The traditional financial services industry could find itself facing a spell of creative destruction if it doesn’t show the nimbleness required to marry legacy business with new platforms
The president of the world’s largest asset manager is feeling the heat from tech companies. BlackRock co-founder Robert Kapito has admitted that he was shocked at the $150 billion potential valuation of Ant Financial, which would make it the world’s most valuable private company. Kapito also professed his unease about tech companies entering the financial services sector in an aggressive way.
Two implications can be drawn from this. The first is that the Chinese tech company model is now going to face a litmus test. Ant Financial is the payments affiliate of Alibaba, one of China’s homegrown giants which have been protected by China’s great firewall. This has allowed them to develop both financial and tech firepower—but it remains to be seen how well they compete in a less skewed international environment.
The larger implication is that the traditional financial services industry could find itself facing a spell of Schumpeterian destruction if it doesn’t show the nimbleness required to marry legacy business with new platforms. This is as true in India as it is elsewhere.
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