Five key facts explain why Millenials are the major agent of change in the future of the global financial industry. We see endless opportunities for innovation in several FinTech areas like payments, credit/financing and insurance.
5 KEY FACTS
– 33% of Millennials think banks will be unnecessary in five years from now
– 14% of Millenial small business owners use alternative financing rather than traditional banks
– Less than half of Millenials have a credit card
– Only half expect to use cash on a weekly basis by 2020
– 50% are counting on tech startups to overhaul banks
The infographic is part of the recently published Goldman Sachs’ Investment Research Report – The Future of Finance – Part III “The Socialization of Finance”. Find the full report in our Knowledge Center.
Following Wikipedia’s publication, “Millennials (also known as the Millennial Generationor Generation Y) are the demographic cohort following Generation X. There are no precise dates when the generation starts and ends. Researchers and commentators use birth years ranging from the early 1980s to the early 2000s.”
The debt and obligations of the western world are now higher than ever and still increasing. Declining demographics and long term economic time cycles pointing down into 2022 / 2023 time frame indicating that the next few years might be the time of reckoning.
But what does bitcoin and crypto currencies in general have to do with it?
Our forecasting research of social trends indicates that the western world and specially Europe will introduce even more regulations related to cash, deposits, transfer of money, limits on withdrawals, etc. It is very easy for them to include Crypto Currencies by saying the same regulation apply.
We have reasons to believe that Crypto Currencies like Bitcoin will not be spared. Governments have collective decision making and they are slow learners, so things takes time. However, they do learn in the end and compliant exchanges in these regions with their clients deposits are “sitting ducks” for increasingly assertive and desperate western governments trying to put their hands on any cash they can, scrambling for dollars to pay for their ballooning debt and obligations that are at unmanagable levels.
In other words, more assertive western governments introducing draconian restrictions might be the biggest risk of all for Crypto Currency Exchanges and their clients over the coming years.
This can not happen in a “civilized” country, right? Well, with fiat currencies this occurred in the seventies in the U.K., and is happening today in Argentina and Cyprus, just to mention a few well known countries as examples.
The use of bitcoin and exchanges (fiat to btc/altcoin) has awaken the controversy around topics like hacking, fraud, technical breakdown, to mention some. The events have proven that these areas must be taken care of in detail.
It has become a kind of luxury to discuss which exchanges provide the best service, are the most user friendly, speedy and competitive on their fees.
BUT, one of the highest risk factors is often forgotten. The external risk attached to the authorities that define the rules of the game also known as “compliance”.
Record-breaking fines issued by regulators worldwide, notably in the US and UK, dominated the financial services landscape the last few years, with many Bitcoin exchanges closing for trade owing to non-compliance with regulatory requirements or exorbitant licencing related fees, making inviable to hold the exchange day to day operations. In other words many of these businesses were destroyed, with job positions and money lost.
As a consequence, the shutdown of these exchanges created a lot of stress on customers. This included businesses scrambling for alternatives in order to safeguard their continuing operation, often in need of taking their funds out in cash over a short time period. Then, when trying to deposit the funds cash to another bank, a new problem occurs: Cash Deposits. Large cash transactions are in practise now criminalized at least in the western world. You could easily end up with a lot of cash at home or in your office.
Crypto currency exchanges shouldn’t overlook at this issue, as in some regions complying with the rules and regulations could become a never ending wheel. If the exchange is based in Europe or the US, Canada, or Australia, they could be surprised after they have adopted and complied the best they can.
Bitcoin exchanges use banks, which carry very much of the same risks as the risk related to the authorities.
Our research has identified 10 major well known banks in Europe and the US that we think will fail over the next few years. The users, and that includes the exchanges using these banks are of course at high risk as well. The debt problem of the western world was never solved.
Where to choose and/or base a bitcoin exchange?
We think some select countries in Asia and Latin America are the best due to the rising social mood trending in these regions over the coming decade. It is hard to believe, but regulations might even be relaxed in these regions the coming years, giving exchanges a brighter future.