Fintech is a broad term that encompasses various technologies. Which technologies do you see succeeding? 

Herb Kozlov: We're only at the very beginning of an explosion of new solutions and outcomes tied to blockchain, distributed ledger technology and smart contracts. The potential for innovation and to fundamentally change the way core business practice is conducted is dramatic, and it’s going to happen. We’re seeing momentum already, but as soon as a couple of major use cases are published and succeed, you’ll see explosive growth in the adoption and creation of blockchain technology in the financial services space. Sophisticated investors perceive good distributed ledger technology companies as being undervalued, but that will change as the pace of adoption increases. 

Will the future success of fintech in financial services require buy-in from boards?

HK: Much of the driver for institutions that are evaluating various blockchain technology solutions for reporting and settlements is that it’s new technology. It’s sexier than going to your board and saying “we need new servers” or “we need to move to the cloud”. When senior management explains that the company is looking at blockchain,that it could save a billion dollars a year and possibly be leveraged into reporting, eliminating costly systems, that has a lot more appeal. This requires having a clear strategy for the technology and how it will be integrated and benefit the organization. Clearly articulating that vision and strategy to boards will be essential. 

What role will regulation play in the success of some technologies over others? 

HK: The regulatory cost to large financial organizations has increased dramatically in the past 10 years. Their budgets for compliance increase every year and if they can find a technology solution that’s faster, more reliable, more efficient, there is a great impetus to acquire it. Quality compliance personnel are also more expensive than ever because they now have personal liability. An added benefit is the availability of meaningful metrics. Compliance solutions can deliver data and information to help banks understand which product segments are too expensive, which are the most efficient and where profits are really coming from. A lot of that can be delivered by fintech software solutions.