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.
So.
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.
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