Predicting Tomorrow's Fintech PART #1: The Big Picture

Writer, broadcaster and tech entrepreneur Andrew Walker spoke at REGIS-TR's client event in Luxembourg at the end of November. After three successful start-ups and three successful exits, Andrew writes about voice technologies and AI, creates digital communications courses for corporate leadership teams and is Associate Director of Voice Skill Development for Amazon partner companty Marketplace AMP. Here is part one of his fascinating whirlwind tour of this new, invisible frontier of challenges for the financial services industry.

AW: "It’s traditional at this time of year to look towards the future, or back at the year that has passed. In the tech world it’s usually the former. Making predictions about what will be the next big thing, or the new market disruptor, or the new must-have platform is a full-time job for many pundits and also a recurring headache for the C-suite. It’s high stakes, big spends, reputational and operational risks, and nobody wants to be the next big name with a data breach or clients locked out of their own accounts. Predicting the next wave of tech in heavily regulated environments like finance is tricky because manual form-filling and paper processes remain present like ghosts from the 1990s, and decision makers are superstitious about banishing them in favour of robotic process automation or distributed ledgers.

Making predictions about technology often feels hard because the digital world presents a constantly moving target. At least, that’s how it appears. However, the truth is the target hasn’t moved at all. To explain and hopefully present a way of disambiguating the overhyped fad technologies from tomorrow’s staples, it helps to strip the tech back to basics. The most basic level we get to is defining technology itself as simply lowering human effort. If it lowers human effort, it’s tech. The wheel. The spoon. Supermarkets. Biometric login to your retail banking app on your new smartphone. It’s all the same thing. Humans are natural problem solvers, compulsive multitaskers and we’re all a bit lazy sometimes. This is a simple lens through which we can spot tech that’s going to win in the long run, by asking if it meets the universal human need for lowered effort.

The effort-reduction imperative has created patterns in technology development that need to be considered to help us differentiate the slam-dunks from the turkeys. Tomorrow’s tech staples don’t simply have to lower human effort, they have to enable new experiences and create new categories of commerce by doing so.

For example, the first mass market automobile (Henry Ford’s Model T) was successful because of the Ford Motor Company’s significant investment in ‘automobiling’ clubs that organised social activities to engage people with the new possibilities of owning a motor vehicle. Suddenly, city dwellers could take day trips in the country and farmers could sell more produce in the cities, but Ford had to spend money to alert them to it. Leisure and commerce boomed, as did the new need for oil, gas, rubber and parts.

Another example is Steve Jobs’ triumphant return to Apple, where his new range of aluminium laptops - with peerless entertainment capabilities designed into their hardware and software - became desirable fashion items, closer to designer furniture and high end audio systems than their black plastic computer competitors. Suddenly, Macbooks were working spreadsheets in trendy organic cafes and playing movies in airline cabins all over the world. The newfound demand for conspicuous mobile computing meant public WIFI proliferated, streaming media and e-commerce boomed, and we were primed to swap our clunky plastic for sleek aluminium everywhere, Sony Walkmans for iPods, Nokias for Androids, Blackberrys for iPhones and so on.

That last point, about being primed for the iPhone, is important. New experiences take time to mature and we never leapfrog steps in the maturing cycle. Ford made a car, he didn’t skip straight to tractors and articulated lorries. When the iPhone launched, the ‘killer app’ as Steve Jobs called it, was making telephone calls. Today, we talk more with our thumbs than with our vocal chords using words, photos, memes and emojis, via apps that were but a glimmer in a Silicon Valley venture capitalist’s eye back in 2007 when the iPhone launched.

Today, there are over 2,000,000 apps and over $60bn in AppStore revenues, dwarfing mobile call-carrier revenues. However, that iconic smartphone would have failed completely if it was first launched as an app device. Messaging, email, social networking, web surfing and selfie-snapping were irrelevant back then. We needed time to acclimate to the new smartphone experience. Making calls – lower effort using smarter contacts software and an easy-to-use touchscreen - was the reason the iPhone succeeded. Choosing a smartphone for its ability to make calls? How quaint.

This means, without predicting anything at all, we can say for sure that the Fintech worth watching will tick three boxes – it will reduce human effort; it will enable new experiences that create new categories of commerce; and drive a cycle that will transform traditional financial processes over time in unseen ways.

So what will that new iPhone-equivalent Fintech be? Blockchain? Passive AI wealth tracker apps with chatbot advisers (again)? Automated DLT powered transfer-agency platforms? Alexa enabled client services? Well, the winner is…

(… coming in part 2)".

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This blog was written by Andrew Walker and is published with his kind permission. It represents his own personal interpretation and not the views of me or REGIS-TR. It is for information purposes only, is not intended to provide professional legal advice and should not be relied upon in that regard.