The multiverse of money

I find it hard to believe that some commentators are still talking about BaaS and the great unbundling of banking. The reason? Well that was the conversation we were having fifteen years ago. Today, the discussion is much more around embedded banking that is intelligent, ubiquitous, everywhere, anywhere, anytime … except that I was having that conversation thirty years ago!

In other words, things have not changed much although everything has changed. The only real change is that 30,000 visionary entrepreneurial founders have used the power of technology to reinvent banking. That’s the biggest change. But that’s only because 30,000 visionary entrepreneurial founders were watching the trends, the vibes and where things were going, and have exploited them.

So … what’s next?

What’s next, imho, is the multiverse of money. That has nothing to do with Spiderman, Doctor Strange or gaming; it’s a multiverse of money that works for you. It’s your choice what you use and it’s your choice as to which value exchange mechanism you believe in.

You can use cash, wire, CBDC, cryptocurrency or anything else that works, and nearly all of it these days is just a digital exchange of messages … but it’s a digital exchange of messages between a multiverse of providers. Money moves from issuer to card to API to acquirer to bank and the whole network is impossibly complex and connected … but it works … or does it?

As we move into this multiverse of money, sprinkle in a few more options like crypto. As I blogged the other day about Apple Pay and Revolut, both are now adding cryptocurrencies to their platforms. This means that money is moving across so many different providers that there is a multiverse of choice but, equally, a multiverse of risk, as mentioned the other day in the confusion of money.

In fact, putting it plainly, money is just fragmenting into a value exchange system that is wide, diverse and difficult if you determine to use such options. Taking it further, most humans are pretty simple and just want a simple choice to move money from A to B. So does this multiverse of money make life better, easier and simpler, or is it making it harder, more complex and difficult?

The core of that question is whether it is easy when something goes wrong to find who is at fault, and that’s the core of where I usually come back to. For example, blogging about APP (Authorised Push Payment) fraud the other day, the big issues are around this complex labyrinth of the multiverse of money and finding out who allowed who to do what.

In some ways, these things do not change – we always want accountability, traceability and transparency – but the big change today is that a payment is no longer a payment. It's a data exchange. The good old days of immediate value transfer via cash as a physical interaction are gone, and the key difference is that a cash payment was 1:1. Today’s digital payments may be 4:1 (the four-pillar model of card exchange) or even higher.

The more layers we add to our payments models, the more complex it gets but, as long as banks are happy to be accountable for the £415,000 exposure for each transfer that this implies, we shall continue to expand and diversify.