2023-10-05 17:04:08

Next-Gen Financial Services Must Ensure Fundamental Change, Not Superficial

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Nasdaq
By Guest Contributors

By Hatu Sheikh, co-founder ofDAO Maker

Fintech promises tocompletely transformhow people experience finance. There has been much progress on this front in the past two to three decades. Banking services are now available at consumersfingertips,anddigital payments have soaredpost-COVID-19. But despite everything, the number of unbanked people worldwide has improved only marginally, from1.7 billion in 2017to1.4 billion in 2021.

There is clearly a gap between the expectations from fintech and its realities. This is because mainstream innovations have mostly disrupted legacy systems only on the outside. The internal logic, principles and structures i.e., the roots of most problems have remained unchanged. That is why next-generation financial solutions must bring fundamental changes rather than superficial ones.

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One might wonder, though, whether a radical change at the fundamental level is at all possible. Yes, it is possible, thanks to emerging financial instruments, services and platforms powered by blockchain technology.

Radical change isnt utopian (in finance)

Most people believe radical, fundamental changes are impractical or even impossible and utopian. This view has its merits, with much historical evidence. And till the mid-2000s, it would also apply to finance and financial services. But not anymore sinceBitcoins introduction in October 2008.

Bitcoin ushered in a new financial era by enabling a fundamentally different form of money. It marked the beginning of radical change in finance as the first stable peer-to-peer payment system without any centralized control or governance. This laid the foundation for the subsequent movement towards decentralized financial systems that disrupt legacy frameworks and processes.

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