lot of investment. They also attract their politicians. Their authorities are accommodating. They are open for business. The EU is open for business.
And then when you look at different markets, you look at where the opportunity is. When you go to Africa, there’s a very digital native population that’s ready to kind of go into technology, and they’re ready and they’re actually innovating. They have jumped and they are in the place where everyone is in technology there.
So I think the outlook for fintech is really fantastic. I believe that any transaction that has a technical advantage is considered fintech. Whether you’re an organization, a company, or a startup, you’re looking at Where’s My Next Tech Moment? How do we use this technological appetite to build acumen? So your users are out there doing more and being more productive with your technology.
ALLIE GARFINKLE: Yes, the picture you paint, Nicole, is very broad, but there is also a lot of doom and gloom about a possible recession. So how does fintech fare in a recessionary environment?
NICOLE VALENTINE: I see fintech as recession proof. And when I say recession proof, I mean fintech isn’t going to stop moving. It’s going to keep moving because there’s always room to build even in a recession. It just means you have to figure out where your customer is coming from, where your user is, where your client is, where they’re going next, and make sure fintech meets that need in every room of your life.
I know fintech startups that have built and gone out there in downturn cycles. They figured out how to get skinny. They figured out how to get smarter and build more quality into their product. And that’s what it’s all about. It’s about quality. It’s not always about size.
ALLIE GARFINKLE: It is very interesting. So talk to me and look ahead, how– if you had to distill it down, what’s the outlook for fintech right now?
NICOLE VALENTINE: I see the prospects for fintech as follows. I think about this in a big picture. We are here at the Milken Institute. We have top managers in business from all over the world. And I think everyone is asking themselves, what is the wealth of a nation? What is the wealth of your nation?
And many people say that wealth is about human capital, human opportunity, human creation, the ability to create. And fintech is right at the center of it. The outlook is that when you want to build the wealth of your nation, you have to go to fintech first, build from there and make sure it reaches the people so everyone can have financial mobility.
ALLIE GARFINKLE: And actually while we’re here, before I get to the last question, how do you define fintech?
NICOLE VALENTINE: So I think fintech is very broad. But I will say – I will say this. Fintech is any transaction, any financial transaction that uses technology to scale its impact and use. So it’s about– technology can be AI, cloud computing, blockchain. And the transaction can be anything from lending to currency to payments. And so when you talk about some of these transactions and the technology that goes in and drives that up, that’s fintech.
ALLIE GARFINKLE: What are your expectations for how a possible interest rate increase could affect fintech?
NICOLE VALENTINE: So here’s the deal. It is very possible. And when you talk about impact, for me, I say there’s not going to be a decline in terms of the amount of activity that’s out there. It can affect – hopefully it doesn’t affect the jobs and the talent that will be deployed to ensure that fintech is built. But I have a feeling fintech is just going to keep going no matter what happens. Whether it’s an increase or not, we’re going to keep pushing and making sure we thrive regardless.
ALLIE GARFINKLE: I don’t know if I’ve ever heard a few fintechs sound sexier. Nicole, thank you very much.
NICOLE VALENTINE: Thank you so much, Allie. I enjoyed talking with you, and enjoying the rest of the Milken Institute conference.
SEANA SMITH: It was Yahoo Finance’s Allie Garfinkle at the Milken Global Conference in California.
