Traditional Banking Is Ripe for Disruption. What Does That Mean For Your Money?

Good Disruption, Episode 32: Fintech

UVA Darden.

The Disruption, a lively discussion between UVA Darden School of Business professors Yael Grushka Cocaine and Mike Lennox on cutting edge technologies and practices that are challenging the status quo.

Hello Yaya. Hey Mike, how are you? I'm doing well. How are you doing this, uh, you know, cold or getting warmer February day? Let me just say I am so ready for spring.

I cannot tell you. All right, well, I've got a question for you. This is gonna be almost kind of a pop culture question, but you are, I always feel more up to speed on these things than I am. Um, do you know who is Mr. Beast?

Mr. Beast, have you heard of this thing? 00, I've got one for you today. All right, so this is a pretty famous influencer who got his start giving challenges to people. Oh, maybe my kids have mentioned, I am sure your kids know of Mr.

Beast. Anybody Gen Z knows of Mr. Beast. Um, I mean, million dollar prizes for doing crazy things. So here, here are some of my favorites.

Uh, I spent spent 50 hours buried alive. Would you want to do that challenge? OK. He actually, um, he did Squid Game like without the killings, but sounded very funny, yeah, uh, survived 30 days trapped in the sky, like all of these challenges he does. The reason I bring him up today because I want to talk about FinTech, which is something we've, we've touched about crypto and some other topics in the past, but like the link between Mr. Beast and. Well, this is the crazy thing. He just acquired the youth-focused FinTech app called Step here. And so Step labels itself as an all in one money app. Banking for the next generation already has roughly 50 million under management and 7 million users here.

So this is like going after the younger generation, getting them into banking, providing a variety of sources, um. You know, my first question is like, does the fact that a big influencer like this is buying a FinTech app company, has FinTech jumped the shark?

Well, I, I've kind of, I, I, I see it interesting and appealing because the direct to consumer kind of angle is all around us. I mean, big influencers are kind of on that that wave, right? We're gonna get direct in front of our consumers. We're gonna find a way to connect with our followers and with the people that we're engaged with already and benefit from it in other ways. So I can see that going hand in hand.

But I mean if everybody has their FinTech app now, if everybody's. Offering one of these. By the way, for, for our listeners here, jump the shark is a great Gen X reference. Do you know like where that phrase comes from? Where does it come from?

You don't know that phrase. You know the phrase. OK, so it's pretty much in our popular vernacular. So this is definitely one I remember growing up. So Happy Days, the show.

There's a very famous episode where Fonzie, the cool guy, supposedly. Um, they go to Hollywood and he literally jumps a shark that's in the water and water skiing. This is when they were coming up with content, that's right, they were desperate of the days of happy, and the, and the best part of it was he wore his leather jacket as he's riding on the ski thing. So that is the reference to this idea that like the show really kind of lost its footing, right, right. But let me give you some numbers here on, first of all, traditional banking, right?

$191 trillion. In total assets here, $4.7 trillion in revenue. Big banks like JP Morgan at $4 trillion Bank of America at $3.2 trillion here. Well, Mike, that's the overall banking industry, yeah, yeah, because banks, I mean, we all know banks, whatever.

Tell me, what is it that the, what is appealing for the younger generation? Why do we even have to innovate in this space? Why can't they just use the same banks that I use, the Bank of America, the Wells Fargo of the world? Why does the new generation? The Gen Z of the world.

Why do they need a new type of banking? So, you know, this started a little over a decade ago, where we started to see the emergence of all these startups that were picking apart various parts of the value chain for banking here. And I think the arguments would be everything from efficiency, uh, to cost savings, um, to kind of ease of access to the market. So, so what are some of these? And I know you know many of these, so.

If you think about replacing your kind of standard checking account, you have companies like Chime, uh, Chime, if you're not aware, is an application that layers on top of a, dare I say, an actual bank. So they're not really a bank like you typically would have for your savings and and checking account, but they're providing a very fluid service using a mobile application. So it's a little bit like our Venmo. The Venmo in and of itself is not necessarily a bank, but it's much easier. For me to give you a patent off, transfer you some money than even going into my bank.

