If you are a banker or fintech leader and you get to the end of Chapter 8 of this book, thinking, “What is the point? I should give up now”, don’t! It gets better, trust me!
The Great Transition: The Personalization of Finance is Here is the first book of Emmanuel Daniel, a widely travelled global thought leader in the banking industry and the chairman of The Asian Banker.
While bankers and fintech leaders will get the most out of this book, it’s written in a way that anyone can understand and relate to.
It also explains some complicated industry terms, such as Web3.0, decentralised autonomous organisation (DAO) and blockchain\smart contracts. In particular, APIs are well explained, along with how the finance sector misused them to the sector’s detriment.
The book also simply explains what a central bank is and how they work, something that fintech leaders will find interesting.
A reference I loved was one to Douglas Adam‘s Hitchhiker’s Guide to the Galaxy concerning banks’ marketing campaigns professing personalisation.
Talking about the use of dollars as the global currency, an interesting point is raised, if the US finally digitises the dollar somehow, would all other country’s CBDCs need to be redesigned? But then, will CBDCs matter when their most significant competitor stablecoins are growing in number and adoption (72 at the end of 2021)?
Fear of missing out (FOMO)
A fascinating point raised in the book will appeal to my investor friends. It alludes to the fact that VC investment reduces innovation in the sector rather than supporting it, based on the herd mentality and FOMO effect. Also, rewarding the acquisition of banking licences rather than navigating regulation could be seen as anti-innovative!
It quotes Antonio Garcia Martinez on venture capital: “a hedonistic world of private institutional capital of too much money and too many half-baked ideas in the hands of too few good people”.
The incumbent banks are no better, referenced in the book as using marketing budget (not technology budget) to run hackathons and innovation programmes, generating PR, Ideas but with little thought to the poor entrepreneurs with their houses and lives on the line.
When delving into the benefits of blockchain and data, the book discusses the fact that blockchain technology appears to facilitate the integrity of an audit trail as all information is held by transacting parties; however, the intention of a transaction can never be known, allowing it to be hidden from AI pattern algorithms and perfect for carrying out deceptions.
When talking about balance sheets, the book discusses the stories it tells of an incumbent bank. Still, it also documents the rise of the neobank, which, without adding lending or trading to its balance sheet, will most likely result in never hitting profitability.
Change still to come
Drawing parallels to the music industry and what Napster and Spotify have done, the book reminds us that finance is yet to experience its transformative moment, still hiding behind traditional banking licences and regulation, much like the music industry’s failed Digital Rights Management policies; its time will come.
The book talks about reimagining credit and raises how the west criticised the east’s use of gamification of credit, but are the West’s tactics for consumer use of credit cards and buy now, pay later (BNPL) any less addictive?
At the start of this, I suggested the doom at the end of Chapter 8 that I and many others might have felt that there is no reason to carry on in this financial services sector. However, the final chapter turns this around. I don’t want to comment on this, as it would be like ruining the ending of a great work of fiction.
This book talks about where we started and where we are (warts and all) but, most importantly, gives questions and ideas of where we may go….