Welcome to our course on FinTech Foundations and Overview
In this session, we'll be talking about FinTech technology in
the area of smartphones and other aspects of consumer tech
Now, we talked a lot about
various different technologies that have enabled many FinTech applications
One of the most important technologies to enable FinTech in the evolution of FinTech
the emergence of FinTech and the booming growth of FinTech
companies and applications is the advent of the smartphone
The smartphone was introduced by Apple and Samsung at about the same time
Android and Apple operating system at about the same time
almost in the same year
as the financial markets melted down
So, in 2008, we had a crisis
a crisis of the banking industry
a crisis of the finance world across the globe
It led to a global recession
a downturn, difficult times
but that was the beginning of smartphones as well
and that led to an opportunity, a booming opportunity
As smartphones proliferated, and people said
"We love having the power of a supercomputer in our pocket
the power of a old mainframe computer at our
fingertips," this transform the feeling of users about computing power
I've heard some young people express this that
"Our parents didn't have tech."
Well, they had tech
They just didn't have a smartphone
But to some young people
that feels like the same as tech
So, if you were to say FinTech
maybe what you should say is a bank on your phone
So, if you're not catching the power and the capabilities of smartphones
you're missing a big piece of this revolution
So smartphones matter
They're almost ubiquitous today
very broad across society
The prevalence of smartphones across the planet is of
the scale and maybe even larger than
the prevalence of bank accounts for people across the planet
This is very, very broad
People in villages without banks may well be
using smartphones and in many cases are and are using them as substitutes for banks
So, smartphones are ubiquitous
and they're very, very powerful
This capability brings to life
new capabilities on the fingertips
and the convenience of users that didn't used to exist
So, ignoring the power and the transformation of smartphones in society is
like ignoring the capabilities of
an ATM to change the relationship between a customer and a bank
An ATM change the nature of banking in many ways
made it much more convenient, much more powerful
It was an enormous transformation and the feeling
interaction, accessibility and convenience of banking
Smartphones are enormous, and they're transforming
the power and the feeling of information goods in general
While banks were busy worrying about surviving
and worried about new regulations
and worried about a global meltdown
many apps providers were having fun developing new games
new marketing capabilities new different apps of variety of types
Then they said, "Well, what about finance?
Can't we change finance?"
New apps came out in finance
A lot of new FinTech apps leverage smartphone capabilities
Even things you might not have thought of as
smartphone-enabled are enabled in their popularity and convenience
When you look at the success of a cryptocurrency
like bitcoin, it couldn't have happened without smartphones
You could do bitcoin without smartphones, and they did
That's eminently possible, but it is nowhere near as convenient
It is impossible to have the popularity, the growth
the broad acceptance that we have without the ease of using a smartphone
That's true of many
many different types of FinTech apps
We had branchless banking long before there were apps or smartphones
Ten years before there were smartphones
we had branchless banking
Banks had already developed digital payments
digital checking accounts, online checking accounts
Not a problem, banks were able to do that and adapt well
To some extent, I have fallen into this trap
I teach a course in e-commerce
and I'm thinking about e-commerce applications
and I'm working with a group of students coming up with a brilliant idea
I said, "That's a lot like what this other company is doing.
So you need to differentiate your proposal for
your new business idea from what this other business is doing."
A young student looks at me and says, "Oh, no, no.
That's a website. We're an app."
I thought, "So what?
Website, app, same thing."
But it's not, it's not at all to the end user
You may look at an app which is easy to use and say, "That's phenomenally different."
That's like saying a branch teller does the same thing that an ATM does
Well, that's true, but I might 10 times more prefer
to interact with an ATM than I would a person
particularly if there's a line in front of that person
My user experience is entirely different
Both give me cash
both do the same thing
But the feeling as a user is quite
different between dealing with a person at a branch window
which may or may not have a line and an ATM
which may or may not have a line
So, but the user experience in general is different
The convenience is different
So an app is a different world to many, many users
It's just not the same thing
I kind of missed that at first
I've come to recognize that the feeling of an app
the convenience of an app
the value on app is transformative enough to defeat
a similar e-commerce type app that's on
a website if they're not migrating to a new more flexible capability
So, banks may be doing things with Fin
maybe doing things online
maybe doing things they think are advanced
but you may be passed by because someone else is doing something easier
more convenient, more useful
better linked with something else
So, better more convenient features and
capabilities tied to a smartphone or a wallet or two other applications
So, we see, for example
linking your smartphone together with your social media
together with your network of friends
leads to WeChat becoming WeBank
becoming a major payments system across the nation of China
Becoming a very powerful and viable and sustainable alternative to Bank of China
Bank of China can't now say, ''Oh,
we're going to take our ATMs and put them online,
and make it an app and get those customers back.'' They're coming back
It would be extremely difficult to get them back from
Alipay and WeBank from where they are today
That's become a very sustainable and difficult to undo
FinTech transformation of payments and currencies across the nation of China
Today there is more payment in currency, in society
in digital financial payment systems than there is in physical cash
That's phenomenal, and a transformation over
a period of about five years from going from dominance of
cash or debit cards to dominance of electronic smartphone enabled payments applications
This is not although
this world is more than just smartphones
and that's 10 years old
What's coming? What's the new tech?
Theodore Henry King CLARKAssociate Professor
