Due to the current climate, we are unsure when the next EEA London Meetup can safely be scheduled. In light of this, we thought it would be the perfect time to take a look back at past Meetups and give you a quick recap!
At the October 2019 EEA London Meetup, we were pleased to welcome Lex Sokolin, Global Fintech Co-Head of ConsenSys, who is no stranger to the EEA. Lex always provides much food for thought with his analytical perspective of the Blockchain space.
To begin, Lex started with some current news of the time that involved Chime, the banking app. To summarise, when Chime had an outage, 5 million customers were left in the lurch with no way of accessing their accounts. He pointed out that Chime is a mobile app, they don’t do any banking other than integrate into an API. The API is provided by a company called Galileo, a software company, that resells a banking product provided by The Bancorp.
If you consider the valuations for each company, you can clearly see a disconnect between the value provided and the investments made. From this example, the value of the fintech helping to solve the manufacturing of bank products is undeniable. Lex was of the opinion that this will help to mould future work in programmable blockchains and financial services and went on to explain how...
The significant growth of financial services over the past 40 years was also highlighted (it now represents 20% of the total gross domestic product in developed economies). Fintech companies have responded to this growth by cross-selling several products. Apple, Facebook and Amazon have developed and incorporated fintech elements into their products. Prices on the consumer front have been driven down due to this which in turn has affected corporate business.
United States Gross Domestic Product, by sector, 1947 to 2016 (https://www.darrinqualman.com/deindustrialization/)
Lex then posed the audience a question. Despite the amount of progress, price pressure, competition and venture funding in the fintech space, why hasn't it had its Netflix or Uber moment?
The most disruptive moments in technology, Lex explained, have a common factor - there were no manufacturing costs involved. The fundamental keys to these movements were digitisation and distribution. This fact is reinforced if you consider Google Ads, Spotify and Uber. Once free of manufacturing costs, thanks to digitisation, they were all able to successfully harness a niche market.
Programmable blockchains provide the ability to manufacture financial instruments inexpensively. This is the solution for financial services and one that will minimise the hindrance of manufacturing processes. The use of blockchain to create banking, investing, payments and insurance products which are integrated and interoperable means that they could simply be plugged into fintech, bank and tech company engines for distribution.
“...the use of the blockchain “public ledger” will go on to become an integral part of financial institutions’ technology and operational infrastructure.”
But where to start? Lex strongly believes that the best way to set this in motion would be the industry to agree on both data standards and where the data will be stored. When finalised, workflows can be built.
In conclusion, the huge growth in fintech and the increasing GDP has created the perfect tailwind to bring finance to Ethereum. Lex is convinced that the decentralized world will continue to get stronger, broader, have more functionality and become more interconnected. Eventually, it will assimilate all of the components of financial institutions today. The important thing to consider will be the operating system on which these things will run, let’s hope it will be Ethereum.