Exponential Finance and Disruptive Technologies

TL;DR

The disruption of financial services has led to a shift towards embedded finance and the emergence of new players manufacturing and distributing financial products through open platforms.

Transcript

[Applause] [Applause] hello everybody special greetings to the physical audience that is here with us this evening and to everybody around the world that is watching us virtually i'm here tonight with my fintech hat i started my career on wall street right at the tip of manhattan where the symbolic war stood and i'm happy to report to you that the ... Read More

Key Insights

• 😮 The disruption of financial services has already occurred, moving from unbundling to rebundling with the rise of embedded finance.
• 🐕‍🦺 Traditional players and non-financial companies are expanding their offerings and entering the financial services market to meet consumer needs.
• 🕸️ Manufacturing financial products is being transformed by disruptive technologies like blockchain and web 3.0 protocols.
• 🐕‍🦺 Companies across different sectors are embracing openness as they innovate and navigate the changing financial services landscape.
• 🐕‍🦺 Openness is driving the decentralization of financial services, challenging the traditional monopoly of banks.
• 🐕‍🦺 Trust as a service is being redefined by the various players operating with different degrees of openness.
• 💯 Financial services are core to economic activity, and while the distribution and manufacturing methods may change, their importance remains.

Questions & Answers

Q: What is embedded finance, and how has it impacted the financial services industry?

Embedded finance refers to the integration of financial services into non-financial platforms or products. This trend has allowed both traditional financial players and non-financial companies to expand their offerings and reach new customers. It has significantly impacted the distribution of financial services and opened up opportunities for new business models.

Q: How is the manufacturing of financial products changing?

The manufacturing of financial products is evolving with the rise of disruptive technologies like blockchain. Non-custodial wallets, for example, have disrupted the custody service traditionally provided by banks or fintechs. Additionally, web 3.0 protocols are enabling the creation of decentralized applications and services, challenging the traditional monopoly of banks in manufacturing financial products.

Q: What are some examples of companies embracing openness in financial services?

JP Morgan, a traditional incumbent bank, recognizes the threat from fintech and aims to be the best financial services company in the world. Fintech companies like Square are building platform-based ecosystems to enable broader participation in the economy. Big tech companies like Alibaba and Amazon have also embraced openness through their mission statements and internal mandates to become API-first companies.

Q: How is openness reshaping the landscape of financial services?

Openness is a common characteristic among different players in the financial services market, regardless of whether they are banks, fintechs, big tech, or web 3.0 disruptors. Increased openness is pushing the boundaries of trust as a service and driving the decentralization of financial services. The landscape is becoming more distributed, and the question is how extensively and at what granularity openness will reshape it.

Summary & Key Takeaways

• The unbundling phase of financial services has already happened, and the industry is now in the rebundling phase where embedded finance is a growing trend.

• Embedded finance can take the form of existing financial providers expanding their services or non-financial companies entering the financial services market.

• Disruption is also happening at the manufacturing level, with blockchain and web 3.0 protocols enabling the creation of complex ecosystems and the decentralization of financial services.