Fintech
What is NOT hot in Fintech?
In discussions with other investors, we were talking about what is interesting and what is not interesting in fintech. What’s hot I discussed the other day. What is not is today’s discussion. Our conclusion was that digital banking, neobanks and challengers, BaaS, payments, lending and other well-trodden fintech sectors are no longer hot. Been there, done that. These are the areas where investors are fed up, as they have been getting pitches from these areas for years and yes, they feel they have been there and done that.
Hmmmm.
I wasn’t happy with that vision.
When we say that AI and cryptocurrencies are hot and payments and lending are not, there is a problem. What if we integrated cryptocurrencies, payments, artificial intelligence and lending? Couldn’t you make it hot? That’s where I come from: everything is change and everything is progress. Therefore, nothing is not hot, since everything changes every day. Does this mean there could be another new NuBank or Stripe? Um… probably not. But there could be new partners with NuBank or Stripe bringing AI and cryptocurrencies to the party.
This is why banks and new banks are always looking at innovative start-ups and trying to understand whether they can compete with them, partner with them, acquire them or ignore them. In any case, there is always something new developing and happening.
Interestingly, the debate I’ve had a few times now is whether some of these developments will destroy what came before. The latest is whether quantum will destroy blockchain.
It is possible that there will come a time, far in the future, when quantum computers will be able to crack the SHA-256 hashing algorithm used by Bitcoin. However, if such powerful quantum computers existed, they could crack virtually any encryption software in existence.
Source: Quora
What this says is that there is no status quo. There is no stability. There is only change and those who survive are the ones who adapt best to change. This applies to everyone. Neobanks, challenger banks, traditional banks, payment providers, trusted third parties, you name it. They all have the same problem: change is the only constant.
So when we say what’s interesting and what’s not, I’m never happy to talk about what’s not, because digital banking, digital finance and the digital revolution are never over. It is a constant challenge to keep up with change.
In the near future we will have 6G, the metaverse, Web3, quantum computing and more. These are all opportunities for change in finance that could destroy everything we have today and replace it with something else. Change is the only constant (editor’s note: did I already say that?).
So, what’s the takeaway? What to do about it?
Well, the key is to always be one step ahead. As we see these changes coming, experiment with them, internalize them and consider what it might mean for business today and tomorrow. How will all these future trends and technologies change today’s business and what will you need to change in business to embrace these future trends and technologies? There is nothing that isn’t hot. Only yesterday’s business and yesterday’s technologies.