BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

BofA Fintech Guru: Blockchain Morph Into Big Impact On Consumers Years Away

Following
This article is more than 5 years old.

Blockchain and other fintech innovations probably won't have big, everyday impacts on consumers for at least a handful of years, financial leaders were told in Washington last week.

At conferences for SIFMA, the securities industry trade group, and the Commodity Futures Trading Commission, speakers were pretty much in agreement that fintech’s promises will take years to become everyday realities.

“[Blockchain/distributed ledger technology] is not as impactful as the hype,” asserted Bank of America Chief Operations and Technology Officer Cathy Bessant at the SIFMA annual conference.

She pointed to DLT as a promising technology waiting for proven benefits for consumers, businesses and regulators to cash in.

She noted it’s still pretty much in the labs.

“There’s nothing at scale now. It’s untested and untried,” said Bessant, who is widely regarded as one of the most powerful women in business.

She also addressed the discussion surrounding artificial intelligence.

“Nothing makes me crazier than when someone says AI is better than human intelligence. It is a subset of human intelligence,” complained the high-level Bank of America executive.

Robo advice is another fintech innovation that hasn’t blossomed, JPMorgan Asset Management Chief Executive Officer of Asset Management Christopher Willcox said during the week in Washington.

“Robo advisor technology has a long way to go,” argued Wilcox.

He compared the current limitations of robo advice to Amazon at in its early stages where the only thing the technology could help a consumer to do was to get a book.

During the SIFMA and CFTC meetings, fintech was often called so nebulous it can get in the way of discussions about the impact technology can and could have on finance.

CFTC Chief Innovation Officer and LabCFTC Director Daniel Gorfine said the trend is to drop the soup-to-nuts term “fintech” and speak about the specifics.

But even a concept more specific like a “sandbox” to let fintech entrepreneurs experiment without initial stringent regulatory oversight.

If a sandbox is a system that lets fintech creators have an open door to discuss their plans with regulators, then Securities and Exchange Commission  Senior Advisor for Digital Assets and Innovation, Valerie Szczepanik said the SEC has a sandbox.

Businesses will have to grapple with in bringing fintech to its full potential is integrating it with their long established and relied upon systems, said Fidelity technology executive Sanjiv Mirchandani.

“Technology layers on top of each other. The old never goes away,” said Mirchandani.

One factor propelling fintech is pressure from the financial crisis for financial companies to reduce costs, World Bank Group innovation executive Sharmista Appaya said during the week’s events.

CFTC Commissioner Rostin Behnam said two hurdles fintech faces are the status quo generally works pretty well and businesses have a considerable amount of money and employee training invested in the current infrastructure.

Another hurdle pointed out CFTC LabCFTC Attorney Brian Trackman is people are much more forgiving when a human makes a mistake than when a machine or AI does.

With all of the advertised promises of fintech, there is an undercurrent of unease by the public about the flood of new and potentially privacy invasive technology, Citi Global Head of Fintech Policy for Global Consumer Banking Andres Wolberg-Stok acknowledged.

“The problem is not doing so much behind the scenes it looks creepy to consumers,” he said.

Likewise, new CFTC Commissioner Dan Berkovitz said he is finding technology difficult to fathom as a consumer as well as a regulator.

Back at the agency since leaving five years ago as general counsel, Berkovitz finds he now has to contend with his three new phone numbers and five new passwords.

“I’m having trouble with that,” he admitted.

Taking an overview on fintech, both CFTC Chair Chris Giancarlo and Comptroller of the Currency Chief Innovation Officer Beth Knickerbocker said reaching consensus among regulators is key to boosting blockchain, cryptocurrency, AI and other emerging financial technologies.

But while consensus building is underway, they acknowledged the destination has yet to be reached.

Within the SEC, Szczepanik said consensus on fintech oversight among the agency’s divisions will be as important as coordination with other regulators.

Follow me on Twitter or LinkedIn