FinTech holds all the cards — regulation dealt it a hand that requires no bluffing or smart play. Simply take advantage of the current situation and there is almost no reason that any other industry or tech player should be able to compete with the head start open banking has afforded. The opportunity I’m talking about is multifaceted but the elements of it overlap to such an extent that it can be summarised as Digital Identity and Assets, or rather the ownership of those two things.
When I talk about ownership, the immediate kneejerk reaction is that we already own them. We have identification in the form of government documents, I have the deed to my home and the license of ownership for my car safely stored at home. What are you talking about?
And you would be absolutely correct, with one minor caveat.
The world is distinctly separate right now, where physically we exist in the analog world, virtually we broaden our virtual identity and footprint every day. The problem is that we do not own our digital assets, nor is there any simple way for us to reclaim and control them. Physically we are free, digitally we are not is the way I have begun explaining this. Prior generations main assets were physical, the futures will be digital takes it further. This is something that I feel people are intrinsically aware of without ever fully appreciating the implications of how subtle that shift is. Free services have insidiously entwined itself within the fabric of our physical existence in a way that our privacy and attention are leveraged by attention economy conglomerates to enrich themselves. Reclaiming ownership of them provides a route towards owning your holistic virtual identity and all your digital assets allowing you to be the only person in the world who can unlock value that is currently impossible. That is what FinTech should dominate globally.
The above are the reasons why it’s opportunity and position should be insurmountable — what follows are the reasons why it’s already lost the war.
Hypotheticals and the reality are very different. The process of open banking implementation has been challenging, to temper the phrase I would prefer to use which rhymes conveniently with Fluster Truck. The reaction against providing access, let alone ownership, of data to the user who created it was swift.
‘It’s our data’
‘The security isn’t there’
‘They won’t get any value from it
The dirty secret of the Financial industry is that they have absolutely no idea how valuable the data they have is and no clue how to make it work better for the customer. Innovation is a fantasy which is incredibly difficult, if not impossible, within bureaucratically difficult organizational structures. Conventional wisdom, complacency, and a fundamental lack of understanding for the things which drive the industry prevent any real progress being made. That is only one part of it. Fear for the unknown, specifically that other people, services or organizations will pull back the curtain on the lack of progress and action that has been made within this domain is far more insidious.
Open banking should be the first step in a broader mission to help people unlock value that was previously impossible. Reluctance to give access amid security concerns are valid but mostly an excuse. It is, in fact, symptomatic of the industry as a whole as the shackles which hold it back. Rather than embracing the innovator's dilemma to explore new business models, ones which amaze and provide exponentially greater value to consumers, they’d rather try and suppress the problem out of fear for the unknown.
And that is why FinTech will lose before it has already begun. The shift of people adopting a TechFin moniker is indicative of this. Financial technology is fast becoming a dirty word. Make no mistake, there are great people in this space doing unbelievable things which deliver awesome value to consumers.
But, for the majority, it’s noise and buzzwords people are using to draw attention to reinvention rather than revolution.