Inside Out | Fintech a boon for the unbanked but a nightmare for regulators
Revolution is being driven by two very different populations
This weekend, this old dog learned a new trick – part of a belated effort to earn some “street cred” with our millennial generation: I learned an “Hour of Code” – basically an idiot’s guide to how to write computer code, and how it can be fun.
The initiative, courtesy of Microsoft and our Apec Business Advisory Council (Abac) meeting in San Francisco and Silicon Valley, is part of a campaign through schools worldwide to raise knowledge about the basic principles of computing. It was also intended to demonstrate that even a “homo geriatricus” like me was not a lost cause to the digital revolution that is now consuming us.
There of course can be nowhere better to taste and feel the digital revolution enveloping us than California. Briefings from Google, PayPal, Facebook and even the Dolby sound studios demonstrate clearly how digital stuff is now emigrating from the geek’s laptop to embrace every waking aspect of our work and personal lives.
One of the reasons the emergent disrupters are so unstoppable is that the incumbent banks still disserve large communities across the world
And I’m not just talking about video games and smartphone apps. We are talking at last of developments that will have profound and helpful impacts on all aspects of our lives. We are for example talking about boring tractor manufacturers like John Deere that now have 200,000 “autonomous vehicles” – which means driverless farm vehicles – ploughing fields and sowing and reaping crops across the United States – and placing sensors in vehicles and around farms that “allow your land to talk to you” – telling you which soil is in need of more water, or has too little fertiliser.
We are told that there are six drivers of this digital revolution: 5G telecoms, artificial intelligence, big data, the internet of things, driverless vehicles, and 3D printing. Get your head around all of those, and you have a fighting chance of keeping your head above water in the digital universe that is being colonised by the millennials and our grandchildren.
But most of the weekend’s discussion in San Francisco was tailored graciously to the intimidated, ageing brains of us “pre-millennials”. PayPal’s simulated adult playrooms introduced us gently to their moneyless universe. More challengingly, we were sucked into the mind-altering universe of financial technology (fintech), where mysterious phenomena like block-chain, data analytics, mobile wallets and the internet of things have spawned new age financial companies that are in turn exciting, and scaring the pants off the world’s banking titans – companies like Kabbage, which uses big data and electronic credit checking to extend loans to even the smallest of companies within minutes of their loan applications being submitted.
Already it is clear that the fintech revolution is being driven by two very different populations: radical new start-up disrupters who are using the potential of new technologies to develop fundamentally new ways of living our financial lives; and incumbent behemoths that have on the one hand recognised that unstoppable forces have been unleashed, and on the other have seen economies and efficiencies embedded in the new technologies that can save them big money, improve services to customers, and help them retain their hard-fought competitive leadership.