And, as you can imagine, when Venmo first came out, I remember it as a way to split a check, right? So it was always hard and somebody had to pay and then you have to have nobody had cash and, and the like there. So you have Venmo is kind of your wallet, uh, Robinhood, do you know of Robinhood? Um, so now, you know, every person can go and trade, uh, stocks. Uh, my daughter had a Robinhood account for a little while, which scared the heck out of me as a parent.

I'm like. You know, please do not be shorting something or anything like that. Uh, thankfully she, she closed down her Robinhood account. Um, there's companies like a firm in the credit card, uh, market, so definitely appealing to that like Gen Z. But, but there's also others like, uh, just underbanked people who some of these, you know, um, products are going towards.

So products that maybe don't rely on the same type of credit score infrastructure that we're so used to. To kind of building on the same kind of approval process that you would need and getting access to folks that maybe couldn't otherwise. And I think this is where the tech piece comes in. I think so many of these at the heart of them are leveraging data to be able to do risk modeling in um maybe a more expansive way, a more inclusive way, and then again, these kind of operational fees that can be uh cut down here. Some of it in like international transfers of money, uh, and the like, you know, just some of these kind of, dare I say almost archaic processes that we have for banking, they're trying to kind of break that down and make it easier.

So shouldn't we be nervous about our kids potentially getting access to some of these, uh, services, or maybe they're actually going to improve everybody's life. I mean, I remember when we did our episode a long time, it seems like a long time ago about cryptocurrency, we had. This notion that some of the tension was from intermediaries or kind of centralized organizations that maybe we're we're taking certain percentages in terms of interest or taking certain services fees, and maybe the world has is done with that. We want services that are much more accessible without paying extra fees along the way. Is there an opportunity for that from the market perspective, or is this all stuff that we shouldn't trust?

No, I think that's exactly the The debate, right? You know, on one level, you could say, well, what are the banking alternatives? Sometimes it's like payday lenders and things that have, you know, dare I say, in some cases at least, been very exploitative. So this is saying, no, we're making this easier. We're leveraging technology, no more 40% rate on your right.

You don't have to go to a store to like cash the check and all of these kind of, again, these kind of old school processes. Um, that's the promise, but I think you're absolutely right. Like, you know, there's so many of these out there, um, some of them, depending on how they position themselves, fall in these kind of unregulated spaces here. How is that going to, um, lead to potentially for those who might again exploit in other ways? I think about, um, you know, being able to be a broker and being able to trade and things like that that.

Um, you know, could, could be, uh, could be very detrimental, uh, for certain, for certain users. Well, when, when we think about a disruption, so good disruption, our, our podcast here, we like to focus on disruptions, technological disruptions. Are you seeing that play out? Like, are banks being disrupted? Are they, are they, are we hearing about companies or organizations that used to exist that now.

is questionable, or is this just more players in this big market? That's a really great question, because usually when we think about these disruptions, we think about companies, uh, going out of business, incumbent companies struggling with this. I don't know for sure, but I think Chase is doing fine, right? I think Bank of America is doing fine. JPMorgan, JP Morgan, yeah, they struggling for. Right, but I do think it's fair to say that they've lost certain income streams that they had, um, or at least they've shrunk as these applications and the like have come up. So I, I think it's been disruptive in that way.

Um, you know, one argument is the kind of the biggest disruption here might be customer acquisition, right? That this is lowering the cost of customer acquisition. Compared to the traditional, you know, advertisements, show up to the bank, sign up for, uh, for a service here. Um, but whether it's going to be disruptive in that bigger way, I think is a, is an open question, especially since one of the more recent trends is these very specialized players have now started to vertically expand or horizontally expand into other services. So, will Venmo start competing. Meeting with Robin Hood here in the near future. And at what point do they just start to look like the Bank of Americas of the world where they have a large portfolio of services they offer you as a customer? I can see that. Have we, have we reached the limits of our, uh, of our knowledge? All right, we need to learn more to understand if this is, it is, it is time to bring in our expert Ian Appell, one of our professors here at the Darden School.

