The future is now
I remember speaking to a client about 10 years ago about embedded finance.
I didn’t call it that.
We didn’t call it that then. We didn’t call it anything.
We were just talking about the things that would become possible in the post-PSD2 world, with open finance coming down the pipe and things like IoT and wearables blowing our minds with all that was now possible.
We talked about situational payments imagining that you could walk into a cinema and the geolocation signature of your devices would trigger a payment if you… you know… don’t move for longer than say 10 minutes.
And we talked about smart white goods that would be connected to the network and insured so that they automatically order repairs or replacements for themselves through the internet of stuffs and smart devices…
So neither of those things happened, but actually embedded payments are very much here. You can walk into shops and walk out feeling like a thief only you are not because you’ve paid, just, without doing anything.
And we are getting used to that Uber experience as consumers.
And we are getting creative as an industry.
Open finance has been a long time coming.
But we haven’t been waiting all this time.
It has been a long time coming because a lot of different things – complicated, difficult things – had to not only come into existence but also mature and develop into being ready for prime time.
The regulatory framework, for starters. What is possible and what, out of the things that are possible, is good for consumers and therefore allowed? What is required? What is out of bounds? How far and how deep does the thinking need to go around data privacy, standards, resilience obligations and minimums? How does what is now possible change the way we think about what is desirable and necessary?
Then we had to understand connectivity in a brand-new way. API-first architectures and data governance and all the work that needed to be done to get the systems right and get the data right but also get the balance right of what I need to build, what I need to buy and where I need to partner… how comfortable I am not owning everything (and that took some time, let me tell you)… getting comfortable with interdependence but also understanding where the line between value-additive proprietary technology and utility lay.
Working out the tech was only part of this journey. Working out where to play, where to partner and where to not meddle was a journey in itself.
And building all this at scale meant we had to learn a whole host of new things.
We had to imagine and then understand and then solve new problems.
Resilience, stability and scalability became next order challenges.
None of our risk matrices were useful anymore. So we needed to devise new ones.
This is exciting stuff.
This is complicated stuff.
The building of the building blocks was not light touch. It took a while. There was no way around that.
And here we are. Poised. Embedded finance and banking-as-a-service and contextual payments are all getting started. They are live and out of the labs and in the hands of customers, but they are not yet the dominant mode. We have all the ingredients to move into a totally different financial ecosystem. But nothing is inevitable.
Lord Holmes speaking at Innovate Finance a few weeks ago said that very sentence and I could have kissed him for it. Nothing is done. We are only just beginning. We have a lot of work to do to get to the next stage and the next phase where embedded finance and open banking aren’t just novelty concepts with some good live use cases we can discuss at conferences. The thing we talk about before we talk about the metaverse.
A lot of work.
Not because things haven’t worked out. But exactly because they have.
That’s how it goes. Opportunity looks like hard work. Success looks like hard work. Innovation and progress and all the good stuff are slow and take a lot of work. Not because we are getting it wrong, but because we are getting it right, so we then move to the next step and there is a lot to do. Moving to platform economics is not Mary Poppins territory. It takes more than a click of the fingers.
So when, at the very same conference, I was asked by my panel moderator “What’s next?”, my answer was: this.
You don’t get to move on yet. This is next. This is what was next 10 years ago and it is still in the process of being next. We are not done with this. Doing the doing is what is next otherwise this won’t be more than a footnote on the art of the possible almanac. Nothing is inevitable, as Lord Holmes put it. And although we are 10 years into this journey, the next stage is not foretold and history has not yet been written.
We need to stay focused, we need to stay the course, we need to build and test and adjust, we need to channel creativity in the right places and have the right regulatory conversations about resilience, stability and cross-border portability because ‘open finance’ is not all that open if it stops at the borders of the sovereign nation when nothing else does… not commerce, not ideas, not the energy crisis, not global politics.
So we have a lot of work to do.
And I am not saying don’t talk about Web3. Do. Absolutely do. But don’t do it instead. Treat it for what it is: a different conversation. Connected but separate. It’s not either or. It’s and. That’s the world we have created for ourselves after a decade and a half of innovation. There is a lot going on. And you don’t get to choose. It’s all happening. You get to choose what to work on, that you do. And what to care about. But you can’t choose what is happening and what is real. It’s all happening. It’s all real. And it all takes a lot of work to become a sustained, lived reality that defines and transforms the industry and the wider economy.
What’s next, you ask? This. This is next. The doing. It takes a while, so it will be what’s next for a while. Until we are done.
Roll up your sleeves.
Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.
She is a recovering banker, lapsed academic and long-term resident of the banking ecosystem. She is chief client officer at 10x Future Technologies.
All opinions are her own. You can’t have them – but you are welcome to debate and comment!
Follow Leda on Twitter @LedaGlyptis and LinkedIn.