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How tech will transform the way we buy, borrow and sell

Harriet Taylor
Source: Money 20/20

Tech's makeover of money is well underway, and how we get loans, buy houses, or lend money is going to be dramatically different in the near future.

This imminent future is what both financial services and tech companies will discuss at the fifth annual Money 20/20 conference in Las Vegas next week.

The reinvention of such a complex and highly regulated industry for the modern mobile and digital era requires cooperation between incumbents and upstarts alike. More than 10,000 attendees, including Wall Street bank executives and CEOs of Silicon Valley start-ups, are expected to attend.

The conference will feature keynote speakers from established companies like Bank of America (NYSE: BAC), Visa (NYSE: V), First Data (NYSE: FDC), Facebook (NASDAQ: FB), Alphabet (NASDAQ: GOOGL)'s Google, PayPal (NASDAQ: PYPL), Square (NYSE: SQ) and Wal-Mart (Santiago Stock Exchange: WMTCX-CL), as well as start-ups like Stripe, Pinterest and Poynt. Attendees will also hear from regulators and trade associations, including the Consumer Financial Protection Bureau and the Chamber of Digital Commerce.

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The event has unveiled cutting-edge tech before. Last year alone, JPMorgan Chase announced mobile payments service Chase Pay, Nasdaq launched a private blockchain-powered trading platform called Linq, Citibank unveiled a cardless eye-scanning ATM, Amazon announced customers could "Pay with Amazon" in partner mobile apps and Samsung added new U.S. banking partners to Samsung Pay.

Big topics will include payments and account security, reaching people who are currently "unbanked" and the transformative potential of blockchain technology.

Major financial services firms — from American Express to Goldman Sachs — are playing an increasingly important role in financing blockchain and bitcoin start-ups, CB Insights found.

Blockchain is the technology that underlies bitcoin and other cryptocurrencies. It's a public ledger of all transactions through a distributed database which maintains a continuously growing list of records or "blocks." Each block contains a time stamp and link to a previous block, securing the system from tampering and revision.

"The area is going to make a very big impact [on financial services]," said David Blumberg, founder and managing partner of Blumberg Capital. Blockchain technology will significantly reduce the cost of buying a home, getting a mortgage or transferring currency, said Blumberg.

Many fintech firms are trying to give banking and credit services to individuals with no credit history, and to businesses considered too risky to get loans from bigger banks.

The need is real. Seven percent of U.S. households did not have a bank account in 2015, according to a Federal Deposit Insurance Corp. study released Thursday.

Start-up Bee provides bank accounts, debit cards and financial services all through a mobile app for people who may have never had a bank account. Its strategy is to set up on street corners and register people on the spot.

"A lot of fintech is now focused on helping individuals level the playing field so they can take advantage of services wealthy people or businesses have had for decades," said Blumberg, who is invested in Bee.


Data breaches in the financial services industry have cost banks billion of dollars. The Target data breach — where as many as 40 million credit and debit cards were stolen — cost banks more than $200 million, according to the Consumer Bankers Association and the Credit Union National Association.

Start-ups play a big role in helping financial institutions protect their assets, said Blumberg.

Deep Instinct, a start-up whose customers include central banks and law enforcement agencies, uses a form of artificial intelligence called deep learning to identify and react to new threats as they appear.

New technology is also making it easier to verify that someone logging into an account is who they say they are at the outset — and throughout the transaction. This is designed to address so-called man-in-the-middle attacks in which criminals grab a user's credentials once they are already logged into an account.

BioCatch, a Money 20/20 sponsor, helps banks continuously verify a person's identity, using more than 500 different factors that add up to a unique user profile. They include personally identifiable characteristics such as the way you move your mouse, or hold your phone. Pass your device to another person midtransaction, and you may be prompted to recheck your identity, since the bank will recognize a difference in the way the phone is held.

Some of the likely highlights of the conference will be an on-stage interview by CNBC's Kayla Tausche of Square (NYSE: SQ) and Twitter (NYSE: TWTR) CEO Jack Dorsey and a keynote address from Kor Adana, writer and tech producer of USA Network's program "Mr Robot."



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