PayPal CEO Dan Shulman sees change afoot in the financial services industry. While speaking on a panel at the World Economic Forum in Davos, Switzerland, Shulman outlined the 5 trends that are re-shaping the way financial services are conducted around the world.

  1. Money is digitizing – 85% of global financial transactions are conducted in cash (based on volume, not value). However, Shulman says the trend is clear. Checks are disappearing. Cash is disappearing.
  2. Mobile is exploding – Shulman notes that the bill of materials is for a smart phone is down to $30. That means more customers around the world will be able to harness the power of an entire bank branch in the palm of their hand. “Imagine thinking about banking and starting it in a world of software and mobile. It would be fundamentally different for basic consumer financial services. … That affords an opportunity to bring in the billions of people across the world who are outside the system right now.”
  3. The onslaught of data is not going to stop – The growing volume of data presents privacy and security challenges for companies, but managed properly it can be a game-changer.
  4. (read more…)

Nearly a decade after the onset of the financial crisis and following billions of dollars of costly regulatory reforms, some fundamental questions are being asked about how prepared the financial system is to combat future financial crises. Quite simply: Is the global financial system prepared to fend off another crisis?

The World Economic Forum in Davos is one of the places where today’s leaders in finance gather to ponder such questions. When it comes to financial stability, the Davos minds paint an uncertain picture – particularly in Europe.

Jeroen Dijsselbloem, president of the Euro Group and finance minister of the Netherlands, believes Europe currently sits in a very vulnerable position. “Our shock absorption capacity in Europe is still far to small. We are still over-leveraged in households. Many SMEs are overleveraged. Governments still don’t have a lot of fiscal space. … If the next crisis were to come, who is going to buffer the economic shock? (read more…)

Though the title of the panel was “Preventing Future Shocks,” the participants in the Wednesday session at the World Economic Forum annual meeting in Davos spent most of the time looking back at the last financial crisis and analyzing its aftershocks.

Martin Sorrell, the chief executive officer WPP, Plc. says the mentality of consumers has been slow to recover from the shock of the financial crisis. Meanwhile, the failure of corporate leaders to invest in the long term serves as its own form of post-traumatic stress disorder. “How do you explain that companies are sitting on $7 trillion in net cash, at least – the last time I looked.”

Paul Singer, the founder, CEO and Co-CIO of Elliott Management, says uncertainty continues because central banks have provided cover for politicians who have failed to implement fiscal reforms.

The first question from the audience served as a reminder to the panel that they were supposed to be discussing future crises, rather than the past. (read more…)

Fintech stands to have a profound impact on the financial services industry, but how that impact will take shape was the key topic during Wednesday’s “Transformation of Finance” panel discussion at the World Economic Forum in Davos.

Morgan Stanley Chairman and CEO James Gorman conceded that regulation still crowds on his inbox, but stressed the importance of keeping an eye on fintech. “If you are not focused on how some of these innovations are disrupting different parts of the financial system and how you can embrace them and use them to win business, not just defensively, then you are not doing your job,” Gorman said.

Deutsche Bank Co-CEO John Cryan said technology will revolutionize payments so dramatically that he predicts cash won’t exist in 10 years because it is “terribly inefficient and expensive.” Cryan added that he expects block chain technology to be used not only for financial transactions, but also for digital identity purposes. (read more…)

The World Economic Forum Annual Meeting 2016 kicked off with an evening program Tuesday in Davos. Here are some of the highlights:

UBS sees automation helping the rich getting richer: The theme of this year’s gathering in Davos is the “Fourth Industrial Revolution.” UBS Chairman Axel Weber was on topic as he revealed the findings of a report that forecasts automation playing an increased role in the global discussion about income inequality. “Automation will continue to put downward pressure on the wages of the low skilled and is starting to impinge on the employment prospects of middle-skilled workers. By contrast, the potential returns to highly skilled and more adaptable workers are increasing.” Read the full report from UBS.

Has Davos become too passé for BRIC leaders to bother?: This New York Times piece looks at the evolution of emerging markets – both as an asset class and as a hot topic at events like Davos. (read more…)