He's Also the academic director of our Mayo Center for Asset Management. He holds the John McFarlane family chair. He studies a number of different things in the space, including institutional investors, corporate environmental behaviors, and governance and decentralized finance. Uh, but he has a particular interest in the fintech world. And so we're so excited to have you with us, Ian.

So, so maybe to start off with, uh, what, what have we gotten wrong and what have we gotten right so far? I think, I think you guys are on the right track. And so, I like in particular how you highlighted sort of the uncertainty that exists with a lot of these new financial institutions, and particularly when it comes to potential risks that they might. Pose, but also how they benefit customers. And so I think that's a really important point when it comes to thinking about these institutions.

I'm so excited to talk to you because um I hear students raving about your FinTech course. So, uh, clearly you're an expert and you get them excited about it. Um, is it, is this like innovation that is technological in nature, or is this rethinking the kind of some of the, some of the rules of how to kind of think about money and how to think about our banking in terms of the products that people might be interested in? So is there a tech component to it, or is this something that is more theoretical and um almost like an economic in nature? So, uh, both, and so, let me explain.

For instance, Mike was talking before about some of these new banking models, uh, for instance, Chime, this idea of a neobank. And fundamentally, neobanks, they use some new technologies, they integrate APIs, but everyone does things like that today. Really, it's a new type of business model. And so, for instance, what a neobank like Chime is doing is that they are partnering with a chartered bank that Takes deposits, you need to have a bank charter in order to take deposits, and China is providing the front end. China is the brand, China, China is providing some other infrastructure, but it's really bringing this new business model to banks.

And so this is an interesting thing because, well, rather than competing with some of these smaller banks that Chime partners with, uh, they're actually partnering with them. And so that's sort of one side of what we see happening with the evolution of banking.

But certainly part of this story is also technology. And so we see, uh, new fintech startups are applying technologies like machine learning, AI when it comes to, uh, underwriting loans, when it comes to predicting risky the riskiness of borrowers. And so we see really both of these things happening simultaneously and shaping the future of banking and how the industry is evolving. Now, when I think about the competitive dynamics between like the established banks and these fintech entrants, uh, you know, it comes to mind, uh, Venmo and the success they had, and then the consortium that formed Zelle as like an alternative that's what really is the traditional banks who are, are running. The show there. What's, what's your prediction of how this is going to evolve? Like, is, is FinTech going to be swallowed by the big banks at the end of the day, or do they have, uh, some form of competitive advantage that's going to allow them to kind of survive and, and succeed in the face of these big banks?

I think it's a really interesting question, and in part, it's useful to think about the US versus other countries. And so, I think in general, in the US people tend to be relatively happy with their bank. Um, and so when you look at approval ratings, you know, people hate certain types of companies, people don't like Comcast in general. Banks actually, people tend to be pretty happy with their banks. Um, and you see that some of these neobanks, banks like Chime, um, they've made progress with certain subsets of the population, oftentimes lower income folks.

But we see by and large, JPMorgan Bank of America, banks like that, which were dominant when Chime came out 15 years ago, remain dominant. Now, it's interesting to look at other countries, um, where, for instance, if I poll my students and I ask them, does anyone use Chime, and generally no one does, at least from the US. But then if I ask students, particularly those from Europe, do you use Revolut? And there you see almost every hand go up for those people from Europe. Same thing with Brazil, where new bank is incredibly popular and has really made progress in terms of taking market share from incumbents.

And so this is something that, that is localized to an extent in the US. Um, I agree with you. The big banks were dominant 15 years ago and remain so. In other countries, we do see fintechs really making progress. Well, it's interesting, you know, I'm, uh, part of me is also trying again and kind of trying to learn from Mike over the, the years from this podcast, like how to think about disruption.

