We all are living it. The nightmare that is. From an external vantage point, “customer experiences” for those of us that are considered to be the world’s banked and who use the modern financial system on a daily basis, perceive from our experiences that today’s global banking system is a disjointed, haphazard collection of experiences. There’s a reason that it feels this way. The experiences are the reality!
A view that is my reality involves not only the external but the internal vantage point as well. I’ve spent most of my career as a business and solutions architect working tirelessly in Financial Services. Day in and day out moving the ball forward achieving new goals and providing new services. Efforts such as:
- New product launches in Payment and Consumer Retail Banking
- Massive expansion and merger initiatives bringing systems and banks together to achieve investor value and operational savings
- Complete overhauls of systems supporting KYC (Know Your Customer), Customer Centric operational models
- Big Data analytics efforts making sense of the data and madness that these exceptionally complex ecosystems present
Through all of this, the underlying concern that has always been nagging at me is what about the unbanked? What about those that don’t have access to these systems? Over time, this concern grew into an awareness that something greater was at work here. How did we get here in the first place?
As a result of this awareness, I’ve spent a considerable amount of time working to bring the subprime and unbanked into this global system in a fair and consistent manner that would support improving their position in life. Financial Inclusion as it’s come to be called. Some say that bringing the unbanked or subprime population into the financial system is “to take advantage” of this population for revenue gain. That may be the case for some, but not for all. Working in this area is difficult due to this stigma associated with “the effect of the subprime or poor on profits and bank and economic stability.” Regulators, executives, and investors are rightfully worried about “doing it right” both from an impact perspective as well as an investment perspective. To put it bluntly, I’ve found that most run away from the subject for these reasons.
Besides the obvious “product centric” nature of everything, which remains a problem to this day, there exists a much greater problem of how does one enter the system. What makes one worthy to be “allowed” or “invited” to enter.
As a career-long architect of the modern systems and one who’s trying now to architect the future via FinTech investment and evolution, all of my perspectives, all of my experiences have shown me something that is apparently hidden in plain sight. To say I’ve come to a major realization would be an understatement. What I now see is that today’s global financial systems are not designed the way the world likes to do business, trade, transact and buy and sell. Besides the obvious “product centric” nature of everything, which remains a problem to this day, there exists a much greater problem of how does one enter the system. What makes one worthy to be “allowed” or “invited” to enter. As I’ve outlined, I’ve focused a career-long effort to fix and advance today’s financial systems and until recently, I never pulled back and looked at it all from a “blank slate” perspective. A perspective from history; above the bank; above the line of business or product being sold. One which asked, “how did we get here.” Not until recently that is.
The Global Economy is Seriously Flawed in its Design – It’s Broken
If you’re in Financial Services or if you’re a FinTech Entrepreneur, you know that unless you’re working “outside the current rails,” you’re working on a foundation that is by definition broken in its design. What does that mean? It means that the fundamental design of the modern, global economy is designed from a seriously flawed perspective. It, by definition, does not allow a playing field in which the entire global population who wishes to can interact as equals. It was built by a few, for a few and those that are “invited” in are only invited in to advance the few.
If you find this difficult to believe, take a look at some key points:
- Entering the global economy can only be accomplished when hurdles – set by the few – are met,
- One can be pushed out of the global economy when one no longer meets these hurdles,
- Population in the distant parts of the globe are excluded as they are perceived to not economically “add value” because they “don’t make enough money,”
- All global interactions are not seamless across the whole and require “multiple entries and proof points” to enter subsections of the economy,
- The fundamentals of economic interactions are missing from its design which includes responsibility, trust, relationships, and the individuals own design on how and who gets to define these fundamentals.
One might question what this all means. It means that true transformation, true inclusion, and true fairness and 100% worldwide inclusion in the global economy can ONLY come from a massive shakeup; a redesign that fundamentally changes the foundation of the world’s economy.
It means that true transformation, true inclusion, and true fairness and 100% worldwide inclusion in the global economy can ONLY come from a massive shakeup; a massive redesign that fundamentally changes the foundation of the world’s economy.
For years, insiders and occasional outsiders to financial services have hypothesized that “disruption” was coming. Disruption like that seen in travel, retail, telecom, etc. The disruption that – since the information age has begun – has killed decade or century-old businesses in mere years. They have spoken about how it was inevitable, and how it was being cooked up in garages around silicon valley. The truth is, very few people understand the global economies true dysfunction or how it works to begin with. This has led to false starts and false predictions beginning from the time the word disruption has first been uttered in the context of the Information Age. If the idea of disruption is a shakeup built on today’s global financial rails, it by definition can not be a disruption. The reason is that the problem exists at a much higher level. Disruption has to come from the top and from the vantage point of the entire global population. Make no mistake; disruption will come and it will come big. Because as we know, the bigger they are, the harder they fall.
Having spent the past few quarters deep in FinTech, I’ve seen a lot and what I’ve seen is almost all “built on the flaws and foundation of today’s global systems.” With this observation, there will be some big winners and many lives will improve, but what I can tell you for sure is that those big winners will NOT change the world. They will not “Amazon” disrupt, they will not Google disrupt, they will not Kodak disrupt, they will not Wireless telecom disrupt. They just simply will not replace the massive infrastructure and ecosystem on which so much is built, the current broken system, with a new, fair, and all-inclusive system in which the world population can grow through the coming decades and centuries.
What Will Drive the Disruption?
We at BanQu don’t believe there is one solution or one idea that is so great that it will drive the entire transformation required to move from the archaic, caste based financial services system built for the industrial age, to the new, identity-centric based system built for the future in which people, not companies, decide how they will exact commerce with each other; similar to the way it has been done for millennium.
We do, however, believe that there is a fundamental flaw. An error in the design that exacts so much of the problems that remain and force millions to fight to provide an equal and fair landscape for the world’s population to interact economically, which in turn leaves billions behind.
The flaw is that identity needs to be at the center of a global system, a global network, in which relationships are created, information is carried along as needed, and interactions between relationships occur on a 1 to N basis with the information that both parties deem necessary to enable an exchange of monetary value to occur.
The flaw is that identity needs to be at the center of a global system, a global network, in which relationships are created, information is carried along as needed, and interactions between relationships occur on a 1 to N basis with the information that both parties deem necessary to enable an exchange of monetary value to occur. Individuals, not corporations, should decide what is required to transact and provide the trust that is needed to complete an economic transaction. This network must be at the center of the global economy, not ancillary to it. In the current FinTech outline above, this approach underscores most of today’s attempts to deal with identity. Companies are trying to bolt identity onto today’s global economy. This simply won’t work.
Of course, the view outlined above is fundamental to the BanQu approach. It will, however, take many FinTech companies to re-engineer for the future. Fundamentally, a dialogue that outlines the poor design of the past must be center to FinTech. Educating and aligning efforts for the future is a must.
Follow us here at www.banquapp.com for more on this subject, or reach out to us anytime to discuss this topic.
Also published on Medium.