Collaboration and not disruption may just be the key:
Sometimes you can’t get enough of Donald Trump. Wherever you go, Trump is! On your email, on Facebook, on LinkedIn, especially from people who confuse LinkedIn with Facebook, on Twitter, on Instagram, on the news feed of the day, it’s everywhere! (Sorry Donald, I had to quote you as an example).
In many cases, I feel the same way when I hear the word separation. Looks like fintech would suck if you didn’t stop something, especially in the land of payments.
Of the hundreds of founders and co-founders I’ve talked to, the theme is the same. Interruption: If you’re not going to interrupt, you won’t understand, that’s popular opinion.
The fragmented world of payments
Seriously, if everyone wants to destroy, the universe will be disrupted. If we think that today’s payments world looks like e-mail, you’ll soon discover that the banking and payments world we live in is very diverse.
Consider the following ten scenarios (both examples side by side):
Legal restrictions in geography
I don’t know if I can email you. I’m not sure if I can send money from my city/county to your city/county
I’m usually not sure how much data is removed from the message when I email you. I’m not sure how much it will cost me to send your money, it’s not clear.
Currency Conversions or Forex Restrictions
If I send an email in Chinese, will you receive it in Chinese or English? Am I sure you will receive renminbi or US dollars when sending Chinese renminbi?
Delivery times are uncertain
Not sure how long it will take to receive my email? I don’t know if I should send the money at 10:00 on Monday, I don’t know if I will receive it?
Lack of an international (open) standard for money transfer
I use the SMTP protocol to send emails. What protocol should I use if I need to send money? I am not sure!
Universal Addressing Mechanism
What is your email address? Okay, I understand! Then send us an email immediately. What are your bank details / mobile wallet details? Why not a SWIFT code? What does “get more credit” mean? Why is there a linked account?
Confirm the email has been read. You have your money!
I send emails from Lotus Notes to your Gmail. I send money from my app/bank to your app/bank
KYC (know your customer) and lack of global KYC standards
I’m sending you a message via WhatsApp or Facebook Messenger. I know who you are. let me send your money
Money laundering prevention control
My service provider has a great message and spam filters and DNS checks, but sometimes email can get stuck in one of them. I will send money, the bank will conduct all OFAC and regulatory investigations to ensure the transaction is genuine.
It seems more logical to fix fragmented payment systems. There are many opportunities (and business opportunities) to play a role in what I would call a financial router, to accept payments from one entity/country and seamlessly route them to another entity/country. Despite its name, the payment gateway functionality needs a lot of updates.
Most fintech startups are determined (if desired) to position their solution globally or regionally and bring us back to the forefront. Who will connect your solution to the rest of the fragmented payment systems and networks?
To cite three examples…
1. It is impossible for a PayPal payment in Bangladesh to end up in a bKash wallet.
2. Boleto payments cannot be loaded onto a debit card in the Philippines.
3. A Dwolla payment cannot go to Venmo.
These types of interoperable transactions are not absent from the larger ecosystem and can represent a lost opportunity in the billions (dollars or a currency of your choice).