Consumer Credit in the Entrepreneurial Age

European Straits #58

Dear all,

I often talk about fintech in front of various audiences—corporate executives, entrepreneurs, policymakers. My key message is always that the revolution in finance is not about big data, machine learning, chatbots, and crypto protocols. Rather it is about the current paradigm shift and how the financial needs of businesses and households are changing as a result. The financial powerhouses of the Entrepreneurial Age won’t be the firms using the most cutting-edge technology. Rather the winners will be those who design financial products more in line with the new paradigm.

Take the case of consumer credit. An entire system involving central banks, government subsidies, retail banks, and one-of-a-kind financial institutions such as Fannie Mae and Freddie Mac in the US and the Caisse des dépôts et consignations in France has been designed to finance the typical middle class household of the age of the automobile and mass production: a married couple of salaried workers with 2.2 chi…