Fighting for Their Financial Freedom: Millennials Reinventing FinTech

One of the more enlightening sessions at this year’s Money 20/20 payment industry conference (9,000+ attendees) featured new findings from a Foundation Capital survey on Millennials and Financial Services. The survey found that U.S. Millennials as a generalized group (those born between 1984 to 1997) are financially stuck – they have bank accounts, but are swimming in student debt and thus have no money to spend on investments and the extras after food and rent. Not surprisingly, most Millennials do not believe that what savings they have – mandatory Social Security contributions – will actually materialize for them in retirement.
And as indicated by such emerging social constructs as the post-college group house, Millennials are essentially stuck in the bottom tiers of the needs pyramid — not only can’t they save for big purchases, but they are also postponing milestone life events such as getting a place of one’s own, marriage and family.
Ergo you could say that millennials – even more so than the capitalist generation before them (i.e. the wolves of Wall Street) – are obsessed with money. And how it holds them back.
At the same time, Millennials are very facile with their mobile financial apps and rely heavily on them for financial information, services and purchase decisioning. They may have big brand bank accounts, but to them the brick and mortar branch, the ATM, even physical money– are becoming less relevant.
All the above lays the groundwork for continued massive disruption in financial services as Millennials fixate and act on their [lack of] money obsession and the status quo education and financial systems that have literally left them living in their parents’ basements.
And thus driven by the financially disenfranchised (but still optimistic) Millennials, a new FinTech Renaissance is emerging. From alternative methods of lending like SoFi ($1 billion capital raised in Sept. 2015 to help consumers refinance their student loans) to services focused on helping consumers to understand and take control of their credit scores (Credit Karma raised $175 million in June 2015), to bitcoin and other cryptocurrency technology that represent a new payment rail and partial replacement for fiat ($1 billion+ investment in 2015 with blockchain development companies like Chain raising $30 million), Millennials are taking down – or at least making less relevant — the traditional financial power structure one sector at a time.
Over the course of the next year, we’ll take a look at some of the emerging financial services disruptors and trends coming out of Y-Combinator and other incubators and launchpads such as Draper FinTech Connection and Plug and Play’s Fintech Accelerator.

The Internet of Things and Networks of Everything

The Internet of Things (IoT) has been a hot topic for several months now, and there are new stories about it in the business and technology press on a daily basis. While it’s easy to view these as hype at worst and vision at best, there is no denying that purveyors of hardware, software and services are dedicating and creating the resources they will use to capitalize on the IoT. Last week alone, there were three announcements that show just how quickly the IoT market is progressing and how big of a business opportunity it is.
On Monday, September 14th, IBM formally launched a distinct IoT business unit and named former Thomas Cook Group CEO Harriet Green as its leader. The new IoT unit is the first significant step by IBM toward delivering on the $3 billion commitment it made to IoT in March. IBM signaled in Monday’s press release that the unit will “soon” number about 2,000 consultants, researchers and developers, who will use IBM’s assets to help customers get up and running on the IoT. Those assets will likely include the Bluemix platform-as-a-service (PaaS), Watson and other analytics software, as well as the MQTT messaging protocol standard for machine-to-machine communication that IBM submitted to OASIS in 2013.
The next day, Salesforce.com used its annual Dreamforce conference as the grand stage on which to unveil its IoT Cloud. This offering has at its core a new “massively scalable”, real-time event processing engine named ‘Thunder’ (to complement Salesforce’s ‘Lightening’ UI framework). IoT Cloud connects IoT resources and Thunder rules-based workflow to route data between them, triggering pre-defined actions. For example, when an individual enters a retail store, a beacon can offer them discounts based on qualification criterion such as loyalty program status and in-store inventory levels. Scenarios such as this will be possible because of IoT Cloud’s integration with the Salesforce Sales, Marketing and Analytics Clouds. IoT Cloud is currently in pilot and is expected to be generally available sometime in the second half of 2016.
While these two announcements are important milestones in the respective organizations ability to help customers connect to and use the IoT, they do not enable them to do so immediately and risk being labeled as more IoT hype. The sheer magnitude of resources assembled for each of these vendors initiatives signals that they believe that the IoT will be both real and profitable in the not-so-distant future.
The final piece of related news from last week underscores that smaller, pure-play vendors are delivering tools that help their customers get on the IoT now. Build.io announced that Flow, its integration PaaS that had been beta released in March, is now generally available. Flow features a drag-and-drop interface that is used to connect IoT elements ─ sensors and other intelligent devices, backend systems, mobile applications and other software ─ into an integrated system. Connections are made at the API level. Like Salesforce’s Thunder, Flow uses rules-based event processing to trigger actions from IoT data. In essence, Build.io is delivering today a critical part of what Salesforce intends to make generally available later this year.

Current State of the Internet of Things and Networks of Everything

These announcements, taken together, mean that the IoT is poised for takeoff. The first sets of user-friendly tools that organizations need to connect IoT nodes, transmit their data and use it to drive business processes are available now, in some cases, or will be coming to market within a year. We are on the cusp of a rapid acceleration in the growth of the market for software underpinning the IoT, as well as the network itself.
This latest batch of IoT announcements from software vendors underscores another thing: the IoT will initially be built separately from enterprise social networks (ESNs). Many organizations, particularly large enterprises, have experimented with ESNs and a few have managed to build ones that are operating at scale and creating value. Those businesses will be turning their attention to IoT development now, if they haven’t already. They will pilot, then scale, their efforts there, just as they did with ESNs.
Eventually, organizations will realize that it is more efficient and effective to build Networks of Everything (NoE), in which humans and machines communicate and collaborate with one another using not only the Internet, but also cellular, Bluetooth, NFC, RFID and other types of networks. This construct is just beginning to enter reality, and it will take a few years before NoE get the market attention that ESNs did five years ago and the IoT is now.
At some future point, when NoE have become a fixture of networked business, we will look back at this month (Sept. 2015) and declare that it was a watershed moment in the development of the IoT. We’ll also laugh at how obvious it seems, in hindsight, that we should have just built NoE in the first place.