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Here's Who Will Win the FinTech War

Here's Who Will Win the FinTech War

You have to have been hiding under a rock over the past handful of years to miss that this is no longer your father’s business world. More data is being produced in a day than in the entire history of humankind: as a result, the pace of change in business is lightning fast, with technology product cycles shortening and the drivers of business, and managerial, success changing.

I’m one of the few that has worked to lead businesses through this change from two very different vantage points: big company and start-up. I ran Merrill Lynch Wealth Management and Smith Barney, and I’ve most recently founded Ellevest, a digital investment platform for women.

I founded Ellevest because the “gender investing gap” in this country can cost some women more than the much-more-discussed gender pay gap. Closing this gap can not only help women and their families, but can unleash significant amounts of money into the capital markets, providing capital for companies to grow. It’s all good.

So why didn’t I work to close this gap while at the big companies, with all of their resources? I’m going to be (brutally) honest here: the challenges around doing so were enormous.

Among them:

*We didn’t have culture of innovation. Instead, the quarterly earnings cycle as a publicly traded company conspired against it, with a culture of delivering results on schedule and providing a forecastable earnings stream to public stockholders.

*We fretted about alienating our existing clients and employees. Our Financial Advisors were about 85%-ish male….our client base was therefore quite male….and our female clients pretty much left in droves once their spouses died. Even as we saw the opportunity to do a better job for women, the senior leadership team fretted that changing what we did – which was working well enough to earn us billions of dollars a year –could alienate our existing client base, without any degree of certainty that it would have any level of success.

*Our senior tech team was terrific, but they had spent years and years running tech and ops at big firms, so their skillset had morphed into those of managers, rather than pushing towards the edges of tech innovation. Given the large client base, it was always more important on any given day to play defense rather than offense.

*And, let’s face it: there was no sense of urgency for change. It’s very easy to tell yourself that things are ok if you’re making a lot of money – the old “We’re gaining share….if you compare us to the competitors who do exactly the same thing as we do, in exactly the same way…No, don’t look at those start-ups….they are in businesses that have customers too small for us to care about.”

In contrast to the big guys, fintech start-ups have a lot of things going for them: they can focus on discrete market opportunities, they can move quickly, they don’t have legacy systems and issues to worry about, the cost of technology (and just about every other cost of starting a business) is declining. They can test and learn, test and learn, test and learn…at a pace and in a way that’s very, very tough to do at the bigger firms. They can establish fresh brands that in some cases are not burdened by legacy issue (think financial crisis). They can speak specifically to a market segment, rather than having to homogenize their messages for their broad swaths of customers.

Of course, what the fintech start-ups don’t have are lots of customers, lots of money, lots of existing data, lots of experience, and embedded distribution systems. They also don’t have relationships with the regulators – which might feel like a positive, right up until the moment that it’s not.

So who wins?

In my area – the wealth and investment management space – I-can’t-even-imagine-how-much ink has been spilled writing whether the big guys OR the “robo-advisors” will “win.” Will clients want to speak to a person OR have a digital experience? Will the client interaction take place across the proverbial kitchen table or in cyberspace? Will firms continue to bet on their armies of Financial Advisors or bet on technology?

But don’t we all understand that, in so much of this, the right answer is not OR, but AND?

In my experience, this OR is way too black-and-white. Sure, some individuals will eschew any technology and insist upon in-person-only, and some won’t want to ever talk to a human. The extremes will exist, but many firms will provide both – or experiences that can bring the best of both – regardless of which side of the spectrum they started on.

And a symbiosis is beginning to emerge: with bigger companies investing in start-ups and with both sides engaging in joint ventures and distribution partnerships. This gives bigger companies a “seat at the innovation table” as a low-stakes way to learn, as well as to outsource some of their innovation. And it can provide start-ups with access to capital, potentially to customers and to deep-seated industry expertise.

Read more of our coverage from Milken Global here.

This post originally appeared on LinkedIn.


Sallie Krawcheck is the Co-Founder and CEO of Ellevest, a digital investment platform for women. You can sign up for early access here. She is also the Chair of Ellevate Network, the global professional women’s network.

For information about Ellevest, a Securities and Exchange Commission (SEC) registered investment adviser and its financial advisory services, please visit the firm’s website( or the SEC’s Investment Adviser Public Disclosure website (

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