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to "destroy, disrupt, and unbundle the bank." The second
The revolutionaries believe that banks was when banks began to work experimentally with a
are "dinosaurs" and the Internet giants few fintechs and startups. The third generation is where
will provide the platform ecosystem banks recognize they need startups for innovation and
change because they cannot do this internally – too many
going forward and handle the overall fiefdoms and too many silos.
client relationship. Survivors will be
successful based on their size and Skinner caused a light bulb to go on for the audience when
he said, "Fintech is about doing what we do today cheaper
efficiency, and technology will change and faster, with technology, whereas 'techfin' is about
the economics and business models of the doing things completely differently with technology." This
financial services industry. is a big distinction.
In the past I was involved with SBA lending at a community
bank. The process of applying for a loan is a nightmare for
Their question is: Is it worth it for the customer to do this, a small business and typically takes months. A business
or would it be easier to just buy and finance everything usually has to hire a consultant to write a business plan
online and have the car delivered to your house, so you and pull together all the exhibits that the bank requires.
don't have to take a test drive? They say the car dealer is The majority of applicants are turned down.
a dying business. Is this true, given that there are 16,794
of them doing business today? Carvana, which sells used But what if the bank could leverage data and technology
cars, doesn't have the manufacturing and distribution to quickly assess the credit risk and approve the loan in
costs a factory dealer does. a few minutes through an SMS text message? What if
the process could be initiated via a voice-enabled device,
It takes the average consumer about four hours to complete which would authenticate the individual's identity with
the whole transaction at a dealership, and consumers physical and behavioral biometrics, device intelligence
generally find the experience unpleasant. At Carvana, and digital behavior? That is fintech thinking.
you can manage your trade in and sign the sales contract
online. The company says its reduced cost structure will Suspend disbelief
save the consumer $1,500 on the average purchase, and
85 percent of its customers need financing, so it works One of the sessions gave some "homework" to the attend-
with Allied Bank to provide that and to commoditize ees, which I thought was interesting. First, suspend your
receivables. disbelief in new solutions, and find eight to 10 disruptive
trends that could impact you. Second, pick three to four
Carvana brings the car to your house and offers a seven- technologies/solutions that are most unlikely to happen.
day, money-back full return policy. You can return the Third, say yes, and identify the five things that would
car for any reason. There's also a 100-day/4,189-mile have to happen for each of these disruptors to succeed.
warranty because it fully reconditions cars. Frankly, this This is the way a venture capitalist might think in trying
is a powerful incentive for the average person buying a to pick one of the dozens of opportunities that he or she is
used car, although I'm not sure it's significantly different shown every month.
from other "no-negotiation" dealers like CarMax. But
will Carvana carve out a section of the market for itself? Certainly one of the biggest success stories in fintech is
Absolutely, as long it can deliver a better customer this show itself. It started in 2012 and has grown to the
experience than other dealers. And the deck is stacked in point where there are Money 20/20 conferences all over
their favor. the world, including Europe, Asia and China. In 2014, the
two founders, Anil Aggarwal and Jonathan Weiner, sold
There are other examples in fintech in personal finance, the enterprise to London-based i2i Events Group for a
investing, insurance, mortgages, loans, etc., and more than deal valued at $100 million – just another example of the
100 companies in the vendor hall presented their offerings opportunities in this space, which you would not likely
for the next generation of their niche industry. have thought about six years ago.
Cheaper, faster versus completely different Brandes Elitch, director of partner acquisition for CrossCheck Inc., has

One of the most interesting talks came from Chris been a cash management practitioner for several Fortune 500 compa-
Skinner, whose blog "thefinanser.com" is a must read for nies, sold cash management services for major banks and served as a
payments executives all over the world. Skinner spoke in consultant to bankcard acquirers. A certified cash manager and accred-
a "boxing ring" environment, where the audience was in a ited ACH professional, Brandes has a Master's in Business Administration
circle all around him wearing earphones. He said we are from New York University and a Juris Doctor from Santa Clara University.
in the third generation of fintech. The first generation was He can be reached at brandese@cross-check.com.

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