Your credit score holds the key to my heart

Your credit score holds the key to my heart

Your credit score holds the key to my heart.

Over at the U.S. central bank, the jury’s still out on whether inflation’s set to trend back toward policymakers’ 2 percent target.

But a new working paper published at the Federal Reserve Board draws some conclusions that might help prevent your heart from deflating.

Let’s just say you’ll never look at “credit unions” the same way again.

Economists Jane Dokko, Geng Li, and Jessica Hayes presented their findings about the role that credit scores have in predicting the stability and potential longevity of a relationship that’s starting to get serious.

The trio scoured quarterly data from the Federal Reserve Bank of New York’s Consumer Credit Panel, based on information provided by Equifax that includes a “risk score” similar to the more commonly known FICO measure of an individual’s probability of failing to meet their credit obligations in the not-too-distant future. Because personal identifiers are stripped from the data by Equifax prior to delivery, the researchers are agnostic as to whether the couples they identify are married or merely cohabiting.

“In light of the growing prominence of credit scores in households’ economic and financial opportunities, we are interested in their role in household formation and dissolution,” they write, noting that their analysis centers on the initial match in credit scores and quality at the time a committed relationship begins.

The start of a committed relationship is marked by the quarter in which two individuals who did not share an address begin to do so, and, for the purposes of this study, requires that they live together for a minimum of one year. Other filters are applied to the data in an attempt to minimize false positives.

Here’s a summary of their findings:

  • People with higher credit scores are more likely to be in a committed relationship and stay together
  • People tend to form relationships with others who have a similar credit score as them
  • The strength of the match, both in the headline credit score and its details, is predictive of whether or not a couple is more likely to break up for observable reasons pertaining to finance and household spending; and
  • Credit scores are indicative of trustworthiness in general, and couples with a mismatch in credit scores are more likely to see their relationships end for reasons not directly related to their use of credit.

Those are some pretty bold conclusions to draw. But the proof, the economists say, is in the numbers — and, although correlation doesn’t equal causation, in some instances their results also have both practical and intuitive underpinnings.

Controlling for other factors, individuals whose credit scores are one standard deviation above the mean are 14 percent more likely to enter into a committed relationship over the next year than average, according to the economists. In other words, if you’ve had trouble meeting your financial obligations, your wherewithal to stay current with someone else’s life is also probably suspect.

The results indicate that these partnerships are more likely to endure.

“Among the relationships that survive the first two years, a one standard deviation increase in the initial average credit score implies a 37 percent lower chance of separation during the third and the fourth years of the relationship,” wrote the economists.

Major imbalances between people in committed relationships — when one person is considerably more physically appealing than the other or earns significantly more — tend to be a potential source of conflict that bubbles not too far below the surface. And a wide gap in credit scores between people in a committed relationship is just another manifestation of such a powder keg.

“[T]he initial score differentials are strongly predictive of the stability of the relationship,” reads the report. “The odds ratios show that, for example, a one standard deviation increase of initial score differential (66 score points) implies a 24 percent higher likelihood of separation during the second year and during the third or fourth year, and 12 percent higher during the fifth or the sixth year.”

Moreover, the similarities between individuals when it comes to the components that go into generating a credit score (negative events, usage of lines of credit, length of credit history) also have “a statistically and economically significant bearing with the likelihood of separation in the third or fourth year,” the researchers wrote.

Credit scores, the economists reason, have a real impact on how financially intertwined two individuals will become.

Couples that have similar credit histories are more likely to take on joint ownership of a mortgage, the researchers discovered. Taking on this burden together could therefore be perceived as a pair of financial handcuffs, or something that raises the transaction cost in the event of a breakup.

On the other hand, a chasm between credit scores suggests that a couple’s access to financing, or good terms on those funds, could be impeded and blamed upon one individual. That’s a recipe for tension.

The probability of an adverse credit event is also something that increases as the credit score differential between partners widens. According to the report, “a one standard deviation increase of the initial credit score differential is associated with a 19 percent higher chance of filing for bankruptcy during the first two years of the relationship, while the odds are 10 and 15 percent higher for foreclosures and having more of derogatory records, respectively.”

The findings on the strength of partnerships with similar credit scores also speaks to the phenomenon known as assortative matching; the notion that, in relationships, “opposites attract” does not always apply.

This is true in the animal kingdom, often for practical purposes: Individuals within a species and of a similar size find the copulating process easier. For homo sapiens, this can also hold for nonphysical attributes, like religious affiliation, level of education, or, apparently, credit scores.

