Financial technology – or FinTech for short – has been steadily developing ever since the first charge cards, cash registers and money dispensers at banks first appeared on the scene.
Today, there’s talk of Apple pay, P2P lending, POS systems, Crypto debit cards and Bitcoin ATMs, the new batch of financial technology that is upending the entire financial and banking industry.
Even tech titans such as Apple, Amazon, Alibaba, Google and Facebook are entering the digital finance and banking space with financial products to store, save and transfer funds with the convenience of a messenger function, simply from within their own app.
Having the huge benefit and comparative advantage of a massive user base – Facebook currently exceeds 2.2 billion users – the “stealth” attack on the very lucrative payments markets is a thorn in the side of the biggest payments companies such as Visa, MasterCard, American Express, PayPal and Stripe. An average of 2-3% on all global payment transactions is not “small change” and the tech giants are eyeing their fair share of this “sweet honeypot” of payment transaction fees.
From the customer’s perspective, transaction fees have become the norm and accepted as a small price to pay for security and convenience. The days of converting your own currency into different foreign currencies in cash and taking with travellers cheques have all but disappeared because now, it’s just is more sensible, safe and economical to get local money at local ATMs in the country that’s being visited. The same applies to shopping and travel, consumer convenience and the “buy now, pay later” premise always works, until the credit card bills comes through the mailbox.
Now that mobile has taken over on every front, from payments to travel, and from search to booking, the convenient and omnipresent smartphone has become the “de facto” payment instrument of the modern global citizen.
Big corporations have taken notice and are offering their customers all the facilities of paying in digital form, whether online or by using an app, as long as it is easy, fast, intuitive, secure and hassle-free.
A bold vision. A fundamental shift. We believe it’s time to disrupt access to assets and wealth.
Olga Feldmeier – CEO Smart Valor AG
The charismatic and indefatigable Olga Feldmeier - host and key presenter at the “Crypto + ICO Summit 2018” in Zurich – sums it up best when she says that tokenisation of everything will benefit us all.
And she’s doing just that through her innovative blockchain startup Smart Valor AG – a Swiss company based in the Crypto valley town of Zug – that is pioneering tokenisation of digital assets on a grand scale and going global.
This disruptive and paradigm shift from “institutionalised securitisation” to “decentralised tokenisation” will affect the entire banking and financial industry, from asset to wealth management, debt to credit, and everything in between.
Tokenisation will open the “floodgates” to market participation and thus make the global financial markets more liquid, and this will profoundly affect the dynamics of global trade and finance as well as lead to unprecedented economic expansion across the world.
It’s exponential networking effects times a million.
With that in mind, just imagine anyone being able to trade the financial markets and make investments without the need for intermediaries ?
And having access to information and investments that only brokers and bankers – the gatekeepers and purveyors of money – have at their disposal ?
Blockchain investment platforms will enable the mass market investor to genuinely participate in truly profitable investments - the promising startups that are changing the world - from the very beginning, that is, at the seed stage with risk management algorithms protecting investors from the downside.
Wealth creation will take on an entire new meaning and the true winners will be the masses, the financial independent investors that are enabled to participate in the world of finance and investments through tokenisation.
Fighting fraud and avoiding the “double-spending” problem in accounting and trade, has propelled blockchain to the forefront of new technology in finance.
The likes of Visa and MasterCard lose millions each year to fraud and are now developing patents to fight this problem once-and-for-all.
This is “easier-said-than-done” because blockchain is simply not yet ready in terms of speed and scalability.
In simple terms, the current financial systems and networks can effectively process millions of transactions per second, blockchain only thousands.
As this current assumption is written, it may be already outdated because blockchain technology is evolving so fast, that even faster and more efficient blockchain protocols may already be around without anyone knowing yet. More importantly, these advanced systems and protocols can be deployed and implemented very fast.
Aerum is an ultra-fast and scalable blockchain infrastructure that stands out. It’s already developing the nextgen blockchain for payments, swaps and P2P lending, using innovative “petal chains” that are ultra-fast, highly scalable and secure, that can be used by banks and financial institutions around the world and, most importantly, is free of charge.
The key advantage of speed in blockchain is “non-negotiable”, it’s the difference between “make-or-break” of any financial product or service. There’s just nothing more annoying than anything that’s slow on the internet and in relation to money more so, customers simply expect hassle-free and superfast transactions.
The biggest hurdle of any blockchain transaction is the validation requirement and related time factor, which delays the transaction speed significantly. This in turn, reduces the throughput of transactions similar to a “traffic bottleneck”. By using “petal chains”, the speed and scalability of blockchain transactions increases exponentially and in due time, blockchain will be able to process millions of transactions per second and when that time comes around, it will completely replace the current legacy financial systems and networks.
Aerum blockchain infrastructure will then be the stage on which FinTech applications and advanced payment solutions can be built, implemented and deployed.
In accelerating tempo, this rapid advancement of technology will usher in a new era of ultra-fast, secure and decentralised global finance and banking system.
In wealth and finance, the absolute unfair thing is the exclusion of the unbanked and underserved masses.
One will argue that’s not true because you can always access the banking and financial systems around the world as long as you are legal and documented.
And here comes the problem, there are currently an estimated 2 billion unbanked (or underserved) global citizens that do not have access to finance or banking, because they either don’t have a legal status, are undocumented or simply don’t have access to an internet connection. And these people pay the high price in the form of expensive financial products, predatory loans and credits as well as restricted access to cheap funding or affordable banking.
In the industrial world, things are little bit different. Most individuals have access to the internet and online banking, are knowledgeable on the subject matter of finance as well as economics and now how to make or save a penny or two.
