A couple of headlines hit me recently. The first is that twitter is going to create a payments system:
Twitter has begun applying for regulatory licences across the US and designing the software required to introduce payments across the social media platform and then, more interestingly, is that Microsoft is going to do the same, but with cryptocurrency. Microsoft is testing a built-in crypto wallet in Microsoft Edge. What is clear is the world of paying, and later much more of finance and banking, is changing. We are entering a world of real-time, global payment systems that brush away local payment systems and account structures. How is that happening?
For example, as the FT reports: Musk has said he wants Twitter to offer fintech services such as peer-to-peer transactions, savings accounts and debit cards, as part of a master plan to launch an “everything app” that incorporates messaging, payments and commerce.
And then, as Bleeping Computer reports: Microsoft is working on a non-custodial built-in Ethereum crypto wallet for Microsoft Edge to allow users to send and receive cryptocurrency and NFTs. Public keys can be shared with others to receive payments, while private keys should be kept secret and can be used to authorize transactions when you want to spend your cryptocurrency.
If I was forecasting the future which, of course, I rarely do (take note), then we are seeing the movement towards everything become online, all-the-time. When I say online, I mean real-time, now-time, this-time. I don’t mean the internet or mobile, I mean it’s just now.
As twitter and Microsoft move to immediacy, payments and banking moves to right here, right now. What that means is that we are no longer expecting delays. We expect right here, right now.
Of course, there are issues around this. What about the correspondent bank and their company? What about the risk? If we allow this, how can we manage it? What happens when it goes wrong?
These are all valid questions, but the movement towards real-time, now-time, all-the-time is unstoppable. That means we need a new financial system to support a real-time, now-time, all-the-time world.
The old world financial system is built upon bricks and mortar. Today’s financial system is real-time, now-time, this-time. That is the challenge.
So, when I look at twitter and Microsoft building payments into their systems, I wonder. I wonder whether the good old banks in the good old world get this challenge?
The thing is that it’s not a challenge. It’s an opportunity.
It’s the opportunity to become something else. Something different. It’s the opportunity to become a new bank, embedded in the world of new finance. I don’t like the word embedded. I prefer invisible. Yet we are at this precipice of banking becoming something that is just there behind the network. It starts with payments, and then leads to credit, deposits, savings and investments. In other words, what twitter and Microsoft are doing is just the start of building a network where banking is a part of it, but invisible.
Invisible banking. That’s the place to be.
A colleague pointed out that my discussion above is about payments and not banking. To be clear, most disruption in the financial system starts with payments: just checkout the history of FinTech ... the thing is that once one area of finance can be upheaved, the rest of the system can be, so I'm thoroughly convinced that everything from treasury operations to share trading and investments will become invisible over time ...
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...