In a sense, this revelation also serves to amplify the tragedy of Romeo and Juliet. The star-crossed lovers came from “two households alike in dignity” — and, presumably, creditworthiness, making their compatibility self-evident. Default, to adapt a line from another of the Bard’s plays, was not in their stars.

But there is also a residual correlation between credit score differentials and conscious uncouplings — that is, the two tend to trend together for factors beyond the aforementioned observable financial channels.

This leads the economists to hypothesize that there is something about credit scores that is indicative of an individual’s “underlying trustworthiness,” and that such a trait is essential for a healthy relationship.

By introducing a pair of equations to this effect, they manage to strip out any remaining vestige of romance from human relationships:

We begin with setting forth the following stylized, conceptual framework,

Pr(default) = f(trustworthiness) + η,


credit score = g(Pr(default)) + µ

In sum, the equations contend that an individual’s “underlying trustworthiness” — however subjective that term may be — is positively correlated with his or her credit score.

The researchers note that credit reporting agencies and lenders used to collect color on a person’s reliability and moral character, and these survey-based assessments of trustworthiness and credit scores also tend to have a large amount of overlap.

As such, the economists find support for the notion that “credit scores matter for committed relationships because they reveal information about general trustworthiness.”

So the next time your significant other asks, “What’s your number?” you might want to make sure you’re on the same wavelength before answering.


Ferrari wants to rebrand itself right before its IPO as a LUXURY BRAND

Ferrari wants to rebrand itself right before its IPO as a LUXURY BRAND

You probably think of Ferrari as a maker of cars. But Ferrari seems to be making the case that it is more of a luxury brand like Tiffany or Patek Phillipe, in documents filed with the SEC on the eve of its IPO.

The word “luxury” appears in its amended IPO filing 151 times.

There is a good financial reason for this. Although Ferrari is growing its sales and is profitable, that growth is slow. There just aren’t that many new Ferrari customers each year. For the last five years, the company has only shipped about 7,000 cars annually:


If this was a company that sold generic objects — hinges or screws, say — that would make its valuation rather low. Investors buy future growth, not today’s growth.

But Ferrari’s $11.1 billion valuation is 37 times its earnings of nearly $300 million in 2014.

The word “luxury” is the reason Ferrari thinks it can command such a price. About half of Ferrari’s current assets consist of its brand value. “Goodwill” and “intangible assets” are literally that: assets that don’t exist, except as concepts (although they’re backed with powerful intellectual property and copyright claims).

Here’s what that looks like on the balance sheet:


Now compare that to the actual growth of Ferrari’s business. Its revenues are only growing at 5% per quarter:


The reason the IPO is so over-subscribed, then, is not because of the business’s current growth. It is more likely that investors can see how powerful the brand is, and how that brand might be extended into a wider luxury goods scenario: Can’t afford a Ferrari? No problem. An over-priced Ferrari leather jacket might be more within reach — and carry a greater profit margin for the company.  

That’s where Ferrari’s future growth is likely to come from, as the IPO filing mentions in passing (151 times).

The growing importance of social skills in the labour market

alberto balatti:

Sorry, robots – Wage growth is greatest in jobs that require strong social skills

Originally posted on Skills and Work:

By Stijn Broecke.

Last month, chatbot Rose won the 2015 Loebner Prize for artificial intelligence (AI) – an annual contest in which machines try to fool judges into believing that they are human. While Rose ranked the most human-like bot by three of four judges, it failed to fool any of them into thinking it was a real person.

While this may be disappointing news for those working in the world of AI, it is good news for those who are worried that robots will one day steal our jobs. Indeed, while some analysts believe that half of our jobs are at risk of being computerised over the next two decades (Frey and Osborne, 2013), others are much less pessimistic (Boning, Gregory and Zierahn, 2015). The fact remains that robots have persistently failed to imitate the most human of skills, such empathy, teamwork, relationship building, etc.

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The LOWEST paid jobs in investment banking

The LOWEST paid jobs in investment banking

Not all investment banking jobs are as well paid as traders might make out.

Behind the traders, there is the support staff, known as the middle and bank office of the bank. While the front office brings in the money and takes the risk, the rest have to process it and carry out the admin.

And the pay is quite different. While an analyst level back office employee will struggle to break £40,000 ($61,000), a trader at the same level can make 20% more, even before factoring their bonus.

Emolument, which crowdsources data on pay, found the six worst paying jobs in investment banking based on responses from 1,982 analysts. Here they are.

