“Fintech“ gets bandied about a lot. Yet few people understand it especially when it comes to bitcoin and blockchain. Writing this post reminded me of Albert Einstein’s quote: “If you can’t explain it to a six year old, you don’t understand it yourself.” Only now, the twist might be that the six year old understands it, while the fifty year old remains clueless…
For those of you not familiar with fintech, it refers to businesses involved with leading edge technology to make financial transactions more efficient e.g. Venmo, ApplePay, Acorns, mobile banking etc. Big financial institutions, after initially dismissing fintech as a fad, are now busily developing their fintech capabilities to streamline their back-office systems.
And what about blockchain? It’s the freely available database that underpins the digital currency bitcoin. It can replace existing methods of transmitting assets and currencies. Scores of institutions are racing to use blockchain to simplify the way securities are traded, settled and recorded. All these endeavors fall under the fintech umbrella. (Source: Bloomberg)
ETFs (exchange-traded funds) are the fastest-growing, biggest disruptors in finance:
- Mario Gabelli, a leading investor, advisor and financial analyst, let the cat out of the bag recently when he said on CNBC: “I’m a dying breed, it’s all about ETF’s now.”
- The growth of ETFs also tells me that people have more trust in algorithms than in people’s decision-making which is not surprising given that 80% of active managers fail to outperform ETFs (Source: S&P)
- Also explains why investor/commentators on CNBC increasingly have that “deer caught in the headlights” look. They know their days are numbered as ETFs become the dominant force in the investment world.
- Finally, Warren Buffett, interviewed on CNBC SquawkBox yesterday morning, had this bit of advice: “Anyone who relies on financial advisors is wasting their money” (vs. investing in ETFs).
Read on below for more on ETFs, Blockchain, Bitcoin and Insurtech (watch the video from Metromile – great info!).