Donald Trump’s stunning upset in the presidential race on Tuesday is likely to embolden his followers to push for changes to internet law that could significantly alter how financial technology is conceived, built and delivered to market.
Technology startups across the payments and financial services industries rely on an open internet to develop, market and deliver their services. Although a partisan battle over internet access predated Trump’s candidacy, he provided a key boost to the issue, setting a stage for a larger battle still to come — a battle that will be fueled by Trump's victory.
The stakes are particularly high for fintech firms, a large portion of which rely on
In other words — without an open internet, there would be no Uber.
"Fintech startups want access to global markets," said Richard Crone, a payments consultant. "So anything that speaks of any kind of isolation is not good for fintech."
NET NEUTRALITY DEBATE
At issue is
Republicans are generally opposed to net neutrality. Sens. Ted Cruz and Mitch McConnell have stated a strong
Fintech firms fear that if anti-net neutrality sentiment grows in the U.S., it could lead to the kind of uncertainty already plaguing the U.K., where British fintech companies were hard hit following the
GOP lawmakers already introduced a
"The internet is based on the premise of 'open,'" said Jordan Lampe, director of communications for Dwolla. "To censor the internet or place restriction on its current existence disregards nearly 30 years of economic prosperity and threatens the future of nearly every industry."
The technology industry is mostly in favor of net neutrality, and even the largest Silicon Valley companies generally express
'NOT GOING AWAY'
Thiel argues net neutrality is an unnecessary regulation, insisting that despite appearances, many in the tech world agree with him, though "it's certainly been hard to accept for Silicon Valley, where many people have learned to keep quiet if they dissent from the coastal bubble," he said in an Oct. 31 speech making the case for a Trump presidency.
He also holds that Trump is a movement as well as a candidate, and will long outlast his candidacy. "No matter what happens in this election, what Trump represents isn't crazy and it's not going away," Thiel said.
Trump and Clinton have not had a lot to say specifically about financial technology.
Every firm's focus is on capturing a share of the predicted $7 trillion market by 2020.
"If net neutrality is challenged by a Trump [administration], the perceived impact on net neutrality could have nearly as much impact on innovation and creativity as actual regulation," said Thad Peterson, a senior analyst at Aite Group. "It would be possible that individuals seeking to start a firm in the U.S. might look to another market where access is more available."
Even slight changes to the law could cause major problems, Lampe warned.
"Business and app makers rely on the internet to grow not only their revenues, but the deposits of 'Bank A' or 'Credit Union' B," Lampe said. "Tinkering with the principles of a fair and open Internet means tinkering with the fair market principles that led to one of the greatest eras of economic prosperity this nation has had."
SILVER LINING?
The mere perception that net neutrality is in play could cause some companies to rethink doing business in the U.S., according to payment experts. Combined with Trump's isolationist position on trade policy and that policy's impact on the broader Republican party as GOP members seek support from Trump's base, Trump's presence in the White House could tip the scales.
The partisan rancor leaves little room for compromise, though the threat of cyberattacks and data breaches could lead the parties to come together in the next year.
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There is a silver lining in some of the more dangerous turns of the campaign, particularly for those in the cybersecurity industry. The stories of political hacking during the campaign, especially from outside the U.S., are likely to draw attention to cybersecurity in financial services, payments and other industries.
"I think that fact that Russia has been able to influence this election through hacking will serve as a sharp wakeup call that we need to significantly up our game in this regard," said Julie Conroy, research director at Aite Group. "I think cybersecurity is probably one topic that will see some bipartisan middle ground."
