A thought experiment on the sort of fintech experiences and products we’d want as consumers in the distant (or near) future. The thought process is structured as a conversation between an older father and an adult son. Italics is the dad.
So son, hows your financial life going? Everything under control?
Oh, Fiona’s got it all covered.
Fiona manages my finances, she’s on my phone, she is my fully automated financial assistant. Remember those old-fashioned risk-based questionnaires, trying to figure out your risk aversion levels? We finally realized that it was all hogwash and there was a better way. The penny finally dropped that when you are asking about risk preferences, what you are really trying to solidify is what are your financial goals? So Fiona just starts there, with my goals. Fiona knows that there some goals that apply to everybody such as retirement and health insurance and then there are some that apply depending on your life situation. Specific goals could be buying a house and financing your kid’s education. All goals have two simple parameters – how much do expect to spend and when. These goal parameters can then be used to imply your risk preferences. Buying a house is a short-term goal – probably better to allocate to safer investments to satisfy this goal. Retirement is a longer-term goal – you can take on more risk. This is all automatable and Fiona does just that! Fiona then goes a step further – she connects to all my current bank and investment accounts and builds a real cash flow picture of my life. Fiona doesn’t lie, she is direct – she immediately tells me if my goals are outta whack. Want to buy a jet, sorry mate – your income doesn’t justify that – not gonna happen on your current trajectory. She’s kinda like you, doesn’t sugarcoat anything ?
That’s great, so now what Fiona just kinda gives you the full picture of your finances? Is that all?
Ah no, it does stop there. Fiona gives recommendations on what needs to be tweaked in order to meet your goals (increase savings rate, invest in new low-cost investment products). She then goes further and automates the whole thing – just one tap and your plan is implemented and in place. Your investments are re-allocated and she automatically starts increasing your savings rate by shuffling cash into your savings account. She constantly saves in the background – can’t spend what you can’t see. She is a machine that is much smarter and faster than me!
That’s amazing, I wish I had Fiona. What about borrowing?
Ah Fiona talks to Albert for that
Ah, remember in your time there was a multitude of credit products out there, term loans, a line of credit, specialty financing, merchant cash advance etc.
Yeah, I remember that. All that needless complexity
Exactly, all that unnecessary complexity exposed to you, the user. The real complexity was on the issuer side, how to underwrite and how to service – but the user doesn’t care. All they want to know is – what is the repayment amount (implied fee structure i.e principal and interest) and when is it due (repayment schedule i.e term structure)? This is where Albert comes in. Albert has access to everything about you. He is integrated with Fiona – so has a detailed picture of your finances. he crawls to the nether regions of the internet and really knows everything about you. Albert just continuously underwrites. Using machine learning, AI. <insert buzzword here>. He always has ready, a pot of money with your name on it (for a price of course). Since is a machine with infinite computing power, he can also let you configure how you want to pay him back? Want to pay back weekly, no problem, monthly no problem, arbitrary schedule no problem. Albert handles all the math and pricing changes.
That’s like magic.
Yup. Magic is what we do now. Since Fiona knows Albert really well, I don’t ever have to talk to Albert. Fiona handles my finances, she knows when I need debt and whats the most efficient way to pay it back. She does all this behind the scenes. All I see is my goals and purchases ticking along nicely. As a consumer, I don’t have to get a Ph.D. in financial products or investment products. It is all simple, like you say, magic.
There still seems to be something missing, there is still a lot to keep track off. There are so many financial services options, how did Fiona manage to talk to them all? Does Fiona work only for a chosen few?
Good point. Let me talk about Thor.
Great one more character?
Last one I promise :).
Remember blockchain? We finally found a use case made sense :). One way to think about blockchain is that you have a standardized open model to interact and trade any digital assets. Imagine a platform that converts all assets into a crypto tokenized assets that can be traded on a common platform – that’s Thor. Thor came about when the NYSE bought out coinbase for a gazillion dollars. This was the first “cross-connect” of stock markets and the blockchain at a venue (NYSE) and then it just grew exponentially from there. Everything got integrated on the blockchain. literally, everything that you owned was available on Thor to be traded. Not just traditional financial assets such as stocks, but any asset, think subway points and accrued vacation days. Since the great “cross-connect”, Fiona now just talks to Thor and the magic happens. Imagine this, you go to purchase a coffee at a coffee shop and swipe your card, Fiona using thor decides what is the best asset to pay for this coffee. If you have a surplus of subway loyalty points it can be traded for real money on Thor instantly and used to pay for the coffee. Fiona can, in real-time, execute the best asset to pay for your consumables – as it knows what is the best asset that matches your long-term goals. Maybe at this instant subway loyalty points are a better asset for you to liquidate for the coffee than actual dollars as you have liquidity needs in the near future that can only be satisfied by spending real dollars. Similarly, when Albert is due a repayment, Fiona can again decide what is the best asset for you to liquidate/trade on Thor in order to facilitate the repayment back to Albert.
Ah, I understand now, all you need is Fiona, Albert, and Thor. Fiona the orchestrator, Albert solving a vertical need (lending) and Thor the core infrastructure and asset creation and transformation platform.
Yup, now as a consumer I never have to worry about the complexity of financial assets anymore! I just do my day job and Fiona manages it all!