Trade support in the back office of the investment bank.

Median salary: £41,000

Median bonus: £2,000

What the job is: Making sure trades are settled on behalf of traders.

Cash management in custody and transaction banking.

Median salary: £38,000

Median bonus: £1,500

What the job is: Managing escrow accounts.

Operational risk management and risk analytics.

Median salary: £41,500

Median bonus: £500

What the job is: Oversight of the trading floor operations, such as making sure the profit and loss figures are correct and spotting rogue traders.

Trust services in custody and transaction banking.

Median salary: £40,000

Median bonus: £1,000

What the job is: Managing assets and securities in safe-keeping on behalf of clients.

Corporate banking in asset finance and leasing.

Median salary: £39,500

Median bonus: £1,500

What the job is: Leasing deals for companies who need to use heavy machinery or expensive assets such as aircraft.

Trade settlement and securities operations in the middle and back office of the investment bank.

Median salary: £38,000

Median bonus: £1,500

What the job is: Making sure the transactions made by traders come off smoothly.

Huawei: A Case Study of When Profit Sharing Works, governance diversity matters

Huawei: A Case Study of When Profit Sharing Works, governance diversity matters

The gaps between what CEOs earn and what workers do are startlingly large around the world. Such uneven wealth distribution has long been a topic of discussion in economic and policy circles, but it’s now increasingly common in the corporate world as well. A 2014 IMF study illustrates that extreme inequality is self-defeating as it slows down economic growth and insights from behavioral economics show that it damages employee morale and productivity, while large executive bonuses have presented PR nightmares for the companies that award them.

From this discussion, profit-sharing plans have emerged as a potentially viable solution to both the problem of wealth distribution and the challenge of employee engagement. But how feasible are these plans at large, global organizations?There aren’t a lot of models out there aside from a few, well-known examples such as Waitrose, a British online grocer.

One example that’s less well known in the West is Chinese telecom giant Huawei, a private company owned by its employees. Founded in 1987 by Ren Zhengfei, today it employs about 170,000 staff, including more than 40,000 non-Chinese (75% of employees outside China are local hires), and serves more than 3 billion customers worldwide. It is the only Chinese company that receives more sales revenue from markets outside China (67%) than from inside it. (Editor’s note: It’s worth noting that the U.S. isn’t one of those markets. Some U.S. lawmakers consider the company a security threat. For its part, Huawei’s internal policy is to use U.S. law as the guiding law in their international business.)

At Huawei’s inception, Zhengfei designed the Employee Stock Ownership Plan (ESOP). At the time, Zhengfei had no idea what a stock option system was – not being familiar at that time with the types of incentives systems developed in the West. Around that time, China was still struggling with the aftermath of the Cultural Revolution and being a private owner and thus capitalist was still perceived by many as an ugly thing. In light of that reality, Zhengfei felt that not owning the company was also the least dangerous thing for a founder to do.

Today, Zhengfei himself holds only 1.4% of the company’s total share capital, with 82,471 employees holding the rest (as stated in Huawei’s 2014 Annual report, as of December 31, 2014). Furthermore, because Huawei is not a public company and owned by its employees, employees take a large share from the companies earning. In the case of Huawei the total net profit that was earned over the last twenty years is considerably smaller than the total net profit that was paid out to its employees. To be specific, the sum of employees’ salaries, bonuses and dividends is 2.8 times the company’s annual net profit, and plans are to further increase the ratio to 3:1.

The structure of the ESOP is based on two important premises. The first are the Confucian values of equality and harmony, which underlie Zhengfei’s desire to prevent wealth gaps between employees from becoming too big. To achieve this, Zhengfei believes that if employees own the company they will be motivated to act as entrepreneurs and initiate more projects that could help all of them to earn more and diminish differences in wealth creation considerably. This feature of providing opportunities to all employees to increase their wealth is characteristic of what an employee-owned company stands for and differs from public companies where primarily the happy few at the top are earning more by serving their external shareholders and thereby widening salary gaps within the company significantly. But although Huawei is big on creating equal access to those opportunities, they do not employ a view that also promotes equality in the distribution of outcomes.

The second premise is built on the idea of equity. The harder you work, the more you can earn — but working overtime is only rewarded extra if the work directly addresses the needs of their customers. Overtime projects that do not reveal direct positive consequences for customers are not rewarded. This plan not only controls wealth gaps and allows employees to earn more, but also allocates more influence and authority to those who show strong skills.

