Donald Trump's win 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 open-source development or technology toolkits that decentralize innovation, allowing businesses to become payment companies with minimal coding. A significant amount of money has already poured into this market, notably PayPal's transformative $800 million acquisition of Braintree, the development platform used by Uber, Airbnb, OpenTable and TaskRabbit.
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."
At issue is net neutrality, which refers to the treatment of the internet as an impartial utility, which bars internet service providers from setting up tiered lanes that favor access based on pricing or other factors. Democrats are mostly in favor of net neutrality; President Obama and Clinton have both supported it.
Republicans are generally opposed to net neutrality. Sens. Ted Cruz and Mitch McConnell have stated a strong opposition, but Trump upped the ante, comparing net neutrality to the defunct Fairness Doctrine and stating that net neutrality would allow parties to target conservative content on the internet.
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 Brexit vote. In addition to open source, much of the current innovation in payments is geared toward cross-border transactions, using blockchain and cloud technology to ease execution and erase artificial borders. The idea that there may be even a digital wall built around the U.S. could further chill the market.
GOP lawmakers already introduced a bill this year to end net neutrality, a bill Trump would likely sign into law if passed.
"The internet is based on the premise of 'open,' " said Jordan Lampe, director of communications for Dwolla. "To censor the internet or place restrictions 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 support for the concept. Cable companies and telcos oppose net neutrality, as does Peter Thiel, a PayPal co-founder, who endorsed Trump and donated to his campaign.
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. Clinton has called for deregulating smaller financial institutions, a plea that included support for more online financial services and other financial technology. Clinton has also visited a financial technology startup during a broader tour in Denver to support new technology development.
"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."
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.
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. "I think cybersecurity is probably one topic that will see some bipartisan middle ground."
