U.S. has the 'tech edge' amid growth expected for the fintech industry: Milken Institute exec

Milken Institute Center For Financial Markets FinTech Director Nicole Valentine joins Yahoo Finance's Allie Garfinkle at the 2023 Milken Institute Global Conference to discuss the impact of the regional banking crisis on fintech and the outlook for fintech in the U.S. and internationally.

Video transcript


SEANA SMITH: The regional banking crisis sparked by the collapse of Silicon Valley Bank has also hit fintech companies like Venmo, Stripe, and Square. Their valuations have plummeted, and it's harder to raise capital. Yahoo Finance's Allie Garfinkle was at the 2023 Milken Global Conference to find out how fintech is faring in these uncertain times.

ALLIE GARFINKLE: Milken 2023. I am here with Nicole Valentine. Nicole, thank you so much for being with us.

NICOLE VALENTINE: Thank you for having me on Yahoo Finance. I'm happy to be here with you.

ALLIE GARFINKLE: So I want to start out by testing out a thesis with you. Compounding bank collapses, Silicon Valley Bank, Signature, First Republic, have those bank collapses made fintech more important than ever?

NICOLE VALENTINE: It has. And the great thing about fintech is fintech is not scared. Fintech is not scared of a crisis. It actually looks at a crisis head-on and figures out how to innovate. They look at what-- are there ways that we can build?

What are the ways we can innovate and get things done? And a crisis for fintech is just another opportunity to figure out what's next, how are they going to reach their customer, how are they going to deliver value, and how are-- how are they going to get more sticky in a moment like this.

ALLIE GARFINKLE: And can fintech come out of these collapses more sticky? What would that look like?

NICOLE VALENTINE: Well, first of all, fintech is expansive. And what I look at-- when I look at different phases of a business cycle, this theme is all about thriving. I'm talking about thriving in an advancing world, making sure that everyone's thriving. But there's three stages. There's surviving. There's building. And there's thriving.

So fintech is always building. Fintech is always building on top of new technology. So we talk about generative AI. We talk about blockchain. That's how fintech keeps moving through cycles. It doesn't stop the builders, and it doesn't stop those from coming out of a space and saying, what's next?

ALLIE GARFINKLE: So talk me through what the outlook for fintech is because you've been across the world actually talking to people about fintech. So I'd be curious about here in the US and more broadly.

NICOLE VALENTINE: So it's interesting. When you look at different markets, every market-- you're meeting a market where it is. So I spent a lot of time this year in Singapore. We've been to the Middle East, Abu Dhabi. We are focused on Africa. And we're obviously focused on the US, Latin America. And we're out here looking at the different ways that people are attacking and attracting fintech innovators, investments, and where they are.

So I would say for the US, we're a very mature market. We have a tech edge. We have investment edge. And so you're going to see a lot of fintech coming out of the US, and people are not stopping in this space.

When you're looking at the Middle East, you're looking at a lot of investment. They're also attracting their policymakers. Their authorities are welcoming. They're open for business. The EU is open for business.

And so when you look at different markets, you're looking at where is the opportunity. When you go to Africa, there's a very digital native population that's ready to kind of go into tech, and they're ready and they're actually innovating. They've leapfrogged, and they're at the space where everyone's in tech there.

So I think that the outlook for fintech is really amazing. I think that any transaction that has a tech edge is considered fintech. Whether you're an organization, a corporation, or whether you're a startup, you're looking at where is my next tech moment? How do we use this tech appetite to build acumen? So your users are out here doing more and being more productive with your tech.

ALLIE GARFINKLE: Yeah, the picture you're painting, Nicole, is really expansive, but there's also a lot of doom and gloom talk about a possible recession. So how does fintech fare then in a recessionary environment?

NICOLE VALENTINE: I look at fintech as recession proof. And when I say recession proof, I mean that fintech is not going to stop its movement. It's going to keep moving because there's always opportunity to build even in a recessionary time. It just means that you have to figure out where does your customer, where does your user, where is your client, where are they going next, and making sure that fintech meets that need at every space of your life.

I know fintech startups that have built and have gone out there in down cycles. They figured out how to get lean. They figured out how to get smarter and build more quality into their product. And that's what it's about. It's about quality. It's not always about size.

ALLIE GARFINKLE: That's really interesting. So talk to me then looking forward, how-- if you had to distill it down, what is the outlook for fintech right now?

NICOLE VALENTINE: The outlook for fintech I see is this. I think about this in a big picture. We're here at the Milken Institute. We have the top leaders in business from all around the world. And I think everyone's asking themselves, what is the wealth of a nation? What is the wealth of your nation?

And a lot of people are saying wealth is about human capital, human opportunity, human creation, the ability to create. And fintech is right in the center of that. The outlook is whenever you want to build the wealth of your nation, you have to go to fintech first, build from there, and make sure that it reaches the people so everyone can have economic mobility.

ALLIE GARFINKLE: And actually while we're here, before I get to the last question, how do you define fintech?

NICOLE VALENTINE: So I believe fintech is very broad. But I would say-- I will say this. Fintech is any transaction, any financial transaction that utilizes technology to scale its impact and its usage. So that's whether-- technology can be AI, cloud computing, blockchain. And the transaction can be anything from lending to currency to payments. And so whenever you're talking about any of those transactions and the technology that goes in and powers it up, that's fintech.

ALLIE GARFINKLE: What are your expectations for how a possible interest rate increase might affect fintech?

NICOLE VALENTINE: So here's the deal. It's very possible. And when you're talking about impact, for me, I'm saying that there's not going to be a decrease in terms of the amount of activity that's out there. It may impact-- hopefully it doesn't impact the jobs and the talent that are going to be deployed to make sure that fintech are being built. But I have a feeling that fintech is just going to keep going no matter what happens. Whether there's an increase or whether there isn't, we're going to keep pushing on and making sure that we're thriving no matter what.

ALLIE GARFINKLE: I don't know if I've ever heard anyone make fintech sound sexier. Nicole, thank you so, so much.

NICOLE VALENTINE: Thank you so much, Allie. I enjoyed speaking with you, and enjoy the rest of the Milken Institute Conference.

SEANA SMITH: That was Yahoo Finance's Allie Garfinkle at Milken Global Conference out in California.