Finternet: Bold Vision or Soon a Reality?

We’ve seen how the internet has completely transformed the way we communicate, shop, and do business. Now imagine if the same revolution happened in finance. That’s the idea behind Finternet, a visionary concept introduced by Nandan Nilekani and Agustín Carstens that’s got everyone talking.?

Hey folks, ?? how’s it going? Hope you’re all doing well!?

These days, my focus is on Futurense US Pathway and I’m travelling across the US, meeting academic leaders and professors, and even students. We’ve been having some great discussions about the future of learning and opportunities for students.??

Okay, now let’s get into today’s topic.

What exactly is Finternet? Will it really become a reality? This is something I’m excited to dive into with you all in this edition. Let’s begin!

Think of Finternet as a global financial ecosystem, similar to how the internet connects websites and services worldwide. It combines everything from online banking and digital payments to decentralised finance (DeFi) under one system. Unlike traditional banking systems, which are centralised and limited by geography, Finternet is global, combining the security of centralised systems with the flexibility of decentralised technologies—meaning anyone, anywhere with internet access can participate.

Here's an example-

Let's say there's an engineer from India working in Canada. He sends money back home every month. With the current traditional system, he faces delays, high fees, and complicated currency conversions through standard remittance services. But with Finternet, he can use tokenized money to transfer funds instantly, securely, and at a fraction of the cost. The process is seamless, ensuring that his family receives the money almost immediately, without worrying about fluctuating exchange rates or hidden fees. This is the power of Finternet—eliminating the usual challenges of cross-border payments.

So, How Does Finternet Achieve This?

At its core, Finternet is a token-based financial system, supported by unified ledgers and built using a combination of cutting-edge technologies such as Cryptography, Cloud Computing, and AI.

What’s interesting is that blockchain technology could also be a part of the system. When blockchain first arrived on the scene, many people were uncertain about its long-term viability, viewing it mainly through the lens of Bitcoin and other cryptocurrencies. But now, with Finternet, blockchain is proving to be much more than just about securing digital coins.

Talking about cryptography, Nandan Nilekani puts it in a different bucket than cryptocurrency, as the latter focuses on removing authority. He’s more in favor of integrating the technology behind cryptography to strengthen financial systems by ensuring security, privacy, and scalability.

The Hybrid Nature of Finternet

I think what makes Finternet really stand out is the hybrid nature of the system. It's this smart combination of centralised efficiency with the innovation and flexibility of decentralised technologies that sets it apart. Basically, it’s taking the best of both worlds.

Right now, a lot of issues exist with traditional financial systems—slow processing times, expensive transaction fees, and even geographical barriers. But with Finternet, these problems could become a thing of the past.

Startups Need to Seize This Opportunity

For startups, Finternet represents a huge opportunity. By tapping into Finternet’s global infrastructure, startups can access new markets, offer innovative financial products, and build decentralised solutions that were previously impossible in traditional financial systems. For example, startups can offer tokenized assets like real estate, art, or commodities to a wider audience, democratising investment opportunities.

Finternet also opens the door to cross-border ventures. With tokenized assets, startups can bypass geographical barriers, allowing them to trade globally without needing multiple regulatory approvals or intermediaries. This can help more people get involved in financial innovation and give entrepreneurs a solid foundation to scale their ideas across borders.

Final Thoughts

Finternet represents a paradigm shift in how we think about finance. By merging the best elements of centralised systems with the innovation and flexibility of decentralised technologies, it promises to create a financial ecosystem that’s faster, more inclusive, and more efficient. However, the key to its success will be overcoming the regulatory, technological, and adoption challenges that currently stand in its way.?

So, what do you think? Will Finternet be the "internet of finance" that revolutionises the way we manage money and assets, or are we still far from that reality? I’d like to hear your thoughts in the comments below!

Until then, stay excited and stay curious!?

Signing Off, Raghav.?

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