In Zhengfei’s view, people care about belonging to and being proud of a collective but also have the desire to differentiate themselves from others. Huawei’s ESOP can satisfy both human needs. The ESOP emphasizes the idea that Huawei belongs to everyone in the company and that Zhengfei expects all employees to act like owners, with dedication and committment. This entrepreneurial spirit allows the company to learn and innovate, collectively, in support of Huawei’s mission: “To improve quality of life through communication.”

One limitation is that, due to legal constraints, non-Chinese employees are not able to participate in the ESOP, despite many of them having expressed a desire to be included. To meet these demands, Huawei has recently adopted a long-term incentive plan called Time-based Unit Plan (TUP). First piloted in 2014, TUP is a profit-sharing and bonus plan based on employee performance for all eligible employees (“recipients”). Under TUP, time-based units (“TBUs”) are granted to the recipients, which entitle the recipients to receive cash incentive calculated based on the annual profit-sharing amount and the cumulative end-of-term gain amount.

Another important limitation is that Huawei is a private company; it’s not clear how the approach they use would translate to publicly traded companies, and Huawei currently has no plans to go public. Huawei believes doing so would effectively dismantle their profit-sharing plan, hurt morale by creating inequality, pressure the company to think short-term, and curtail innovation and growth – which are of high value within the telecom industry.

Huawei’s example helps us understand two things about how profit-sharing schemes work at scale. First, the idea of an employee-owned company requires a culture with a long-term focus and a collective orientation, which in turn imply not being a public company. Second, the idea of an employee profit-sharing scheme is innovative in serving both individual and collective interests simultaneously because it links the motivation of an individual employee to act as an entrepreneur to the achievement of the company’s vision. It is here where an employee-owned company has the potential to turn individual ambitions into a sense of intrinsic motivation and pride to serve the company’s purpose on the long-term.

At the same time, the Huawei example also highlights suggestions on how global companies can handle those profit-sharing plans and what the likely challenges will be. Specifically, it is clear that companies operating in different countries will face legal challenges that may introduce an inequality between employees in the company’s home country and employees elsewhere. Huawei approaches this challenge by working together with a consultant firm to arrive at new incentive plans like the TUP, but also to offer its non-Chinese employees higher salaries than Chinese employees at the same level. Usually those pay rates are also higher than to those in the local countries or regions. Another challenge that global companies will face when giving employees a stake in the company’s profits is to develop tax-efficient incentive plans. Countries will differ in the extent to which and how much tax benefits they want to provide to stimulate profit-sharing schemes.

For example, in the current U.S. presidential race, candidate Hillary Clinton has suggested that companies that implement a form of profit-sharing could receive tax incentives for the first two years. The underlying idea is to nudge companies toward a mindset that sharing profits will instill a sense of ownership in employees — something that’s profitable and effective in the long term.

The challenge thus primarily lies in shifting our focus from external shareholders to internal shareholders — internal shareholders who not only work at the top layer of the company, but across every layer. And it is exactly this mindset that employee-owned companies strive for: the idea that wealth and profits are common goods that are shared — and not only awarded to a few golden boys — and as a result, can boost productivity and innovation and serve as a catalyst for growth.

Huawei: A Case Study of When Profit Sharing Works

Profit Is Less About Good Management than You Think, non-human assets — i.e., their moats — were ultimately more important to firms than human assets

Profit Is Less About Good Management than You Think, non-human assets — i.e., their moats — were ultimately more important to firms than human assets  

