Fintech
What an upcoming wave of diffusion will mean for Fintech
The Great Diffusion
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As we stand on the brink of The Great Diffusion (the topic of my recent Tedx talk), an era that defines the shift from consolidated power to a more decentralized and distributed framework, financial services finds itself at a crossroads.
The coming wave promises to reshape industries, especially the gatekeepers of our capital.
Here are the crucial questions financial services must grapple with in this new era:
How does Fintech fuel diffusion?
A variety of emerging tools are fueling the rise of financial services. Banking platforms allow anyone to offer a bank account, credit card or insurance policies. Companies like Plaid and Open Banking regulations are making account interconnectivity much easier, thus diminishing the value of centralized single-service incumbents.
It’s no surprise that over the past decade we’ve seen an explosion of fintech activity. But what will the next decades bring?
Can inclusion become a fundamental principle?
Technology has the potential to bring financial services to the masses, including those previously disadvantaged or excluded from traditional banking. We have already seen the impact of mobile banking in Africa, or government-backed systems like PIX and Aadhar in Brazil and India. In the US, major fintech players like Chime (where I’m an investor), Robinhood, and others have democratized access to low-cost bank accounts, investments, and more.
The question remains: how will financial institutions leverage this to create truly inclusive offerings?
What innovations will emerge?
Widespread diffusion could shift production away from global integrated supply chains to be closer to home and more local. As a result, the need for new financial products and services is growing. How will financial services innovate to meet the needs of a new generation of entrepreneurs whose needs differ from those of corporate giants of the past?
As freelance and contract work increases, individuals’ financial stability becomes more volatile. What solutions will emerge to provide these workers with the financial security traditionally afforded by full-time work?
Which skills will be rewarded in the widespread future?
As the job market changes, so do the skills needed to thrive in it. Financial services must ask themselves how they will contribute to the education and skills development of future generations to prepare them for this new landscape.
If AI automates financial decisions, how do we prepare our children for the future?
Are local economies the new globality?
If economic activity becomes more local or regional, financial institutions must consider their role at the micro level. How will they adapt their strategies to meet the resurgence of local businesses and community projects?
We have seen a resurgence of bank branches in the United States. Will this be the way to support a more widespread population? Or are there alternative ways to build authentic, trusting relationships with customers around the world more widely?
How will decentralization reshape finance?
The advent of blockchain and decentralized finance (DeFi) is perhaps one of the most obvious attempts to spread financial services, moving us from centralized to decentralized systems. They could overturn the centralized banking model.
But what does this mean in practice? Will peer-to-peer lending become the norm? And how will traditional institutions adapt to a world where the middleman is no longer necessary?
The answers to these questions are not yet clear, but one thing is certain: the industry must proactively engage with Mass Media. Financial services must imagine their place in a world where the individual has more agency, where the local and global are intertwined in new ways, and where sustainability is not just a choice but a necessity.
In this kaleidoscope of change, financial services must find their new identity, not as giants of a bygone era but as agile facilitators of a widespread future. How we respond now will determine the financial landscape of tomorrow. It’s time for the industry to innovate, not just to survive but to lead the era of Big Diffusion.