After Donald Trump won the race for the White House, many people are wondering what Trump presidency would look like. Trump has promised a lot of things including deporting millions of illegal immigrants, tax cuts for middle-class families, building a wall between the US- Mexico border, getting rid of Obamacare and tearing down some trade deals such as Trans-Pacific Partnership agreement. But what does the USA fintech industry expect from the incoming US president?
Positive Impacts of Trump’s Presidency
Trump advocates a “new modern regulatory framework”. In the past, the incoming US president had said that over regulation costs US economy $2 trillion dollars per year and cuts household wealth by about $15,000 dollars. The 45th president of the US wants to reform all what he sees as unnecessary and wasteful regulations that kill jobs and don’t improve public safety. Streamlining financial regulation will benefit all businesses including fintech companies.
Furthermore, Trump will not be alone in managing the government. We expect him to form his cabinet and appoint people who will lead government agencies. Think of CFPB, the Securities and Exchange Commission, Treasury and other government agencies that touch fintech. Depending on who will be appointed by Trump, we may have enlightened policy makers that support technology and financial innovation.
Negative Impacts of Trump’s Presidency
In the near future, we expect to see USA fintech investment slowing down. There is a lot of economic uncertainty that is sweeping across the country. Fintech investors are cautious. Trump’s government will make extensive changes that would take some years to implement and we don’t know how those changes will affect the fintech market.
With Trump’s government, fintech-specification regulation might never see the light of the day. In the past, Trump has been calling for the abolition of the Consumer Finance Protection Bureau (CFPB), a fintech-friendly US agency. This might be a blow for fintech companies, which have been asking for fintech-specific rules in order to streamline their way to compliance.
Also, Trump has repeatedly demonstrated his desires to reduce immigration to the United States. His immigration policies could be a setback for the country start-up scene, including financial technology, which sources many entrepreneurs and skilled workers outside the US. For example , according to a research by the National Foundation for American Policy, over 51 percent of US start-ups valued at more than $1 billion, including Oscar and Stripe, were founded by immigrants.
Lastly, Republicans are opposed to net neutrality. Net neutrality refers to the handling of the internet as an unbiased utility that prevents internet service providers from favouring access based factors such as on pricing. Democrats support net neutrality; Clinton and Obama have both supported it.
USA Fintech companies fear that if anti-net neutrality is allowed to grow in the US, it could lead to uncertainty. In addition, the current payments innovation is focusing on cross-border transactions, using cloud technology and blockchain to erase artificial borders and ease execution. The idea that there may be a digital wall made around the US chill the market.
In light of the Trump’s presidency, it’s important for fintech investors to keep calm and consider long-term plans that will factor in economic fluctuations. In the meantime, let’s hope Trump’s government will live up to its job creating policies and make an opportunity for all people– including USA fintech entrepreneurs.