In this piece John Power (CEO - Ostia Solutions) comments on two recent articles and three infographics on developments in the Fintech sector.
A quote attributed to Bill Gates in 1997 where he had said, “We need banking but we don’t need banks.”
Is this not a little like saying we need software but we don’t need software companies? Ultimately whether the companies running any payments systems are called banks or software houses, structure and regulation is needed to run a banking system.
Consider what has happened in Ireland in the past 7 years even with supposedly regulated banks? I think what we are seeing is that payment processing is moving outside of the traditional banks, however, the international payment systems being used are still the same clearing houses.
While blockchain offers a way to replace these payment systems, it’s going to take a long time for the trust and regulation to catch up with the technology.
Biggest Trends in Fintech
Some of the main points covered in this article are:
- Fintech Investment
- Usage by mobile phone for banking purposes
- Biometric authentication
- Mobile money
What is clear is that ease of use of banking and securing that ease of use are the top trends emerging in the Fintech space.
Even with the 6 candidates for the Accenture Fintech Innovation Lab - Dublin 2016, all are addressing these issues. Ostia are slightly different in that we are not in a customer facing role; what we are offering the banks is a way to deal with their legacy infrastructures while addressing these customer facing requirements.
The future of payment
It’s clear that how we pay is changing all the time. In recent trips to Norway and London, I didn’t use cash once as a credit card was a perfectly acceptable way to pay for even the smaller things like a cup of coffee. This is extremely convenient as no cash needs to be exchanged and one doesn’t end up with a drawer full of different currencies that are kept in the hope that one day you’ll return to that country and use it again.
While in the past this has worked, I have often been caught out by the fact that the notes or coins I had kept were no longer in circulation! I guess one of the key technologies that will move this on will be the biometric identification of people.
Apart from what are being called the 1st generation external biometric authentication such as fingerprint, voice, iris etc. there is now a 2nd generation of internal biometric authentication emerging which uses your heartbeat (which apparently can be uniquely identified) to determine who you are!
Gives new meaning to the phrase ‘you cannot take it with you’ as when you have passed on, these 2nd generation biometrics will not be able to identify you
If you doubted a FinTech revolution is taking place have a look at this
Infographic for the Chinese market - Covering such points as:
- Smartphone usage
- Cheque usage
- Increasing third party payment companies
Ultimately this will be all music to the ears of people frustrated by the slow pace of change with the ‘older banking’ institutions. Many of them are being dragged kicking and screaming into this new world only now reacting as they see others prepared to eat their lunch.
One key problem this will cause is that now you are likely to have payment information in multiple places as against just against your bank account. Controlling and managing that will represent a massive problem to pull all of that information into one place.
Blockchain Activity of FIs & Banks:
Blockchain certainly seems to be the future, however, it’s likely to take many years before the regulation of and legislation for this technology will catch up with the technology, however, we have seen time and time again where millennials are quite prepared to take a higher risk with their finances for the sake of convenience.
It wasn’t long ago, people were predicting that very few people would purchase anything with their phones and then along came the Apple Store and look where things are today without the legislation catching up.
IOSCO chief says block chain could revolutionize market-data transfers
There is a lot of talk in this article about cybercrime and how blockchain can address a number of the issues that will prevent cybercrime, however, you can be sure that once blockchain gains widespread adoption, people will find other ways to abuse the system perhaps even quicker because of the instantaneous nature of blockchain transactions.