Future of Finance with Square's Jackie Reses | #BIS2020

TL;DR

Square Capital, a small business lender within the Square ecosystem, discusses the evolution of FinTech and the potential for innovation in the lending industry.

Transcript

welcome back to arcs vis 2020 QA video conference as Tom mentioned I'm Brett Winton arcs director of research and I'm joined by a Jackie resis so Jackie you've led Square Capital since 2015 if I went through your whole resume it would take a long time but before that you were Yahoo and spearheaded the Alibaba staff the Yahoo had so quite a tumultuo... Read More

Key Insights

• 👻 FinTech companies thrive on culture and invention, allowing them to make agile decisions and pivot when needed.
• 👨‍💼 The evolution of FinTech has made banking services more intuitive and accessible to consumers, but there is still significant room for growth in serving small businesses.
• 👻 Real-time data and machine learning are revolutionizing the underwriting process, allowing for better risk assessment and unlocking access to credit for previously underserved businesses.
• 🍧 The COVID-19 pandemic highlighted the importance of having a distributed workforce and the ability to adapt quickly to changing circumstances.

Questions & Answers

Q: Why is FinTech disrupting the banking industry now, as opposed to during the dot com era or after the financial crisis?

FinTech companies often emerge during times of crisis when entrepreneurs identify unmet customer needs. The fragmented payments ecosystem still offers significant opportunities for innovation.

Q: How does Square Capital differentiate itself from traditional banks in terms of lending?

Square Capital focuses on the needs of small businesses, offering smaller loans and utilizing real-time data from its payments ecosystem to make lending decisions. This customer-centric approach differs from the balance sheet-focused mindset of traditional banks.

Q: How has Square Capital managed its lending operations during the COVID-19 pandemic?

Square Capital paused its lending activities to assess the impact of the pandemic on businesses and make necessary adjustments. By combining human judgment and real-time data analysis, they were able to navigate the volatile economic landscape and ensure responsible lending practices.

Q: Will Square Capital expand its product offering to allow consumers to invest directly in small businesses?

Square Capital's focus is currently on serving small businesses, but the potential for consumers to invest in fixed-income products, such as bonds for local coffee shops, is a possibility. This would create a sense of community and advocacy for the businesses.

Summary & Key Takeaways

• Square Capital was attracted to Square due to its inventive and well-run culture, making it an enjoyable and challenging environment.

• The FinTech industry is disrupting traditional banking services by focusing on customer needs and providing elegant, simple products.

• Square Capital utilizes machine learning and real-time data to underwrite small business loans, offering credit in a more flexible and accessible way.