SingularityU South Africa Summit 2021: Efi Pylarinou - Fintech and Disruptive Technologies
Efi Pylarinou presented a keynote talk on Fintech and Disruptive Technologies at the SingularityU South Africa Summit Online 2021.
Here are a few key highlights from her presentation.
I started my career on Wall street, right at the tip of Manhattan where the symbolic wall stood. I'm happy to report to you that the 10 year old FinTech wave disruption of unbundling financial services has already succeeded. It has disrupted the capital markets, consumer banking, asset management and insurance.
However, this wave is not over. It continues because of the scaling potential of disruptive technologies like blockchain and artificial intelligence. Most importantly, it's all about disruptive use cases, disruptive business models and the changing of business culture. We are now seeing a new trend called embedded finance, which wasn't clear three or four years ago.
Embedded finance has taken two forms in the market. One stream of embedded finance is taking place through existing financial services providers growing their stack of services. For example, Paper Paper is thinking of adding investing services in the U S, or Revolut just announced that they will add a “buy now, pay later” service to their stack. It's also about incumbents such as JP Morgan adding small business lending through fintechs to their offering.
The other form is non-financial companies now offering financial services. For example, Apple in the US offering their own credit card; Google India, offering small business lending; or Shopify offering business banking. This aspect is mainly focused on the distribution of financial services. This has been the predominant focus of the disruption until now.
On top of that, there is the emerging trend of disruption of the way financial products and services are manufactured. Here we see enablers through blockchain. A very characteristic example is non-custodial unwinds. The use of non-custodial wallets has risen exponentially over the past year. For example, MetaMask the noncustodial wallet which now has an estimated 10 million users.
Overall, we have these two distinct layers that are working in parallel at the distribution level and at the manufacturing level. Of course, there are different paces in different regions and different adoption in Africa, in the Western, the East, North and South. Financial services have been predominantly manufactured by banks and now experimentally, but suddenly they're also manufactured by protocols of the time. The banks used to have a monopoly, which they now clearly don’t have any more. Their products are distributed by Fin-Techs and by Tech-Fins in the east.
Due to better tech in general, we are seeing a new phase of disruption predominantly in at the distribution layer. We have also seen that public markets will feature businesses that are offering financial services through platforms or platform based ecosystems or super apps in China and Southeast Asia.
These streaming technologies enable us to create complex ecosystems that are characterized by openness. Let's look first at an example, from the big incumbents, a company that has not been shy to innovate in what I would call more traditional Fintech, but also in the emerging and more disruptive blockchain space. There are numerous examples of companies using disruptive technologies to do things differently such as JP Morgan, Amazon or Polka dots.
These businesses have all adopted very different ways of operating, innovating and using disruptive technologies. The common thread they share is that they all have an increasing degree of openness as a consequence of these different players operating differently.
One thing that has not changed and will not change is the fact that financial services are core to economic activity regardless of where they're manufactured, how they're manufactured, or even how they're distributed.
Financial services are already becoming increasingly distributed and there is the sense that an unstoppable, decentralisation is emerging. It's only a question of at which level or scale it be adopted and how it will reshape the landscape that is already much more distributed than it was five years ago. Think of openness as the Greek diet in the digital world that is transforming our economy.
One thing is certain. Financial services are going to be manufactured in a different way and distributed in a very different way than we know today.
