We’ve had DeFi, CeFi, ReFi and more, but now it’s time for GeFi.
If those phrases confuse you, we have Decentralised Finance versus Centralised Finance; we have Regenerative Finance, and now we have Generative Finance, or GeFi for short.
What is GeFi? It’s the integration of artificial intelligence (AI) into finance. This all started with ChatGPT which, just to remind you, stands for Chat Generative Pre-trained Transformer (GPT). GPT is a large language model (LLM) framework for generative artificial intelligence.
Wow. I’m tired already with so many TLAs (Three Letter Acronyms) although, just to point this out, I’ve only used two TLAs (GPT and LLM).
Either way, my test is always to go back to the person on the Clapham Omnibus. Do you remember that test? The person on the Clapham omnibus is used by the courts in English law to decide whether a party has acted as a reasonable person would. So, let’s imagine this person on a bus in London and ask them if they understood any of the above? Answer is probably no. Do they need to? Answer is also no, as the idea is to offer a service to the person on the Clapham omnibus that makes their life better and easier.
The theme of GeFi is that you can integrate intelligence into everything you do with money. Today, we have got part of the way there. Most challenger banks offer integration of transactions with Google Maps for example, so you can see where you were when you bought that cappuccino. Tomorrow, it will go far further.
For example, you are travelling. Lots of foreign exchange transactions. Your GeFi app tells you that you are being irresponsible and could have saved $10 if you had paid in local rather than your home country’s currency.
For example, you have a whole range of regular payments, and your GeFi app alerts you to the fact that three of the things you subscribe to have not been used for the past six months.
For example, you arrive at the office and the GeFi app tells you that you’ve driven to the office for the past year and so has your neighbour. Why don’t you carshare?
OK, so that last one starts to get a bit Black Mirror, but you get the idea.
What about if we zoom out and put this into a macro picture?
As a corporation, you have suppliers worldwide. I remember at one point that Apple reached almost 800 suppliers in over 30 countries. How hard is that to manage? Back then, in the mid-2010s, I enjoyed the concept of a company using real-time connectivity to manage their supply chains. Knowing that a component ordered as part of a 10,000 component order is on a ship in the middle of the South China sea will be delivered to the port of your choosing in the next 32 hours is kind of freaky, but realistic.
Imagine how this could change things?
By way of example, back in the late 1980s, I remember a story used in a business book about how Ford were blown away by Toyota’s just-in-time (JIT) processing. The executive team of Ford had flown to Japan, and discovered that Toyota paid orders on arrival if they were correct. If they were incorrect, they just got rejected and sent back.
Why was this important?
Because Toyota had three people employed in Accounts Receivable compared to Ford’s 400 or so.
I’m probably getting the story wrong, but that was the gist of it and so, when you think about embedding intelligence into finance, payments and transactions today, just imagine the phantasmagorical outcomes.
An item is being tracked in real-time, that is delivered with GPS tracing and is paid with immediate effect on safe arrival … is eaten by your dog (that’s what happened to my Amazon order yesterday).
If you want more on that Ford story, I wrote about it six years ago, claiming that your CFO could become an algorithm.
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...