Benjamin Graham, the father of value investing, seldom met the managers of the companies he invested in because he felt they would tell him only what they wished him to hear and because he didn’t want to be influenced by impressions of personality. His talented student, the legendary Warren Buffet, thought the same: “when management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
Value investors like Graham and Buffett believe that the sources of sustainable returns on capital are not a company’s human assets but their so-called “economic moats,” structural, durable competitive advantages around revenues or costs. Revenue moats are usually linked to intangible assets (including brands and patents), high switching costs, and network economies. Cost moats are linked to the ownership of cheaper or faster processes, favorable locations, unique assets, or firm size. In some cases, companies’ moats have enabled them to survive multiple technology disruptions and industry shifts over time, making their founders some of richest people in the world: think Bill Gates, Carlos Slim, Amancio Ortega, and Larry Ellison.
There’s an interesting fact about companies with these kinds of moats or competitive advantages that often gets overlooked: the turnover rate of CEOs among the S&P as a whole is between ten and twenty times higher than in the big entrepreneurial successes of the past few decades. A case in point is Inditex, founded in 1963 and now the biggest fashion group in the world, which has only had two CEOs succeed founder Amancio Ortega. By contrast, Germany’s Deutsche Bank, which has suffered from years of poor performance, has had three CEOs in the last five years, none of whom has done much to improve performance despite their glittering CVs in the sector.
This raises a basic question: can a CEO with the best track record imaginable turn around a poorly performing company?According to MIT economist Antoinette Schoar the answer is yes roughly 60% of the time, which is not that much better than the odds of getting heads on a coin toss.
Chicago’s Steve Kaplan’s findings on the difference that managers can make are even more sobering. He studied the relative importance of management teams in 106 venture capital-financed firms from early business plan to IPO. He found that although 50% of venture capital investors described the management team as the most important factor at the business plan stage, this emphasis had dropped markedly by the IPO stage. He concluded that non-human assets — i.e., their moats — were ultimately more important to firms than human assets, with their relative importance increasing over time. The implications are clear: first choose the right industry and company, then pick the right management. If the managers don’t perform, they can be swapped out much more easily than the basic business idea or industry.
Of course, in a highly competitive world, even a slim advantage is better than a coin-toss. So is there something different about the managers who do succeed? Let’s go back to Steve Kaplan, who has also studied how and why CEOs matter, relating their features to hiring and firm performance.
His detailed assessments of over 300 CEO candidates in private equity-funded companies suggest that CEOs with execution strengths (“efficiency”, organization and planning”, “attention to detail”, “persistence”, “proactive”, “sets high standards”, etc.) perform better than CEOs whose softer skills such as team building or listening dominate. This finding is a ringing modern confirmation ofwhat Peter Drucker was telling us in 1967about what makes executives effective.
If all this is true, then the high CEO turnover you see at many public companies is not a symptom of poor management. It suggests a deeper problem, which is that the companies in question simply don’t have a competitive advantage and are simply engaged in a lottery, hoping to find a CEO who can find one. The odds aren’t favorable.

The smartest minds in fintech on how Wall Street is going to change

The smartest minds in fintech on how Wall Street is going to change

The advent of technological change is reshaping Wall Street at a rapid rate.

Business Insider surveyed a number of the brightest minds in financial technology, including chief information officers at industry giants, heads of innovation, startup founders and venture capitalists, and asked them one question.

What is the one thing that is going to change finance as we know it in the next decade?

Their answers varied widely, but there was a handful common theme that ran through all of their responses.

The old models are changing, technology is making some systems antiquated, and new players are going to emerge.

Here is what they had to say:

David Gurle, CEO of financial messaging and data platform Symphony

“It’s going to change in a number of ways. I’m not a specialist in finance, I’m a specialist in technology, but what I can tell you is this: there is today an operating system that makes the financial system work, the system that ties things together. That is a vertically integrated system, in the same way Windows is.

Over the course of the next 10 years, with cloud computing, with open source, we’re going to see a model where the transformation of this system is the same as from Windows to Linux. You’re going to see organizations being more technologically driven, like Goldman Sachs and others, and giving components of their assets as applications. That is going to make the life of people who interact with financial services way easier and more cost effective.

“There’s a huge infrastructure and technology cost today. Institutions spend billions of dollars on technology. Why? Because of this vertical model. As this transforms itself into unbundling and a horizontal integration like Linux provides, the cost is going to go down. Eventually, that’s going to benefit all of us because the cost of transactions will go down and we’ll find better deals. I’m pretty optimistic about that.”

Blythe Masters, CEO of Digital Asset Holdings

“By and large you’re going to see people moving into more value-added roles thanks to the advent of blockchain technology which will result in middle and back office operational burdens being dramatically reduced.”

Suresh Kumar, chief information officer, BNY Mellon

“Silicon Valley firms are willing to share technology and knowledge when it doesn’t jeopardize their competitive advantage. They’re focused on talent. Empowering their people to try new things, fail fast and pivot is key to their innovation. The future for Wall Street, and finance more broadly, could also be more collaborative.

“Rather than each firm investing time and money to build its own nearly identical processes, we could work together to create start-ups to improve those functions.”

Mike Cagney, chief executive of SoFi

“We’ll see the emergence of the non-bank bank — because banks won’t fix banking.  Companies will finally be able to secure a national lending license without FDIC-insured deposits insured deposits, giving consumers better technology (mobile) and lower loan rates (less regulatory burden, branch overhead).  These pioneers will aggregate deposits using private insurance, paying slightly more than FDIC costs but avoiding the regulatory burdens that come with that protection.  The massive misallocation of human capital – such as physicists working on Wall Street pricing options – will reverse out, and the influx of human capital into areas like battery technology will benefit everyone. The then-rare Wall Street bulge bracket analyst – whose compensation has fallen by 80% – will even be able to buy an electric car.”

