I was flattered to be invited to chair the keynote panel on new business models for banking at the Paris Fintech Forum 2023, because the issue of paradigm shift is being raised again and to me, paradigm shift means a change in business model, not mere refinement of existing model. The predictions of disruptive change are well justified and if I think about some recent conversations in the U.S. there are currently three technologies that stand out as impacting fintech strategies in the immediate future: central bank digital currencies (CBDCs), the Metaverse and Artificial Intelligence (AI). Interestingly, only two of these were discussed in Paris in the Spring.
Many of the issues discussed in Paris were of course the same as those being discussed in London or New York: changes in buy-now-pay-later (BNPL) dynamics, the expansion of embedded banking and open finance, new opportunities around digital assets, cryptocurrencies (and specifically the need for their regulation) , dealing with fraud and so on.
To the specific issue of CBDC, the Governor of the Bank of France said that CBDCs were the fintech development that he was most excited about and there is no doubt in my mind that the deployment of money as a platform will change the sector. There will be new products and services developed on this platform that will move value around the internet, not around banking networks, and it is impossible to imagine that such change will not impact the strategies of retail financial services organisations.
To the specific issue of AI, it is undoubtedly the most disruptive technology in the sector and my view that the paradigm shift comes when consumers (not providers) get hold of AI has been strengthened by recent developments. It seems to me that for most people, most of the time, in the not-too-distant future, their financial decisions, transactions and analysis will be performed by bots operating under relevant duty of care legislation with the co-ordinated goal of delivering financial health.
To the issue of the Metaverse though, I was surprised by the lack of discussion around the opportunities afforded by the new, more secure version of the internet that is around the corner. This wasn’t discussed in the venture capital (VC) panels that I saw either, which I thought was a little odd now that we are only a few days away from the long-anticipated launch of Apple’s
This could easily follow the trajectory of the AirPods, whose shipments roughly doubled in size each year between 2017—their first full year on the market—and 2020 (according to a person who spoke to an Apple procurement expert). Goldman Sachs forecasts Apple’s headset sales at $18 billion per annum in 2028, a significant addition to Apple’s line up of wearables, home devices and accessories that is currently delivering $41 billion in annual revenue. And, as the Financial Times notes, that’s without the potentially high-margin services that could accompany the hardware: if consumers are willing to pay up for the deeply immersive experiences that come with VR, software sales could eventually overshadow the amount spent each year on hardware, as they do for games consoles..
(Coming from a fintech perspective, I am not so much interested in the headsets or the 3D interfaces but the transactional infrastructure that they will stimulate and the consequent demand for financial services, Here, the recent development in generative AI may well prove to be a catalyst, accelerating development in AR/VR technologies for metaverse platforms and citizens.)
These developments may not focus simply on games and pop concerts though. If you look at what is going on in China, the government there was quick to get in on the metaverse, backing technologies and setting rules for the emerging cyberspace. However, while the metaverses proposed by Meta, Microsoft
The communications feature is simply that you put on a headset and talk to an avatar of someone else in your field of view. The copresence feature means someone wearing a headset can share video of the thing they’re looking at with another person wearing a headset, and they can both experience the same thing at the same time. I can imagine engineers and doctors and, for that matter, fashion buyers making immediate use of this.
(In fact I wish I could have used it at the Paris Fintech Forum so that my wife could have enjoyed walking past the Arc de Triomphe in glorious Spring sunshine just as much as I did.)
This implies that alongside in-app purchases, entertainment and games, it will be business-to-business financial services able to exploit the safety and security of the new environment. The metaverse may have been absent from the Paris spring, but the Paris runways will be in the metaverse in the summer.