On November 5th, the United States—and the world—will prepare for the 60th quadrennial presidential election. Whether it results in a Democratic victory under Harris or a Republican win led by Trump, the outcome will shape the next four years at the White House. The potential consequences of either result are extensive. Here, we will explore how the outcome of this election could influence fintech careers and the wider industry.
Fintech's impact on the economy is significant, with many Americans hoping this influence continues to drive GDP growth. However, as industries increasingly adopt new technologies, concerns surrounding fintech AI and cryptocurrencies are growing. Democrats and Republicans hold contrasting views on the role of AI in fintech, among other key issues. But what could these political divisions mean for the future of fintech?
Our insightful guide explores the impact of the US election on fintech careers and, more specifically, what each party’s policies might mean for the industry going forward.
Fintech’s Influence on the US Economy
Currently, those currently working in fintech careers look to be in a strong, stable position with plenty of opportunity for personal growth. Over recent years, fintech’s presence in the US has become more prominent. As it grows as an industry, its impact on the economy is increasingly significant. Several indicators suggest its expansion is likely to continue:
- In 2023, the US accounted for 50% of the fintech market share worldwide.
- It’s forecast that fintech revenues in North America will soar to $520 billion by 2030, with the US responsible for 32% of global fintech revenue growth - which equates to annual growth of 17%.
- The US fintech market volume is projected to exceed $2,209 billion by 2028.
With such astronomical figures associated with the current and future of fintech, it’s natural that the US economy will benefit. US fintech companies offer lucrative opportunities to investors. Continued capital injection results in innovation and the creation of jobs. Just three years ago, over 10,000 fintech startups were listed in the US, with investment showing no signs of slowing; this figure will continue to grow. Let’s take a look at the wider economic effects:
- In 2023, US fintech companies generated $24.2 billion across 1,531 deals, which equated to 47% of global fintech investment.
- The average deal size for US fintech investments in the same year was around $15.8 million.
Four US regions have appeared to have substantial financial influence in the fintech market and US economy:
- California saw $13.1 billion invested across 412 deals.
- In New York, $4.7 billion was invested over 339 deals.
- Across 47 deals, $1.2 billion was invested in Massachusetts.
- Texas had $855 million worth of investment across 110 deals.
How Policy Shifts Could Shape Fintech
However, a change in presidency could alter the trajectory of fintech futures. Each party will have its policies relating to fintech law, which companies may or may not benefit from. As we’ve seen, certain states have prospered heavily from fintech investment - could this determine certain voting trends?
Current Regulatory Framework for Fintech
US fintech companies are critical of the current regulations they must adhere to. Unlike Europe and the UK, which have a more decentralized approach, the US system is composed of several agencies at both federal and state levels. This results in a framework that’s considered fragmented and complicated, causing a multitude of compliance issues for fintech organizations.
Adam Hughes, CEO of Amount, has called for a streamlined approach:
"A new nationwide set of requirements and a system for formal accreditation would even the playing field and establish controls that are better aligned with regulator expectations."
He argued that certification of adherence to third-party partner risk management requirements, either by a standards body or by a self-regulatory organization, would offer assurances that a third-party vendor has satisfied compliance requirements to help ease the procurement process for technology providers.
Democratic Leadership
If the Democrats were to retain leadership, would it mean a shift away from the current frameworks loathed by US fintech companies, or would more stringent policies be implemented?
Regulatory Approach
As discussed, the current Democratic approach means rigid regulations that are widely lambasted. Under a Harris administration, it looks as though those policies won’t be repealed - they’re likely to be maintained and possibly expanded. Here’s an overview of the areas of focus for the Democrats:
Consumer Protection
Democrats want stronger consumer protection measures. They’re pushing for funding for the Consumer Product Safety Commission (CPSC) to improve consumer product safety research, enforcement, and surveillance. In addition, the Consumer Advocacy and Protection (CAP) Act will aim to increase the CPSC’s authority when distributing penalties to companies that breach regulations.
