Don’t expect Bitcoin to replace the dollar or Visa to go bankrupt

J. Christopher Flowers, a veteran investor in the financial services industry, said at the Super Return Private Equity Conference held in Berlin, Germany recently that although new technology companies seeking to build financial services companies can succeed, most financial technology startups will ultimately fail.

Christopher Flowers is a world-renowned investment banker and one of the youngest partners in the history of Goldman Sachs. He is worth $1.43 billion and has invested more than $14 billion in financial services companies around the world through his own company, JC Flowers & Co.

According to the Wall Street Journal, Flowers believes that although some emerging technology companies that hope to steal business from established banks and financial services companies will eventually achieve remarkable success, most companies will not survive due to basic strategic contradictions.

He said that there is a big psychological difference between Silicon Valley entrepreneurs and traditional financial industry executives. Entrepreneurs believe that they must grow quickly and dominate a certain field while realizing the technical idea of ​​network effect, but this rule is not suitable for the financial industry. "In the banking and lending industry, this idea is not only wrong, but also very dangerous." Flowers said, "There is an old saying in our industry: busy growing today, die quickly tomorrow."

Christopher Flowers

“Don’t expect Bitcoin to replace the dollar, and don’t expect Visa to go bankrupt,” he stressed. “American banks need to settle all dollar transactions to some extent, so it’s impossible for no banks to participate.”

Flowers said that the area where fintech companies are most concentrated is providing unsecured consumer loans in the United States, but this is risky. "Banks in the United States basically do not provide unsecured consumer loans, so there is a gap in the market." He said that there are hundreds of fintech companies exploring this market.

He believes that if financial technology companies like Bitcoin want to succeed, they can provide more services to people in areas that have been neglected, such as providing financial infrastructure such as payment processes, but traditional banking will not disappear.