Future of Fintech: The Road to true transformation in financial services

TRUSTECH – CANNES – What progresses have we made in the past couple of years and are there any promising trends, companies or products which could impact few industries in the short term?


Once upon a time…

Back then, banks and financial networks were in aggressive competitive mode against each others. This allowed smaller more nimble tech companies to enter the world of finance with little resistance at first (Intuit, Square, Stripe, Affirm, Poynt, Plaid, Yodlee, etc).

The important point was that these companies were not trying to stay relevant, they were creating relevance for users who had been left on the side of the road to recovery by the large financial players and/or couldn’t rebound from the 2008 financial crisis within the traditional banking framework. These new companies were each solving a very specific problem for a very specific audience. Physical payment acceptance for small and mobile merchants, instant consumer loans for non-traditional banking clients, online payment and risk management integration for SMB, financial data aggregation consumable via API for financial 3rd party services, etc.

…in today’s fintech transformative world…

The past few years have transformed the way all players approached various problems and different challenges.

The hard reality is that incumbents and challengers have learned to work together, to morph their business model and to “coopete” in an intelligent way. Innovation is sometimes so subtle it can’t be detected. Banks have ramped up acquisitions, released simple but efficient products like Zelle or Marcus.com. Challenger banks in the UK are helping accelerate the necessary changes for legacy banks. Fintech startups like Affirm, Square or Stripe have learned to identify markets and customers who are underserved and underbanked and change their views of working with larger players. The coopetition is becoming more and more the norm via open technologies and business models. Companies are realizing that they can’t do it alone and even further, that innovation is not the key but instead with smart integration being what leads to success.

Building the fintech magic kingdom

On the road to this futuristic vision of what could Fintech look like in 2020 or 2025, it is important to remember that it is always hard to make predictions and these usually, especially the wrong ones come to haunt someone for a long time. However, not being superstitious, let us put on our imagination hat. In a near future, this script may be reflecting a reality closer than y ou think.

Winter is coming, you realize your wardrobe seriously needs a refresh. What about purchasing that new winter jacket? After verbally requesting your mobile voice assistant (Siri or OK Google or Cortana) for a quick search of options, triggering a massive inventory search of various vendors, options, colors, size, availability, etc., all of these tailored to your specific taste based on past purchases, preferences and budget, you will be presented with few choices.

Now, still from within your conversational shopping interaction, you will decide which one y ou want. From there, your consumer bot will start negotiating with a merchant bot on price, size, speed of shipment and return policy. When the bots reach an acceptable agreement, maybe (or not based on user preference) a notification will be sent to you to either approve or continue the negotiations.

If approved, your consumer bot/wallet/digital butler will call upon a transactional token validating your ID, address and payment method and any other elements necessary to complete the transaction. Since payment/transfer of value will be instant but secure, the merchant will just get the token basic data from a trusted digital token custodian.

However, this custodian would not held many of your information as these will be gathered from distributed locations/nodes and managed via distributed assets. Could it run on Blockchain? Maybe but not necessary as distributed computing has been around for quite some times.

When the transaction completes, all elements of it could be held in your personal cloud/remote storage/ledger for future use. The data held in there could also be shared for better services, deals or offers but only when you make that decision to release more reality or dream pipe?

If you look back at which companies didn’t exist 5 or 10 years ago, we cannot really say what will be the reality in 5 to 10 years. However, the potential scenario above leveraged technologies and projects already being implemented and perfected today.

The Bots / Conversational commerce are already making lightspeed progress with appointments being made between humans and machines. This is possible because of the richness of digital data and the capacity to work with these via Artificial Intelligence and Machine Learning. And these can be exposed via APIs.

With the mandate of Open APIs coming from various regions, it is clear that more and more entities will be able to gather data sources and generate new services, products from them. Of course, all of this needs to happen in real-time or instantly. With new payment rails/network like Zelle, Paylib, FPS, NPP being created to address the need for speed, it will be extended to other areas than payment, like user verification, disbursement, settlement, insurance, etc.

Now, the key to all these elements interacting with each other will be the various tokens being used. Key upcoming companies will be the ones able to either issue, retail or exchange these tokens or do all three at a time. The challenge however in these custodians of transactional tokens (ID, transaction instrument, commerce, education, government, etc.) will be in whom do we put our trust and how the regulatory bodies will see this in light of recent breaches and compromised data sharing. This is where the concept of Zero Knowledge Proof (ZKP) could become the tie breaker and the winner is…

In the end, the main question is who will be best positioned to win in this new world? Platform providers which is why when looking around, players like WeChat, Weibo, Xueqiu are leading the charge and Google, Amazon, Facebook, Apple (the GAFA) are trying to move into a controlled environment with economics ecosystems and technology platform.

Building a destination is the start, making sure the user trust and stay in this world is key. And then, there is the small detail of navigating new regulations and regional restrictions.