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  • I would like to introduce today's speakers.

  • Larry Lagerstrom, who you'll be hearing from later in this session,

  • is the Acting Director of Academic Programs responsible for

  • graduate education offerings.

  • Today's featured presenters are Bruce Wallace and

  • Reetika Grewal from Silicon Valley Bank.

  • Bruce Wallace is the Chief Digital Officer of Silicon Valley Bank Financial Group.

  • He is responsible for client digital banking experience and

  • channel delivery services along with the sales, development, and

  • delivery for fee-based products including payments, cash management,

  • cards, merchant services, foreign exchange, and global treasury services.

  • Previously, Bruce was Silicon Valley Bank's Chief Operations Officer,

  • responsible for global operations and IT.

  • Prior to joining Silicon Valley Bank, Bruce spent more than 20 years in

  • a variety of management positions with Wells Fargo and Company.

  • Reetika Grewal is the Head of Payment, Strategy, and

  • Solutions at Silicon Valley Bank.

  • She joined the company in 2012 to lead the Payment, Strategy, and Solutions team.

  • This team focuses on internal payment strategy and development,

  • as well as working collaboratively with Silicon Valley Bank clients and

  • partners to help deliver payment solutions to the market.

  • She leads Silicon Valley Bank's partnership with MasterCard to run

  • Commerce.innovated, an accelerator program focused on helping early stage

  • companies innovating across the commerce space.

  • Prior to Silicon Valley Bank, Reetika was at JPMorgan Chase.

  • Reetika was recently awarded as one of the most influential women in payments.

  • Actually, she won this honor for the last two years.

  • At this time, I'd like to turn the floor over to Bruce and Reetika.

  • >> Good morning, everyone, this is Bruce.

  • And we are excited to be here this morning to talk about what's happening with

  • the Fintech revolution.

  • So, we're going to have some slides that we're going to walk through as Beth had

  • mentioned.

  • We'll be more than happy to answer questions throughout

  • the course of the presentation, and

  • actually would recommend that you provide questions throughout the course.

  • So I'm going to turn it over to Reetika,

  • who's going to start stepping through the presentation.

  • Reetika?

  • >> Great, good morning everyone.

  • So I'm going to start first with a slide that we've received

  • -- some data from CB Insights, which is an analysts firm.

  • -- and what is going on in this slide is really to help illustrate

  • the Fintech innovation in here.

  • What they did was use the Wells Fargo homepage as an example of the top half

  • is the consumer home page, and the bottom half is the small business home page,

  • and really describe all of the different companies that are innovating and

  • attacking every single segment of banking from lending,

  • to banking services themselves, to investing.

  • There are a slew of companies that are going after and

  • truly disrupting banking as you know it today.

  • On the consumer side, there's some names that I'm sure you've heard

  • of in the market, right, on the lending side, companies like SoFi and others.

  • As well as on the banking side, some of the banking startups that

  • are trying to disrupt the way that consumers receive just the basic

  • services that come along with a bank account, companies like Moven.

  • There's a slew of companies focused on the savings side: savings,

  • wealth management, companies like Digit that help to automate your savings.

  • Companies like Betterment, Wealthfront, etc.,

  • that are focused on that wealth management space.

  • And then finally there's a whole world of companies that are focused on sort

  • of the payments aspect from a consumer perspective as well.

  • Companies like Bill.com that help make bill payments easier,

  • cleaner, and with a beautiful UI in front of it.

  • On the small business side there's even more pronounced

  • disruption that's happening from, again, same thing,

  • where pretty much every tab of that display

  • from the Wells Fargo example here is being disrupted.

  • You can look at, again, banking, lending and credit,

  • and I'm sorry, merchant services, insurance, all of those

  • things are all being disrupted again by a wide variety of services.

  • Some of the more well-known services because they've IPOed or

  • are out in the market really aggressively, companies like Square that have

  • truly disrupted the way merchant services are being delivered.

  • Giving small businesses,

  • extending the aperture of small businesses that are able to accept card payments

  • as well as changing the way people accept card payments.

  • And then on the lending side companies like Kabbage and

  • OnDeck helping small businesses get access to capital in unique ways.

  • Is there anything else that you would add on this slide?

  • >> Just one thing I would add at the macro level is, I think what's happened

  • over the past, I would say, three to five years, with a lot of these companies is,

  • every single one on there is a pure digital solution.

