FinTech Is Finance: The Datafication of Everything

Key Takeaways

If we look around the world over the past 15 years, we can think about 2010 as the fintech decade and we have seen this process essentially of the fintechization of everything. Arjun Singh at Arthur D. Little highlights the idea how over the past 15 years fintech has become the operating system of finance. And I think very much when we think about finance today, we can't really differentiate between fintech and finance. The reality is that fintech and finance are today the same thing and we'll investigate this further later but one of the core aspects of this has been this process of digital transformation of finance but also the digitization of almost everything that we do all across the world. And what this has done is it has created vast amounts of data. Vast amounts of data that as digital storage, digital communication systems have improved and processing power has increased. that these have gone on into supporting the development of processing systems such as artificial intelligence and most recently generative AI. But when we think about the datification of finance, one of the key underlying features has been that we actually have to create the data. And in much of the world, particularly the developing world, the data didn't necessarily exist. We've seen in some cases in the context of China the development of big tech companies companies like Alibaba, Ant and Tencent that have used the internet and smartphones to build giant pools of data which they have then used for all sorts of monetization purposes including supporting finance. And one aspect of that in both cases has also been the development of electronic payment systems. Those payment systems in turn have created vast amounts of data in China. Those smartphones and the bank accounts are in turn linked to national IDs which creates a vast pool of data from various sources linked to a single ID which then provides the data pool which can then be used to datify finance. In much of the rest of the developing world, these rails had to be built. And this has been the process in many countries of building digital financial infrastructure. First, in many cases, things like fast payment systems, instant payment systems connecting billions of people around the world. These have often been joined with digital identity systems systems like India's uh Oadar and in many cases those are then joined together via smartphones and that in places like India where you have that combination of smartphones instant payments and digital ID these are creating vast new pools of data and in countries around the world as they pursue these strategies and particularly in places in Africa, South Asia, the Middle East where there has been historically more feature phones, mobile phones than smartphones. We're now seeing a dramatic increase in smartphone penetration and the availability of mobile data. And this new pool of data is then being joined with fast payment systems data and often interlin by digital ID systems particularly as we move in more and more countries to require a real ID to get a SIM card to have a mobile phone. Now the challenge in many places is not only the use the analytics of the data but the fact that in many countries you don't necessarily have a system for protecting that data. And so we're seeing moves around the world to develop data regulatory systems to develop cyber security systems to develop systems to deal with the everinccreasing amounts of fraud. But also we're now seeing these data rails put together to underly transformative data strategies. And if we look forward, I think in much of the world, particularly those parts of the world that are moving from feature phones to smartphones and those areas where mobile internet is only now becoming more and more available that we're going to see more competition from the telecom's companies in addition to the big tech firms, the traditional banks and the fintexs. And if we want to look forward beyond bringing together the smartphone data stream, instant payments data stream and digital ID data stream. I think over the next 5 to 10 years, the next pieces of our data ecosystem are going to come from health. In an increasing range of countries around the world, health provides a vast amount of data. But it's historically been isolated and often non-digitized. But as health data becomes more and more digitized, the integration of this sort of data with these other data rails will be our next big development. And beyond that is energy. Energy underlies everything. But as we see the digitization of everything, we're now seeing digital pricing of energy use on a more granular basis across ever more jurisdictions. And if one combines payments data, internet, particularly social media data, digital identity linkages, smartphone and telecommunications data, health data, and energy data. This going forward is going to be at the base of not only datification strategies but also for supporting the next generation of artificial intelligence. [music]