The after-crisis period that changed consumption and finance forever

Low returns lead fintechs and other services to focus on 1 service: turning into a revenue generation platform is hard, making aggregation a hot fintech trend for the next 18 months.

Grab taxi platform launching a wallet, Didi venturing in credit scoring business, Spotify partnering with Samsung — all these news items demonstrate a combination of ability, need, desire for additional revenue for platform players: a category that appeared thanks to:

  • Inability of incumbents in a particular segment to demonstrate simplicity or new pricing ability;
  • Diminishing returns from scale amid tech, processing power and delivery channels available to all;
  • Cheap debt financing expansion of platforms, both increasing velocity and momentum but also burning capital to fight for the same user;

Advancements in tech, its ability to receive, process and deliver data with granularity sometimes on par with physical presence have rendered obsolete the advantage of physical networks, at least for menial things: where for large transactions users would still want a secure function of a physical presence and communication, paying with your card that you received remotely for groceries is no longer outlandish. Nor is insuring one belongings, or selling them with secure exchange of value, or instant zero-FX when travelling.

The promise of new technology was to demonstrate not just that it’s better, but completely different: freeing user to only enjoy consuming, where originally friction has been the stop-factor to relentlessly engage in consumerism.

The reward in this new model is data: often overpriced it’s still fought for to give users the soothing experience of comfort while increasing the bargaining power platforms start to have with providers: no longer major ones like Amazon buy from certain producers: they accelerate their private-label development, buoyed by transaction knowledge and control over delivery — and switch producers to themselves fight for consumers while buying business services.

Platforms win through aggregation, analysis and orienting more on B2B — the end-game for platforms will be in reinventing the unseen part of the equation — B2B while maintaining user satisfaction at the B2C layer.

Decoupling and recoupling:

According to a recent article in the Economist, the experience of purchase is now decoupled from the asset itself: it is being delivered through remote channels, shown through a variety of interfaces — AR, VR, its characteristics molded by AI, risk-profiled through data aggregation and brokerage — so that one gets an originally complex service peeled and distilled.

Those able to simplify the originally complex service — creating stress, adding to anxiety — get increasingly loyal user-base lucky to couple their desires to consume them as they would their morning coffee and their emails.

Once decoupled — the user having the ability to compare spending through different mediums, unify the spending profile on one platform — provide the ultimate utility to platforms being able to target representative behaviour with services users would be more willing to accept.

The competence to compete successfully with aggregators is yet to be developed as bank profit centres fight often between themselves, where both fintechs and aggregators care about their ability to sell best products based on available data.

The rebirth of a wallet:

We are effectively seeing a re-bith of a wallet: originally designed to do payments better than banks, its function has evolved to monitor aggregated spending and analyse data:

  • selecting best means of payment and offering new should they lead to improved spending, saving, developing profile for best terms of lending etc
  • protecting transactions as they happen: the utility function of payment is separated from the service and loyalty layer.