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?
