Blythe Masters is the CEO of Digital Asset Holdings, a FinTech startup. FinTech represents technical and business developments in payments, consumer loans, and automated advisory services. Over the past several years there has been significant venture capital interest in FinTech (see The Pulse of FinTech Q3 2016) and even large Bank Holding Companies are showing more and more interest (see March 2016, Digital Disruption: How FinTech is Forcing Banking to a Tipping Point). Masters is well known as an early founder of the global Credit Derivative market (or see Gillian Tett’s 2009 Fool’s Gold) and then moved to an even more lucrative position running Global Commodities at J.P. Morgan until 2014. When Masters starts up a FinTech company you can be reasonably sure “that’s where the money is.”
Wall Street has a modulated appetite for new technology in banking. Google and Bank Holding Companies harvest available tech at very different rates. Google leads technology while BHCs tend to lag technology. Sure there are technology inflection points on Wall Street where new technology enables trading that would otherwise have been impossible. Ranieri in the 80’s using desktops to build the CMBS market is an example. James Simons’ quantitative trading at Renaissance is an example. More recently, high frequency equity trading KCG, Jump Trading, Tower Research, Citadel, Hudson River Trading, and Virtu are other examples of automating trading (banking). Generally, Wall Street will take as much technology as needed, but not much more, to take care of shareholders and employees. Typically a modest pick up of low hanging fruit with technology has been enough to make a solid ROI on the Street. So technology can race ahead growing performance exponentially and Wall Street typically follows at a measured pace pocketing the easy money. The friction introduced since 2008 with the Credit crisis, Volker, Dodd-Frank, negative interest rates, Brexit and historically low Net Interest Margins make it harder for Financial Services Firms to pocket the easy money. Blythe Masters is the face of yet another Wall Street inflection point where Financial Services firms need substantially more from technology to generate the profit needed for shareholders and employees. The FinTech technology pick up hits cashflow settlement time, consumer loan origination, and capital plan automation. Perfect for Net Interest Margin optimization.