Cryptocurrencies
A Democratic leadership would mean stricter government regulation of cryptocurrencies and US fintech companies as there’s a strong emphasis on protecting the consumer. Fintech organizations interested in purchasing bank charters would also be subject to greater scrutiny.
AI in Fintech
According to a Public First and the Center for Data Innovation survey, 35% of Americans believe artificial intelligence will be detrimental to society, while 38% think it’ll benefit society. Recognizing this divide in opinion, the Democrats want to balance the “promise and peril” of AI and ensure it benefits the public.
Innovation
Those with fintech jobs may be concerned that the Democrats’ prioritization of consumer protection will thwart fintech’s ability to develop technologically. However, despite the increase in regulation, Kamala Harris is steadfast in her belief that protecting the public and innovation can’t coexist. The potential president said in a speech in London, “I reject the false choice that suggests we can either protect the public or advance innovation; we can and we must do both.”
Republican Leadership
Conversely, if the Republicans were to win the US election, they would focus on reducing stern regulatory policies. While fintech organizations would view this as advantageous, portions of the US public might be concerned about what this means for consumer protection.
Regulatory Approach
Typically, Republicans favor a laissez-faire approach and let the market dictate developments. This would allow for innovation and create a more desirable environment for US fintech companies. The areas of focus relating to fintech are as follows:
Regulation Changes
The Republicans are predicted to want to reverse a selection of Biden-era policies that concentrate on stability and consumer safeguards. They also want to accelerate innovation and provide better access to financial services. However, Republicans are set to have pro-bank policies, meaning support for traditional banking services. This may have ramifications for fintech firms competing with banks.
Dodd-Frank Act
Passed in 2010 in response to the 2007-2008 financial crisis, this legislation aimed to promote financial stability and transparency in the financial system. It established the Financial Stability Oversight Council (FSOC), which has the power to dissolve banks deemed a systematic risk.
It also led to the Volcker Rule, a provision that prevents banks from making speculative investments that don’t benefit the customer. Republicans view this Act as restrictive and want to significantly reduce its power by removing the Financial Stability Oversight Council (FSOC) and the Orderly Liquidation Authority (OLA).
Cryptocurrency and Digital Assets
Donald Trump advocates cryptocurrency, declaring that he will make America the “crypto capital of the planet.” Should Trump become president for the second time, he’s outlined pro-crypto policies that could benefit fintech careers:
- Government Bitcoin Stockpile: Emulating gold reserves, the Republican Party wants to create a strategic national Bitcoin stockpile.
- Crypto Advisory Council: Creating a Bitcoin and crypto presidential advisory council with favorable industry rules.
- Blocking Central Bank Digital Currency (CBDC) The Republicans will seek to oppose the Federal Reserve from developing a CBDC.
Furthermore, it appears that there is wider party support for the industry as the Republican National Committee has cryptocurrency included in its official party platform.
Innovation and Competition
Regulators from Trump’s previous presidency championed the benefits of promoting competition and serving the underbanked. They demonstrated a willingness to experiment with developing charters or creating rules tailored to fintech organizations’ and cryptocurrency companies' needs. According to industry experts, regulators approved US fintech companies’ applications for charters and to acquire banks. If Trump is reelected, could we see an even more liberal approach to fintech companies' operations?
In contrast, it’s countered that fintech firms mightn’t benefit from competing with traditional banks. Instead, by partnering with a bank and providing financial products and services, fintech businesses could thrive under a Trump administration.
Final Say: The Impact of the US Election on Fintech Careers
Evidenced by its increasing market share, revenue growth, and investment, the fintech industry significantly influences the US economy. However, could the Democratic Party derail this, or will the Trump-led Republican Party rejuvenate it?
A Harris administration favors consumer protection through regulations that many argue stifle innovation and fintech careers. On the other hand, the Republicans want to unlock what they consider to be handcuffs on fintech organizations, promote market freedom, and create an environment where innovation can flourish.
Both parties’ policies have implications for fintech jobs, which could be a deciding factor for many when voting on who should lead the country. Likewise, the party in power could be the deciding factor in the extent of fintech’s economic influence and technological developments.
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