The US has a ‘technical edge’ in the face of expected growth for the fintech industry: executive director of the Milken Institute

Nicole Valentine, FinTech Director of the Milken Institute Center For Financial Markets, joins Yahoo Finance’s Allie Garfinkle at the 2023 Milken Institute Global Conference to discuss the impact of the regional banking crisis on fintech and the prospects for fintech in the US and internationally .

video transcript

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SEAN SMITH: The regional banking crisis sparked by the collapse of Silicon Valley Bank has also hit fintech companies like Venmo, Stripe and Square. Their valuations have plummeted and it’s harder to raise capital. Yahoo Finance’s Allie Garfinkle was at the 2023 Milken Global Conference to find out how fintech is faring in these uncertain times.

ALLIE GARFINKLE: Milken 2023. I’m here with Nicole Valentine. Nicole, thank you for being with us.

NICOLE VALENTINE: Thank you for having me on Yahoo Finance. I am happy to be here with you.

ALLIE GARFINKLE: So I want to start testing a thesis with you. Aggravating bank failures, Silicon Valley Bank, Signature, First Republic, have these bank failures made fintech more important than ever?

NICOLE VALENTINE: It has. And the great thing about fintech is that fintech is not afraid. Fintech is not afraid of a crisis. It actually deals directly with a crisis and finds out how to innovate. They’re looking at what — are there any opportunities that we can build?

How can we innovate and get things done? And a crisis for fintech is just another opportunity to figure out what’s next, how to reach their customers, how to add value, and how — how will they become more loyal in a moment like this.

ALLIE GARFINKLE: And can fintech emerge from these meltdowns any harder? How would that look?

NICOLE VALENTINE: First of all, fintech is expansive. And what I’m looking at: When I look at the different phases of a business cycle, this topic is all about thriving. I’m talking about thriving in a world of progress and making sure everyone is thriving. But there are three phases. There is survival. It is being built. And it’s thriving.

The story goes on

Fintech is always evolving. Fintech always builds on new technologies. So we’re talking about generative AI. We’re talking about blockchain. This is how fintech moves through cycles. It doesn’t stop builders, and it doesn’t stop them from stepping out of a room and saying, “What’s next?”

ALLIE GARFINKLE: So tell me what the prospect is for fintech because you’ve been all over the world and you’ve actually talked to people about fintech. So I’d be curious about here in the US and more broadly.

NICOLE VALENTINE: So it’s interesting. If you look at different markets, any market, you’ll find a market where it is. That’s why I spent a lot of time in Singapore this year. We were in the Middle East, Abu Dhabi. Our focus is on Africa. And we’re obviously focused on the US and Latin America. And we’re out here looking at the different ways people target and attract fintech innovators and investment and where they are located.

So for the US I would say that we are a very mature market. We have a technical advantage. We have an investment advantage. So there’s going to be a lot of fintech coming out of the US, and people aren’t stopping here.

If you look at the Middle East, you see a lot of investment. They also attract their policy makers. Your authorities give you a warm welcome. They are open for business. The EU is open to business.

So when you look at different markets, see where the opportunities lie. If you go to Africa, there’s a very digital population that’s willing to get into tech, and they’re willing and actually innovating. They’ve made great strides and are at a point where everyone in the tech industry is moving.

So I think the prospects for fintech are really amazing. I think any transaction that has a technical edge qualifies as fintech. Whether you’re an organization, a company, or a startup, wondering where my next tech moment is? How do we use this tech appetite to develop acumen? So your users can do more and be more productive with your technology.

ALLIE GARFINKLE: Yes, the picture you’re painting, Nicole, is really wide-ranging, but there’s also a lot of somber talk about a possible recession. So how is fintech doing in a recessionary environment?

NICOLE VALENTINE: I consider fintech to be recession-proof. And when I say recession-proof, I mean fintech isn’t going to stop its development. It will continue because even in times of recession there are always opportunities to build. It just means you need to figure out where your customer is, where your user is, where your customer is, where they are going next, and make sure fintech is meeting that need in every area of ​​your life.

I know fintech startups that have built and re-entered the market during downturns. You figured out how to get slim. They figured out how to get smarter and incorporate more quality into their product. And that’s what it’s all about. It’s about quality. Size doesn’t always matter.

ALLIE GARFINKLE: That’s really interesting. So talk to me and look forward to the question of how – if you had to get straight to the point, what is the outlook for fintech right now?

NICOLE VALENTINE: I see the prospects for fintech as follows. I’m thinking about it in general. We are here at the Milken Institute. We have the top executives from all over the world. And I think everyone is wondering: what is the wealth of a nation? What is the wealth of your nation?

And many people say that wealth is about human capital, human opportunity, human creation and the ability to create. And fintech is right in the middle. If you want to increase the prosperity of your country, you must first switch to fintech, build from there and make sure it reaches the people so everyone can enjoy economic mobility.

ALLIE GARFINKLE: And while we’re here, before I get to the last question, how do you define fintech?

NICOLE VALENTINE: So I think fintech is very broad. But I would say – I will say it. Fintech is any transaction, any financial transaction that uses technology to scale its impact and usage. So that’s the question of whether technology can be AI, cloud computing or blockchain. And the transaction can be anything from lending to currency to payments. So if you’re talking about one of these transactions and the technology behind it and driving it, that’s fintech.

ALLIE GARFINKLE: What is your take on the impact of a possible rate hike on fintech?

NICOLE VALENTINE: So here’s the deal. It’s very possible. And when you talk about impact, I mean there’s not going to be a drop in activity that’s out there. It may – hopefully not – impact the jobs and talent deployed to ensure fintech is built. But I have a feeling fintech will just keep going no matter what. Whether there is an increase or not, we will keep going and make sure we succeed no matter what.

ALLIE GARFINKLE: I don’t know if I’ve ever heard anyone make fintech sound sexier. Nicole, thank you so much.

NICOLE VALENTINE: Thank you Allie It was fun speaking with you and enjoying the rest of the Milken Institute conference.

SEAN SMITH: That was Yahoo Finance’s Allie Garfinkle at the Milken Global Conference in California.