So I use Apple Pay everywhere to take it. Like I just typically only travel with my phone these days. I don't need to take a wallet anywhere anymore. So like, are we really talking about a transformation or and and kind of disruption here? Are we talking another layer of ease that we never had that.

My question kind of directly on that, like these payment apps either from Apple or from Google, but I also think about what's happened overseas, uh, with some of these companies like WhatsApp and their use of these kind of one stop shop applications for everything people do, communications, banking, and the like. Is that ultimately could be disruptive for the traditional banks, Ian, or again, is it gonna be like currently where I'm using other banking services through my Apple Pay and the like.

I think a goal that many fintech companies have in the US today, as well as the rest of the world is going after sort of the Alipay super app model, uh, and to be the to be not only the center of your financial life but other aspects of your life as well. Um, we've seen that it's very difficult, and this is why you see, as you mentioned before, some of these fintechs are integrating more and more services. You start with one particular service, maybe you have, uh, you can make payments more efficient, and then you start laying, layering on accounts, or you start layering on lending or peer to peer transactions or something else.

And really, everyone wants to sort of take that idea of be the center of consumers' financial lives. And you've seen this work in some places. In the US though, many companies are going after this. I'd argue you really haven't seen uh any company be terribly successful.

What about on the investment side, like the Robin Hood's of the world, is, are they all gonna run after that part of the market as well? Like suddenly I'm gonna have my checking account and I can also choose where uh the monies are invested while I am uh um letting my money sit there. I, I mean, I, I think absolutely, and so, Sofi is a case in point where Soi started out, it was, uh, loans to students. Over time, Sofi adds more and more services. They eventually actually obtain a bank charter.

Soi becomes a bank, and now they, they have services like crypto. You can trade crypto on Soi, you can trade stocks on Soi, and you see more and more services being integrated. Likewise, if you start with Robinhood, Robinhood's going, sort of trying to reach the same point, but approaching from the opposite direction, where Robinhood starts out with, OK, well, you could trade stocks and options. They add in uh crypto trading, but now Robinhood is offering savings accounts. Again, sort of approaching that idea of we want to be the center of your financial life.

Interesting. Like my E-Trade has, has grown over the years in my, in my use cases of it. Ian, can you define, uh, this idea of a, of a neobank? Like what is a regular bank versus a neobank? So typically, when people use the term neobank, they're thinking about a digital first uh institution, which some neobanks have a bank charter.

So, uh, New Banks is an example where they actually are a regulated bank. Uh, Revolut has a bank charter in Europe as well. Um, some don't have a bank charter, and so that's the chime model that we defined before, where they work with a partner institution. The key features are digital first, typically not having any sort of physical branches. Um, and then, uh, notably when fintechs like Chime first came out, they were known, they, one of the key differentiating factors was the app that they had.

And so, Bank of America, Wells Fargo at the time did not have a, a very good app. Chime came in and said, hey, we're gonna have a nice app that you can use on your phone. Today, that's not really a, a, a differentiator, but Chime being sort of branchless is sort of one of the key, uh, differentiating factors from, uh, normal banks. I, I want to get back to the competition piece here because one of the things we saw, for example, on online retail that I always like to highlight to my students is creating incredible efficiencies in the marketplace, allows consumers to comparison shop very easily, has a great impact for consumers that it tends to drive down prices and ends up being a terrible business for most of the online retailers because.

Any type of competitive advantage is competed away. You get a, not quite, but close to a perfectly competitive market, um, to the to the bottom, bottom to the bottom there. Is, is that gonna happen with banking here? I mean, as you get these efficiencies, as you create lower barriers to, uh, you know, customer acquisition, but barriers to entry for these companies to come in, is this gonna make banking just thinner and thinner and thinner margins? I, I think you see it happening in some corners of banking right now.

And so if you look at one particular service, take a cross-border transactions. And so this has long been a concern, particularly with things like remittances. If you want to send money from the US to India, the fees for sending something like $100 are typically very high. You're talking on the order of like 5 or 6% points, something like that. You have a wave of new fintechs that are coming in.

