When we a transaction is conducted between two parties, the key to a positive response from each is their perception of the value transfer inherent in the transaction. Today that value is reflected by the amount of money that changes hands.

Money, as we know it, is however only a relatively recent tool used to represent value in these transactions. For thousands of years the value in a transaction was measured by barter. Metal coins were the default for a thousand years. Paper was only introduced in the 1200’s in China, and the 1600’s in Europe. The transition to plastic happened in 1950, 4 years after the creation of the first modern computer. So, money as we know it and understand it today has only been a part of human society for a few hundred years (or decades if you mainly use credit / debit cards).

FinTech is the vanguard of the digital transition of money. We don’t know what money will definitely look like in the future, but the concept of value is the central principle that money will continue to enable. Consequently, we can look to the relative value propositions of digital business to give us insight into the trends and dynamics we should be tracking and keeping focus on.

As FinTech begins to disrupt the financial services sector we should beware the inevitable hype that will accompany it, and hold it to a value test. If the value offered is low, regardless of the associated hype, we should disregard the tool and look for an alternative that offers true value.

Digital businesses understand that there is value in social dynamics within the community that uses and supports business. Uber is probably the most well known example of this at work. At the end of an Uber drive the passenger rates the driver, but the driver also rates the passenger. These ratings are visible to other drivers and other patrons. It is possible that a person’s request for a drive may be ignored by Uber drivers in the area because the passenger’s rating is too low. This is effectively unlocking the value of social networking “likes”.

FinTech uses similar user ratings to measure relative risk profiles, whether a potential client is going to be promoted or demoted within the structure, even using the ratings of others to determine is the service a client is offered comes with a penalty or bonus. These social network structures can be “gamed”, but they are more likely to give an accurate, and context relevant reflection of how the FinTech organisation should engage the client.

Apple’s iOS and Google’s Android mobile operating system have delivered a central value of digital business – the value of personalisation. Across the billions of smart phones in the world it is unlikely that any two are set up and played out in the same way. With the ecosystem of an operating system with a back end store of millions of apps every single smartphone user is empowered to customise and personalise their communication experience.

FinTech will ultimately be built in the same way. A platform (possibly based on a mobile operating system) that allows users to search for and enable finance related apps for every part of their financial life. Unlike modern banks that lock you into a one-stop shop and one-size fits all approach to your money, these apps and digital financial services will enable a plug-and-play approach. Ultimately, customers will be empowered to personalise their financial services and money management experiences.

In the old industrial and information ages products and services were not launched onto the market until they had been thoroughly tested and vetted. It was unusual to need upgrades or fixes as they were only available when it was certain they worked almost 100%. In the digital business that is not the case. It is normal to launch a product or service when it is good enough and then patch and upgrade as required. This enables the business to respond to client feedback and responses and tweak their product on-the-fly to meet needs and expectations they may not have foreseen. These upgrade paths unlock the value of constant feedback.

Every FinTech app or platform currently available, being designed, or launched onto the market follows the same principles. Updates are regular and constant. These fix bugs and additional functionality as they track and interact with the patterns and usage habits of their market. This approach gives FinTech a level of nimbleness and responsiveness that the incumbent financial services organisations are not able to match with their top-heavy bureaucratic process.

In all of this the is one overriding value that is delivered by successful digital businesses and will be replicated in the way FinTech redefines our interactions with money – Ease of Use. If a digital product or system is too difficult to use or too complicated to understand it will fail. Digital business is built to unlock the value of simplicity.

Financial services today is the furtherest thing from simplicity. Banks have invested billions in branch networks and infrastructure and have designed products to ensure that they get a return on investment. The implications for banking clients is the need to take time out of our lives and days (generally at the most inconvenient times to us) to go into the bank to conduct our banking needs.

Insurance is no better. In order to take out a risk or investment product there are reams of forms that need to be filled out, and often additional tests or hoops need to be jumped through once these forms are processed.

FinTech is going to be cutting through all of that complexity as it brings its fundamental digital DNA to bear on our financial transactions. The future of money in our digital world will be marked by the inherent simplicity we can enjoy in the way our financial services are provided.

As we transition into the digital age and navigate its inevitable impact on money we need to hold FinTech and other innovations to a litmus test with four elements:

  1. Does it tap into the value of our social network footprint and activity?
  2. Am I held hostage by their design or am I able to personalise it according to my needs?
  3. Are there channels and mechanisms for feedback, and do I see that feedback acted on in regular product upgrades?
  4. Does this make it easier to manage my money and offer me the value of simplicity?

You can also download our latest research on FinTech and the Digital Disruption of Financial services where the TomorrowToday team have identified the most crucial ways that FinTech will disrupt even the most established financial service organisations. Download here.  

Alternatively speak to us about booking Ray for your next event for our Future of Money keynote presentation. ‘The Future of Money’ keynote is not just for bankers (and insurance and other people in the financial services sector) – it’s for everyone who uses money, enters transactions and has a bank account (yes, that’s everyone). It demystifies the revolution taking place in the financial world, and explains how the digital world will change money and how digital money will change the world.

Chat to us about booking one of our team to present our research in our usual edu-taining keynote or workshop format. 

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