The Future of Fintech: What Won't Change, What will Change, What Could Change Everything
A decidedly different view of fintech!
This is a refreshingly candid view of fintech’s future, and it is the most fun read I’ve seen on this topic in ages.
The individual sections are refreshingly short, and you may passionately disagree with the predictions. But that’s actually what makes it fun!
The layout focusing on change is absolutely genius, and all of us in fintech would do well to remember that certain things, like regulations and backward regulators, cannot be changed.
Overall, the future is bright, but the hurdles to truly “Change Everything” are high!
👉TAKEAWAYS
I am highlighting a few sections that I thought were compelling.
🔹What Won’t Change
01. Convenience Always Wins: Great observation and I’d like to add that this is the compelling reason for people going cashless.
04. Financial Services Are Local: This is what we see playing out with payments daily. What works in one nation fails in another. Every fintech solution must be attuned to its market.
05. Incumbents Aren’t Going Anywhere: Finally! The days when fintech thought they would bury the incumbents are long behind us. One thing fintech continues to undervalue is trust.
🔹What (Likely) Will Change
01. Bank Tech Gets an Upgrade: Banks will benefit enormously from the infusion of fintech-quality technology into their existing products and channels. This is already happening. Look at blockchain and stablecoin use by the likes of JP Morgan and Citibank.
04. Interoperability Across Countries: How on earth could they not talk about CBDC? The authors drop the ball on this one. They do score points for mentioning UPI!
05. New Infrastructure to Build Upon: This is a nice read, and the focus on Faster Payments makes up for the lack of mention of CBDC.
09. Big tech Barges In: Big tech is already intruding, and the authors are correct that it presents a real threat to incumbents’ distribution networks.
🔹What Could Change Everything
02. Generative AI Radically Transforms Bank’s Cost Structures: Unlikely but a great observation. Incumbents will move faster and close the speed gap with fintechs.
04. Consumers, Businesses, and Governments Adopt Digital Identity: Great read and something we should all hope for to reduce fraud and transact seamlessly. Great that they see digital ID as a game-changer.
05. Consumers Choose Self-Custody Over Centralization: You’re kidding me, right? I had fun with this, but so far, I’ve seen no compelling reason for it. The authors suggest that government interference might prompt this, but would a government that interferes at this scale permit it? Russia and China today most certainly do not.
“An unprecedented increase in interest rates and crashing tech valuations (public and private) have led to a significant slowdown in venture capital deployment.”
👊STRAIGHT TALK👊
There is a lot to like in this report and I congratulate the authors at “Team 8” for a refreshing take on fintech!
Still, the absence of any discussion on CBDC was a glaring error, as was the omission of any reference to tokenization. You’d expect that from me, right?
There is only one reference to CBDC in one quote, but there is little other discussion. With 95% of central banks working on them, you’d think they would get more than one mention.
Compare this with the brazen claim that people will opt for self-custody due to government interference. Crypto is the only self-custody solution currently available, and it isn’t ready for mass adoption.
The authors also forget that it is likely that if a government is interfering to such a level they wouldn’t allow self-custody! Russia and China both banned crypto!
Still, this was a fun read!
Enjoy!
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