And competing on price, uh, employing new models. And so, Wise is, is, uh, introduced a new model where they said, rather than using the typical correspondent banking system, this is the way that banks transmit money. There's essentially a chain of banks to transmit money across borders. Wise said, we're going to do these transfers internally. We can essentially make it much, much cheaper and nearly instant in order to transmit money um across seas, overseas.

Well, more and more, uh, companies are adopting these models, and there's competition on price now. Now, Wise actually says that their goal is to make cross-border transactions free or almost free. And so, that's sort of a, a, a, a weird word when you, you're thinking about this is a, a publicly traded business. They're trying to make money. Usually don't think about offering your service for free.

But this in part explains why Wise is expanding uh its product offerings, particularly with offering Wise accounts. And so they essentially offer savings accounts for individuals. Now, the key thing that a savings account allows Wise to do is they can offer cards. And so, particularly with debit cards, this is where actually the uh revenue growth for Wise has been coming from. If you look at the last year or two, it's not actually from their main business of cross-border transactions, it's from offering debit cards and getting fees associated with their use.

Fascinating. So I can see that slowly taking that away from the major banks, but maybe something like, um, something that is maybe more regulated, you know, we had the financial crisis in 2008 202009, uh like I cannot imagine that suddenly we can get mortgages from some of these services if they're not as stable like. Is there a concern there that maybe to frame it is, is, are we seeing regulatory changes for the banking sector as a result of these other opportunities, or are we still kind of clinging to these old regulatory structures for, for a different, for a different era? Well, I, I think at the end of the day, regulation explains why some of these models are being adopted.

And so, particularly if you're thinking about uh a bank or a neobank like Chime, well, a natural question is why doesn't Chime just get a bank charter? Well, bank, banking is probably the most regulated industry in the world. Uh, and the reason is because of things like the financial crisis where if you are a deposit-taking institution, You need lots and lots of regulation because we know that, well, deposit-taking institutions, they can fail sometimes, sometimes they can have a bank run, that's why we have a huge regulatory system, um, around these institutions. And so, uh, neobanks, particularly those that don't have a bank charter, say, hey, we're going to let a partner bank. Deal with a lot of that regulatory side of things. Now, of course, there's still some regulations around, you know, you have to know who your customers are and protect against uh money laundering and things like that. But when it comes to the actual deposit taking, that's why Chime says we're gonna let someone else handle that aspect of it. So on the back end of this, does this create more risks? And I'm thinking, you know, um, maybe not the right, uh, comparable, but like the creation of credit default swaps during the, uh, you know, lead up to the 2008 crisis.

Are, are there things to be worried about as these Different players come into the banking system of increasing systemic risk in some way. The thing that we're most worried about, which is sort of the banking side of things, given that you have to partner with a regulated institution that's subject that has oversight from, you know, the Fed or the OCC or, you know, one of these regulatory agencies, I think that helps to protect against some of the risks. Arguably a The risk that people think about a lot when it comes to fintech is protecting consumers. And so, an example of that is we mentioned before some of these uh new fintechs, they employ new technologies when it comes to pricing risk and making loans to individuals.

And so part of this is they use data to make, uh, lending decisions that a typical highly regulated institution would not use. Um, and this raises questions about ultimately fairness. Is the use of new types of data really fair to consumers or not? And so that's one risk that I think lots and lots of people are worried about. Yeah, but then maybe in a way it could it be, and I'm just thinking and reacting to this, could it be that with uh an abundance of new players, and yes, maybe a little bit more of kind of an opportunity for new types of models to emerge, maybe we're diffusing some kind of risk as opposed to being concentrated in very specific institutions.

I mean, you still have that underlying regulatory kind of authority, but maybe it actually kind of provides an additional protection in some kind of ironic way. I don't know. I'm going the opposite direction, and I'm thinking, uh, I'd be happy that it's not all in the hands of the same one businessman in charge of one bank, but I think to your point, Ian, like you're right, that diversifies the opportunities. You can choose your risk profile, but that assumes some degree of knowledge by the. Uh, by the consumer, the consumer, and that there could be people who have no idea.

