Demographics always trumps Technology

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I have argued in previous posts that the fintech investment theme is a 10-15 years trend, see here and that fintech investing is a global endeavor, see here.

There are many reasons why fintech is exploding:

– changing consumer behaviors and expectations
– changing entreprises behaviors and expectations
– demographics growth rates, especially in emerging markets
– new technologies ushering the digital era
– different ways we organize ourselves both socially and work wise
– cheaper startup costs makes it easier to compete with incumbents
– incumbents hit by the great recession
– incumbents clobbered by regulators, regulation
– increasing rates of changes
– burdensome and inadequate legacy IT infrastructure (hardware and software)

Other than market/regulatory based, these vectors of change are either technology or demographics/societal based. In emerging markets the story is dominated by the massive growth of the middle class and their financial services and products needs. In developed countries the story is dominated by the changing needs of newer generations of consumers/clients.  Both stories leverage technology of course. Yet, were it not for changing demographics and behaviors, would fintech be such a hot topic based on technology change alone?

True, infrastructure spending by the financial services industry is massive. True, the potential disruption that poses blockchain technologies cannot be understated. Neither make for a sexy investment theme though.

Without the prospect for delivering better service in different ways to consumers in developed countries, for expanding financial inclusion to consumers in developed and emerging countries alike, for servicing the rising middle class in emerging markets, I wonder whether fintech would remain the confidential investment theme it used to be which only investors and service providers in the know alone cared about.

In that sense, maybe Demographics does trump Technology.


Pascal Bouvier

Life and work experiences have given Pascal an unmatched vantage point, seeing things as both venture capitalist and aspiring entrepreneur. He currently is a Venture Partner with Santander Innoventures – Santander Group’s Global Fintech fund.

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