  • So I think what's happening is, there's a lot of disruption specifically

  • around companies coming into the financial services space without the traditional

  • infrastructure required, with a purely digital or mobile based experience.

  • >> Okay, yeah, and we're going to talk a little bit about some of the main

  • disruption, or some of the main drivers that's causing this inflow of disruption.

  • And we will talk a little bit more about how digital comes into play here.

  • So the next slide is to sort of see the parallel that's happening in the UK.

  • It's a very similar trend where again, consumer banking,

  • business banking is being disrupted by a whole slew of startups.

  • Obviously the Brexit news is fresh in everyone's mind,

  • so it'll be interesting to see how this evolves.

  • But given that SVB has an office in London,

  • we get a good front row seat into seeing a lot of this as well.

  • And it's, again,

  • very similar in nature to the destruction that's happening on the US side.

  • And attacking pretty much every aspect of banking, lending,

  • investing, etc, that consumers and businesses are focused on.

  • >> Yeah, so there were a couple questions that I think were pretty interesting that

  • came up related to the first two slides.

  • The first one was, where is Blockchain?

  • So in terms of what's happening with the percentage of startups

  • that are in Blockchain or digital currencies, and

  • in terms of overall venture investing, there's been approximately

  • a billion dollars that have gone into Blockchain startups.

  • And in terms of where it stacks against all of the other startups that Reetika had

  • been referencing earlier, it's probably about the sixth or seventh largest

  • sector in terms of where a lot of the investment dollars are going right now.

  • It' s primarily going into the lending space.

  • It's going into the payment space.

  • And it's also going into kind of a combination of individual finance,

  • consumer finance, and then also into different types of individual investing,

  • in consumer investing, or I'm sorry, business investing.

  • But if you look at the trajectory around investments

  • in blockchain technology, it is on a very high trajectory.

  • And in terms of what's happened so far in the first half of this year,

  • there has been no tampering of investments going on in Bitcoin and Blockchain.

  • And the second question was related to emerging markets such as Africa,

  • Latin America, Asia.

  • I would say, again, in terms of investment dollars,

  • probably about 75 to 80% of the overall venture investment dollars for

  • Fintech are primarily going in North America in the UK and EU.

  • I think in terms of some of the emerging countries because they still have a very

  • high unbanked or underbanked population, a lot of these startups that are in those

  • specific spaces are really tackling much more simplified financial services.

  • I'm just trying to get basic consumer products such as

  • mobile payments into the hands of million of consumers that are unbanked.

  • >> Yeah, and the other thing I'll say about that is in reference to some of

  • the other markets is the US and the UK are very similar in terms

  • of people leveraging credit cards and merchant services and things like that.

  • And in those markets, that basic infrastructure isn't even there.

  • Right, so if you go to Brazil, for example,

  • the maturation of credit cards is nowhere near as deep as it is here.

  • So it's similar to what you were saying in terms of leveraging alternative ways of

  • moving money.

  • >> While Reetika goes to the next slide, we're getting a lot of great questions.

  • I'm doing my best to kind of synthesize them together because there's some common

  • questions, so just to let everyone know.

  • And a few of them,

  • we're going to specifically address on some future slides.

  • So I am watching everyone's questions, just wanted to let you know that.

  • >> [LAUGH] >> Yeah, and the next slide really is

  • meant to focus on why is the financial services under attack so

  • aggressively by all these startups?

  • And I think it's because financial services represent

  • 20% of the S&P 500 Index.

  • And if you just look at the names of the companies that are in the middle of this

  • target, they are household names that have been in the business

  • of banking and providing payment for years and years,

  • hundreds of years in many cases.

  • And I have a colleague who's from Texas, and he always talks about Texas tea.

  • And the banking global financial institution market is in the trillions,

  • 8.5 trillion, so again, reiterating the prize at the end of the disruption.

  • And this is sort of an interesting fact from Accenture that they are estimating

  • that full service banks, meaning the banks that offer sort of consumer banking and

  • payments and things like that similar to like a Bank of America, JP Morgan,

  • Wells Fargo, etc, could lose 35% of their market share globally to digitally and

  • oriented disrupters.

  • And sort of to Bruce's point earlier,

  • it is digitally that these guys are bringing their solutions to market.

  • >> I would say the two other factors that are primarily involved that we see,

  • with respect to a lot of the Fintech disruption, is one is,

  • I think a lot of these solutions are offering speed and simplicity.

  • And I think that almost everybody on the call probably has a personal experience of

  • dealing with a traditional financial institution that in terms of