Financial technology already is transforming the way money moves and is deployed around the world. But fintech also is leveling the playing field and opening new doors of opportunity to consumers, companies and communities that have been excluded from traditional banking, lending and investing channels, according to Markus Lampinen, the founder and CEO of Crowd Valley Inc., who spoke at the 2017 Michigan Growth Capital Symposium.
The digital finance entrepreneur said he has devoted much of his career to opening up access to capital for marginalized businesses and individuals around the world. The pursuit of that ideal led him into the fintech industry where, in 2009, he launched Crowd Valley, a pioneering equity crowd-funding service. Today, the San Francisco-based technology company provides cloud-based “back office” applications and services for more than 130 clients worldwide and serves as a catalyst for the burgeoning digital finance market.
“We create access to capital for underserved companies and people by making [financial service] processes more efficient and less costly,” Lampinen explained in keynote remarks delivered at the opening of this year’s symposium on May 16.
The Internet has been a major force behind the shift to financial technology, according to Lampinen. It has ushered in lower transaction costs, potentially universal access and wider distribution of transparent information. Together, these changes have opened up capital flows to consumers and businesses through online investing, equity crowd-funding and peer-to-peer lending platforms.
The development and adoption of innovative digital finance models also has been driven by macro changes in demographics, notably the rise of millennials, and shifts in market demands, according to Lampinen. “In the wealth-management sector, for example, there was incredible pressure on margins and transparency,” he remarked. “It went through one of the most dramatic changes. How do you serve wealth management to a millennial? They won’t go to a money manager or a bank branch.” Similarly, pressure to drive down costs and increase productivity in the private equity industry has accelerated the rollout of digital platforms that can automate many time-consuming and expensive processes involved in sourcing, vetting and closing investment deals.
Lampinen outlined what he considers to be the three stages of fintech adoption:
- First, manual existing processes are complemented by online digital finance models.
- Second, existing partnerships and models are translated to digital medium.
- Third, new models and partnerships emerge from within the digital market.
His long-term goal, Lampinen said, is to find ways to reduce costs in the financial service value chain in order to serve communities better. “One of my hopes for 2030 is that we will have fewer silos and more fabric [in financial systems], so we can open up access to capital for companies and individuals in a way that benefits the actual capital sources,” he concluded.