As a professional working in a bank, I realize that customers do not love financial institutions. Instead, they rely on them to keep their money safe, lend them funds if needed, and move money around for them to meet obligations. This is pretty much becoming a utility. What feelings do consumers have about the company that provides them electricity or internet access? The most important thing is for them to work and unreliability is not tolerated.
The pace of technological development we are experiencing has changed business models significantly in recent years. As Angela Strange, General Partner at Andreesson Horowitz, a Silicon Valley based venture capital firm points out, 10 years ago, setting up a software company was a difficult process. It involved purchasing servers, software licenses and hundreds of thousands or millions of dollars to commence building a product. Today, due to the availability of infrastructure of a service and several tools, anyone can do the same with a laptop and credit card for as low as $100.
This same transformation is coming at scale to financial services. Any company that sells a product or service could very well embed financial services in its offering due to finance as a service propositions available. This has already commenced. Apple has a credit card, Uber offers its drivers financial services and in Africa, mobile network operators offer loans, deposit accounts and other payment services in collaboration with banks and Fintech firms. We should expect to see consumer product companies offer banking as a service at scale and we are already witnessing a surge in the buy now pay later movement. Naturally, some will do this better than others and the competition will drive down prices and drive up quality of services offered. In the end, the consumer will be the winner.
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