Chris Larsen, Chief Executive and co-founder, Ripple
Chris Larsen is CEO and Co-Founder of Ripple Labs, creators of Ripple, an open-source, distributed payment protocol. Mr. Larsen also co-founded and served as CEO of Prosper, a peer-to-peer lending marketplace, and E-LOAN, a publicly traded online lender. During his tenure at E-LOAN, he pioneered the open access to credit scores movement by making E-LOAN the first company to show consumers their FICO scores. Mr. Larsen also played a pivotal role in the passage of the strongest consumer financial privacy law in the nation and was hailed by Congresswoman Jackie Speier as being, "critical to the success of the bill." Mr. Larsen serves at the Board and Advisory levels at numerous companies and organizations including: Progreso Financiero, Betable, CreditKarma, and Electronic Privacy Information Center (EPIC). Mr. Larsen holds an M.B.A. degree from Stanford University and a B.S. degree from San Francisco State University, where he was named the 2004 Alumnus of the Year.
Please give us a bit of background on yourself, and how you've become a leading voice in the financial technology space.
For a long time, I have felt that financial companies and services have a great deal of room for improvement. I left my job as a mortgage lender to found ELOAN, realizing that technology could offer a more transparent, affordable way for consumers to secure a mortgage. Then, I helped launch Prosper, the first P2P lender in the U.S. Now, at Ripple Labs, I have left behind the world of consumer-facing financial technology to focus on building financial products and services for enterprise customers.
What FinTech advances have affected you most in your day-to-day life? Are there any applications which have changed the way you handle tasks so much you now take them for granted?
It was gratifying to offer individuals a better day-to-day customer experience at ELOAN and Prosper. However, my experience at these companies taught me that consumer-facing financial technology is limited by the underlying financial infrastructure, which was built pre-Internet. While there are thousands of talented entrepreneurs building financial businesses around the world, these businesses ultimately rely on today’s siloed payment systems. Ripple Labs builds products to improve payments infrastructure, resulting in a more global, efficient and inclusive payments system.
How is the rapid pace of FinTech development affecting small business? Are new lending and payment systems now an integral part of the financial landscape?
Distributed ledger technologies are the buzz of the financial industry, and new distributed ledger technology companies are rapidly emerging in both the consumer-facing and enterprise-facing space. Every day, there are new banks and payment networks evaluating the use of technologies like Ripple to improve their global payments services. Smaller banks see an opportunity to gain access to the global financial system, while larger banks have the potential to offer better services to their business customers.
What challenges do you see for FinTech development, both from a user's perspective and from a regulatory stance?
Individuals are demanding faster payments from their financial institutions and central banks. Today, it is often cheaper and faster to send a package to Europe than to send a payment. Since individuals are used to everything - the Internet, email, social media, news - operating in real-time, they expect the same from payments. This gets complicated from a regulatory perspective, since financial regulations differ in every region, nation and local jurisdiction. There is no single governance body for payments, nor is there likely to ever be. The world’s complex regulatory landscape makes it difficult for fintech businesses to go global.
What will you be discussing at The Economist's Buttonwood Gathering on October 20th?
I’m on a panel called Finance’s “Uber” moment, where the discussion will focus on how quickly technology is changing finance and the economic implications. When Uber first launched, everyone believed they were entering an oversaturated market with limited scope, since they would be infringing on the services taxis already offered. In San Francisco, the taxi market caps out at about $140 million per year, while today Uber brings in $500 million per year. Uber expanded the size of the market threefold. Similarly, we are already starting to see the effects of faster payments on the economy; in the U.K., for example, the Faster Payment Service tripled the total volume of payments in the market in its first five years of implementation. New financial technologies have a great opportunity to expand overall volume of payments.
Which Buttonwood panel discussions do you expect to be most thought provoking?
The panel discussion on “Rewriting the rules” will discuss whether regulation can keep pace with fintech innovation. There’s an interesting duality in finance where innovation has to push regulators to write new rules, and regulation has to occur in a timely fashion for financial technologies to lift off the ground successfully. Regulation, capital and technology innovation are all equally important to finance.