Rob Frohwein, CEO & Co-founder of Kabbage

“The line between banks and non-banks will become completely blurred as more and more companies seek to integrate banking like services into the experiences they provide to their customers – both SMBs and consumers – and banks realize that technology and user experience build trust. Look for the day that Google, Apple & Facebook acquire, and extinguish the brands of, Bank of America, Wells Fargo and Chase and branches, to the extent they even exist any longer, start mimicking an Apple store like experience.”

Renaud Laplanche, CEO & founder of Lending Club

“Online marketplaces will take over financial services the same way they have transformed retail, entertainment, transportation and hospitality. All of US banking activity will be faciliated through a massive online marketplace.”

Wells Fargo’s executive vice president and Head of Innovation, Steve Ellis

“Financial services are essentially digital in nature. The proliferation of mobile devices coupled with the Internet of Things and the emergence of new technologies provides a platform to deliver payments and other finance products in new ways. Traditional financial players are being joined by fintech companies and businesses in virtually every industry in delivering existing and new services to customers.

“One primary key is delivering financial services where and when customers want them, whether that’s at an ATM, through a mobile application, at the point of sale, or at a bank branch. A second primary key is that financial services are delivered by and consumed by people – even with all the technological marvels, bells and whistles, the best run businesses have that human touch. Business is personal.”


Morgan Downey of

“If you’ve ever watched the original Wall Street movie with Charlie Sheen and Michael Douglas from 1987 you will notice that almost every trader is sitting behind a screen with a black background and green text.   Every trader on Wall Street had one.  It was called ‘The Quotron’.  The Quotron was a dedicated machine connected over dedicated cables to dedicated servers.  This was just before the internet boomed.   Within a few short years in the early 1990s Quotron went from total domination to bust and ceded trading floors to Bloomberg and what is now Thomson Reuters.  

“Since then, for the past 25 years, there has been little innovation on market information platforms.  There have only been price increases to a now ridiculous $25,000 per user per year. This is now changing.  

“Just like the demise of Quotron, change on trading floors can happen surprisingly quickly.  Global Wall Street is voting with its wallet.  Growth has stagnated at legacy terminal systems.”

Sam Hodges, co-founder of Funding Circle

“We’re on the brink of the largest financial services revolution the world has ever seen. Small businesses are underserved in almost every market by traditional financial institutions, and so we’re building a better solution.

“The marketplace model will eventually become the institutional framework of the global financial system – and this will happen within 20 years. Banks and other traditional financial institutions who embrace this sea-change will have a distinct advantage in delivering a superior experience for their customers, as well as better returns over time.”

Adam Nash, President and CEO of Wealthfront

“For the first time in decades, there are now two huge generations moving through the American economy. In ten years, 90 million millennials will be between the ages of 25 and 45, and will control more than $7 trillion in assets. The biggest changes over the next decade in finance and Wall Street will be based on the increasing demands of this generation that is destined to be the largest one economically this country has ever seen. Demands for transparency, simplicity and automation will dramatically improve the options available for retail investors. In ten years, everyone will be using some form of automated investment service.”

Ethan Senturia, CEO of online lender Dealstruck

“Suits and ties will be replaced by hoodies and blue jeans as new technologies with a user-first focus on transparency and efficiency become the new norm for how the most common financial transactions are done. And with the use of technology, big data algorithms and new data sources will make it much faster and easier to secure financing than ever before.”

Ryan Bailey, CEO of analytics startup Contix

“As greater quantities of high quality data become widely and efficiently dispersed via social media, the finance realm will be far more democratized. The new generation of great traders may not work in Manhattan’s towers.”

Alex Rampell, general partner at Andreessen Horowitz and ex-CEO of TrialPay, a startup recently sold to Visa


“My general sense is that, today, you would build a bank with no branches, no ATMs, fewer employees. It’s a real disadvantage for any bank that was formed more than five years ago.”

Will Rhode, global head of capital markets research at Boston Consulting Group

“We will see new types of intermediaries with access to unique data sets start to emerge and act like banks. We will also see the buy side leveraging their own data to do more business independently of banks. This will force banks to look more like technology companies especially in areas where efficiency is sought or where the value add is lower, such as in the most liquid, simple securities.”






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