Um, I imagine on some of these products they might not be FDIC insured. I don't know if that comes up at all, but this idea that like you might have certain beliefs about what you're doing and in fact. You know, those aren't lining up. Yeah, yeah, it's interesting how knowledgeable folks are in terms of the differences between these different modules and what, who are you getting your money from and what protections are there or who are you giving your money to, more importantly, and we're in a world where we've been opening up more and more of these investment opportunities. It's probably a separate podcast that we can talk about gambling apps, but I mean the fact that we've just gamified and gambled on everything now, um.

And how does that affect consumers, you know, thinking about their investments? Well, I know, um, that we've had some concern about crypto before. Um, Ian, is it fair to say that we should kind of decouple crypto with fintech? FinTech is a lot more than just crypto. I'm hearing from you, um, we're not just talking about crypto, but like if crypto continues to be rocky or volatile, that will that affect where fintech goes necessarily?

Yeah, so FinTech is certainly much broader than just crypto, and it wasn't until now we even brought up crypto. I will say though that the one aspect of blockchain that is sort of becoming very quickly mainstream in all of FinTech is the idea of a stablecoin. And so having a crypto that isn't volatile like Bitcoin, the price isn't doing crazy things, where the goal of a stablecoin is just to maintain a uh a $1 peg, have a steady value of $1. So the concern with those have been, uh, regulatory, right? Because we've had these examples of companies that have claimed to have stablecoins and then they look under the hood and there's like no assets break, you know, backing up their, their claims or Terra famously coming up with a synthetic, uh, stablecoin that, uh, proved the model did not work.

Um, are we, are we figuring that out? Is it, is it government? You know, issued stablecoins that are going to be the solution there, or will it be a private entity who does it? So, so right now there's been regulation in both, uh, Europe and the US, uh, to essentially create rules for stablecoin issuers in terms of what assets do they need to hold and who's going to check to make sure that the assets are actually there. And so with the Genius Act in the US.

It essentially says, these stablecoin issuers, if you wanna have a uh Genius Act compliant stablecoin for use in the US, you need to hold short-term government debt, and you need to have it, uh, uh, daily, uh, you have to have this audited, um, to actually show that if you say you have X number of stablecoins in existence, that you have the same amount of assets in very safe government securities backing it up. And so they're trying to create a system here where you can have stable coins produced by these private companies, but make sure that they're safe and um consumers are protected. That that reminds me of something we often talk about with disruption, that sometimes the regulatory apparatus, it just lags by its very nature, but we eventually get there.

I mean, I'm old enough to remember the old savings and loan crisis of like the late 1980s where again, There were really good checks to see how they were investing our, you know, our checking and savings accounts in those, in those vehicles. Well, I'm hearing that there's some technology innovation here, meaning the apps, the use of our phones, the, the just the general kind of comfort with that, with everything being done digitally, the advancement of AI and machine learning, which we've been talking about in so many different ways. Um, I heard Ian, you allude to the. Business model innovation. So because we have new technology and speed of access that comes with a new business model as you and I kind of often talk about, so I can understand where the disruption is kind of emerging both in terms of the processes and in terms of the tech.

What about, um, obviously opportunities and risks, not just in terms of the collapse of the financial kind of structure, but you know, fraud and, uh, uh. Things that happen online that are more easily kind of penetrable than, you know, if my money is in a safe physically somewhere, if I can ever imagine that to be the case. I was gonna say I don't think that happens anymore, hell, but I like tell yourself your money is sitting in a safe somewhere. Now everything is digital. Like how easy is it to see suddenly some, um, some problems with data and, and some, some security, um, issues over there.

Security is certainly a risk, um, for any sort of financial application. I will say that arguably one of the main applications of sort of AI and machine learning in finance today that has seen the most success is using it to fight money laundering. Um, and really looking at the characteristics of different types of transactions that might indicate that someone is engaged in some Sort of illicit behavior. Um, so, if anything, I mean, given, if you think about sort of the massive quantity of financial data that these financial institutions are dealing with, being able to comb through that, um, and sort of pick out the key characteristics that might indicate that, um, you know, this is sort of money laundering or, you know, funding some sort of illegal group or something like that, um, is very powerful.

