Matt Harris is often asked about the history of fintech, and rightly so — as one of the earliest investors in the space, he witnessed its creation more than 20 years ago. He was drawn, some might think paradoxically, to its complexity. Fintech is a specialty. For the person on the street, fintech can be difficult to understand, explain, or predict. This struck Harris as a good place to start.
One of the many things fintech has brought greater recognition to is data, Harris said. Before companies like OnDeck, a now public small business lender in which Harris was the first investor, loans to small businesses were made almost entirely on the basis of the owner’s FICO score. But the digitization of business means there is excellent data on many other areas of operations that may be better indicators of the risk of the loan. This reliance on more streams of data is now routine, but that has taken time.
One of the subtler effects fintech has had on banking is culture — the way people dress in the office and at conferences. But those are surface issues — the underlying attitude toward ideas coming from frontline employees and other issues affecting operations may take years to change. Banks can be enthusiastic about fintech and innovation but unless there is a true cultural shift, it will be a wasted effort.
Harris is now focused, naturally, on where fintech is going. In a recent two-part article in Forbes he outlined fintech’s future as part of the tech stack with which new companies will be built. This is what some have called embedded fintech — every company can be a fintech company with enablers like Finix and Plaid.
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