For the real savvy, there’s a whole universe of making money the easy way.
One can simply choose from the many online money, banking and investment platforms and “cherry-pick” investment opportunities on offer, the only requirement is, have money in the first place.
Innovative startups are tokenising everything from gold to art, using all the benefits of smart contracts to deliver a digital asset, product or service, directly to the end-user.
Gigzi is an innovative London-based startup that is tokenising raw gold and other precious metals that can be stored, traded or transferred online using Gigzi tokens (that are paired with crypto), or even physical delivery using secure and insured transportation means such as express couriers or Brinks.
Blockchain offers fractional/unit investing by tokenising everything into digital protocol such as ERC20 that allows for anyone to participate without any knowledge on how this protocol works, this technology just runs in the background with smart contracts doing the “right thing” as coded.
Even that Ethereum automates most of the complicated parts of a financial transaction using smart contracts, there’s still input required by the user. Technology startups are fully aware of this and therefore create apps that have a user-friendly and intuitive user-interface that addresses the pressing need of modern civilisation, that is, lack of time and attention.
UX specialists design apps and applications bearing this in mind, and the ones that succeed beyond their wildest expectations, are the ones that have designed a superlative UX – the ultimate goal of any app designer.
Uber, AirBnB, Instagram, Amazon and Apple are primary examples of simplicity and user-centric design, the ultimate differentiator in the digital world.
The traditional financial industry is taking notice and there is currently a fierce Fintech race going on to gain market share by taking advantage of financial technologies as well as appeal to discerning millennials.
FinTech has improved finance and banking on many fronts, but it still has a long way to go.
The coming of age of digital disruption will impact everyone and everything.
Artificial intelligence, machine learning, robotisation, automation and the gig economy will disrupt the global labour market profoundly.
Experts estimate that more than 50% of the labour market will be replaced by freelance, automation and robotics, everything from banking to retail, transport through to logistics, and anything that involves intermediates or brokers. And this prospect is actually very discomforting, considering that technology is evolving at such a rapid pace that there will be further disruption down the line.
To counter the effects of technology disrupting the labour markets, a global discussion has emerged on the subject of UBI – universal basic income – that will replace all social benefits such as unemployment, pensions, housing and social welfare (as well as other social services) and provide for a minimum for every person to live on.
In theory, this sounds great, reminiscent of the good old days of communism, the “collective” taking care of it’s people. The only fundamental question remains, who will pay for all of this?
While experts on both sides of the divide argue the benefits and possibilities, one fact is certain, there is no country in the world at this very moment, that is willing or can provide its citizens with UBI, case closed.
Even resource-rich countries like the United States, United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Iran and Russia - not too mention Hong Kong, South Korea, China, Australia, Singapore and Norway (in the form of accumulated sovereign wealth) or banking paradise Switzerland - do not and cannot afford to offer its citizens UBI.
Because for the simple reason, that productivity will be stifled significantly and the division of labour would in all likelihood be affected so profoundly and unfairly, that is, the “productive” working and paying for the “non-productive”, it could very well destabilise, and possibly collapse, the government and its economy. If not, government money coffers would be depleted so fast, it could lead to hyperinflation “Venezuelan” style – the primary example of one of the biggest oil producers in the world that cannot even stabilise its economy and provide for the basic needs of food and shelter for its citizens.
UBI is just a utopian dream.
The only purposeful objective is the empowerment of the people, through an effective redistribution of wealth using blockchain as well as a fair system of inclusion for the unbanked and underserved in the financial systems of the world.
One realistic and viable alternative for the “common good” would be UBA – universal basic assets – a sort of modern times “collective” where citizens participate in the ownership and revenues of a public utility such as water, sustainable energy, toll roads and other public infrastructures. Unlike UBI, receivers at the UBA end can re-invest surplus cash and create more wealth and prosperity as opposed to UBI receivers that will only be able to survive on the minimum.
Taking it one step further, taxing the digital disruption would yield significantly more and benefit the entire global community. Currently, there is already talk of a proposed “digital tax” on revenues of tech companies, and this could further be expanded and applied across the world. In particular, a high tax on the use of robots could be a great equaliser in the disruption of the labour market.
Tokenising the internet on blockchain would be the ultimate taxation and the perfect UBA concept. Everyone that participates in the “Internet of Value” is entitled to their “fair share” of global tax revenues encoded into smart contract.
Perhaps a far-fetched idea for now, but by all means definitely something to consider in the near future.
In the end, it would just be better to provide economic incentives and support for all citizens of the world to get educated or skilled, in order to produce products and services that benefit the population at large and not just big tech and the rest of the corporate world.
Empowering people is a gargantuan task and daunting challenge but could resolve many of the world’s conflicts by removing the one element that causes it all - money.
Simply, because money buys power and control that doesn’t care about equality or equal opportunity.
Decentralisation will transfer wealth, prosperity and power to the people as opposed to inefficient government, corporate meddling and central bank control. Life’s too short to do otherwise.
Eleftherios Jerry Floros is a FinTech Expert at Rethink Your Digital Future and founder of Elysian Impact Investing, a money super-app and impact investment platform powered by artificial intelligence, blockchain technology and data science. He is also an investor, entrepreneur, thought-leader, speaker and author with a 37 year diversified background in FinTech, finance, engineering, maritime and shipping. His main areas of interest are FinTech, impact investing, sustainable finance, entrepreneurship and digital disruption which is profoundly impacting the global economy as well as our personal lives. Mr Floros undertook studies at the University of Oxford, Wharton Business School of the University of Pennsylvania and the London Academy of Trading.