I watched Ozark. Have you ever watch Ozark? I mean, everything I know about money laundering, I know from Ozark. Big fan, big fan, uh, and they got it down to a T there. But so cyber threats or kind of any concern there.

I mean, I will say that it feels to me like, um, our banks are even the regular traditional banks are much quicker and faster to act upon anything. That looks like any, you know, detecting any anomalies in our card in our behavior. So if that's incentive to do that, they do, but that's also feels like I'm more, I feel more protected in that sense. So are we kind of comfortable with that or with this new bank, I guess what went to my mind, have you seen examples, Ian, where someone has basically set up a nefarious FinTech, like, hey, we're. The, you know, chimes with like an S on the end and, and they're like fooling people to sign in the field, yeah, yeah.

Has there been anything like that that we've seen? Well, so if, if, if we think about crypto, you see things akin to that happening where you see very fraudulent behaviors and sort of tricking people to give away their money. And the key differentiator of, uh, when we think about crypto is that because it's not using traditional payment rails, it's using, you know, blockchain to move things around, um, it makes it so that funds aren't recoverable if, uh, someone steals money from you. There is no sort of recourse in terms of how to get your money back. I, I, I find it fascinating.

There's been these cases where the FBI have arrested. people because the problem with crypto is that like let's say Bitcoin, it's not often used for transacting, so you need to convert it into something useful and it's when they convert it, it comes back into that normal banking system and they like, they get them right away. They'd be like literally we'll sit there and watch these accounts knowing that there was something nefarious and they wait for them to try to transfer it out to then pounce on them. Fascinating, fascinating. Well, um, this is exciting.

I mean, I think that uh, there, there are so many ways in which I can imagine this improving our lives. I mean, I see the ease in which my kids are more independent and going back to, you know, that younger generation, they, uh, find, uh, money and talk about even investments and even, you know, buying and trading stocks like they find all of this more accessible and that maybe is a good thing for self-awareness and I'll go. The efficiency side, you know, the fact that this could be lowering the operating costs, getting some of the stickiness out of the system. Like I said, it might not be great from a competitive standpoint, but it might be great from a consumer standpoint, obviously, in lowering those, those costs there.

Well, Ian, thank you so much for joining us today. Uh, at this point, we're gonna transition to our last little point where Yael and I debate the big question. Good, bad, or no disruption. So where are you? Where are you coming down, Yael?

I am somewhere between, um, no disruption and good, meaning I'm not quite convinced. I mean, I've definitely there's development and there's kind of modernization, and I can see it. I, I use it myself and I can see it. But I think that um it's happening at a pace that the incumbents are embracing it too. And so I think, I think it's kind of feeding into the ecosystem as opposed to completely changing it.

Does that make sense? Yes, what you're going to go for, good or no? I'm going to go for no disruption. Excellent. Yeah, your thinking is exactly aligned with mine.

I, I, you know, there are some downsides, obviously. I don't see it being so overwhelming that I'd worry for a bad disruption case. But I agree, you know, is this a more incremental innovation that helps improve the banking system, you know, thinking back to like the existence of ATM machines and other technologies that have helped improve banking, but maybe haven't fundamentally changed the, the nature of it. Just to be contrarian, I'm gonna go with good disruption. I'm gonna go, it's gonna be a disruption, at least at some level, uh, but a fairly muted one.

Again, I'm not sure the banks of Bank of America's, you know. Imminently going out of business here because of the rise of Venmo and although if I had to trust Zelle anymore, you know, then I may have been a little bit more concerned. But yeah, all right, well, with that, uh, you know, thank you all for, for being with us today. As always, we thank our producer Gary. We thank our lead researcher Becky.

Uh, this is good disruption. Have a great day. Thanks, Mike.

Good Disruption is a podcast from the University of Virginia Darden School of Business.

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