Georgetown University’s Institute of International Economic Law (IIEL) released a wide-ranging interview with PayPal CEO Daniel Schulman on the future of digital commerce, fintech, and financial inclusion on Capitol Hill.
The interview, conducted by IIEL’s faculty Director Chris Brummer before a live Capitol Hill audience, touched on new commercial and regulatory developments spanning different sectors of the economy. Among the most important: the profound transformation wrought by mobile technology on the retail industry. According to Mr. Schulman, malls and shopping centers will continue to face massive disruption by online shoppers, and the future of retail will be much as Asia is now—an environment free of carts and sales lines, where shoppers use their phones to tag wished goods and within a half hour items are delivered to people’s homes. In the process, stores will increasingly comprise, and morph into, miniature logistics operations.
The prognosis warrants especially thoughtful attention, Chris Brummer subsequently noted on his blog, hedged positions. “As the head of the world’s leading online payments firm, Dan has unique insight into not just the direction of retail commerce, but also how consumers and market participants are interfacing in real time. No one is better situated to see emerging trends set to disrupt retail commerce as we know it.”
Mr. Schulman also predicted that the offline and online components of commerce will blur as algorithms compile data to allow more bespoke products and services. But for all of the wonderful new services this may enable for consumers, data-based competition will create higher barriers to entry in retail for young companies—just as increasingly powerful technology firms disrupt incumbent old-line retailers. The key to competition in these areas will thus involve the degree to which and how first in time disrupters make accessible the data harvested from their operations with emerging companies and entrepreneurs.
Other topics touched on during the interview with Mr. Brummer included how fintech can and should improve financial inclusion—and the continued need to eradicate banking deserts—as well as the necessity to better coordinate and launch public-private partnerships. Despite PayPal’s notable profile and 210 million users, it operates in a $100 trillion industry with approximately 1% market share—and there are still nearly 2 billion people around the world who live outside financial mainstream. Along those lines, Mr. Schulman praised efforts taken by regulators to better understand emerging technologies via increasingly popular regulatory “sandboxes” and concluded that if it is to achieve its full objective, technology’s increasingly critical role in society will have to be driven by, and evaluated by, the longstanding moral objective of doing good while doing well.
Mr. Schulman’s interview is the latest in Georgetown’s expanding fintech programming at IIEL, a leading global forum for interdisciplinary academic and policy research. In additional to the Institute’s first annual Fintech Week, where Georgetown hosted high level government, legal, and financial experts alongside leading technologists, the Institute has held a variety of forums and discussions with entrepreneurs and policymakers. Most recently, the head of the CFTC’s financial innovation program penned an IIEL Issue Brief on his agency’s new fintech engagement agenda. The Institute is led by Professor Chris Brummer, author of Minilateralism. Mr. Brummer recently concluded a three-year term as a member of the National Adjudicatory Council of FINRA, the securities regulator, and was nominated twice by President Obama to serve as a Commissioner on the Commodity Futures Trading Commission.
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