Long Take: Is Apple Wallet's Open Banking integration a fintech extinction event?
From ancient sharks to Apple's dominance, deciphering the future of the industry in a digitized, cyborg world
Gm Fintech Architects —
Today we are diving into the following topics:
Summary: Sharks, once apex predators, now face decline, contrasting with the rapid evolution and growth of humans, attributed to our general intelligence. Drawing parallels in fintech, specialized ATMs grow in underbanked areas, while adaptable smartphones, embodying human-like versatility, reshape global finance. Apple's embrace of UK's open banking, merging bank data with the ApplePay wallet, hints at a future where standalone bank apps might become obsolete. As tech giants potentially adopt Web3 wallets, they could overshadow national regulations, heralding a future where generative AI shapes global finance.
Topics: Apple, Web3, banking, big tech, artificial intelligence
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Narrow and General Intelligence Wetware
Let’s have some fun today. It’s that kind of crisp fall day.
Check out this fish clump of ocean death and destruction.
Sharks are super competent for their ecological niche, and have been the apex predator for 450 million years. That’s fantastic design and effectiveness, don’t you think? And yet, this wonderfully adapted underwater teeth monster is not doing so well in terms of its population and survivability. Especially over the last 30 years, you can see the population trend down over time across a variety of species.
Consider this animal now.
This highly ineffective and unthreatening baby mammal has had tremendous success from an evolutionary perspective. Its population has exploded from 1 billion to 8 billion in the last century and change. Why? Putting aside the tomes of Yuval Harari, what line can we draw between the shark and the human?
The answer lies in the nature of consciousness and general intelligence. Humans have powerful cognition that is deeply malleable and context dependent. We direct our attention not merely according to instinct, but to build a model of the self, and update it throughout our lived experience. We render our experience and our view of that experience in the magnificent structure of the brain. See some of our prior writing on this below.
We can think about a task, about the thought, about the thinking about the task, about the thinking about the thought, about the thinker behind the thinking, and so on. We can direct our mind super-powers at any task or subject, and adapt to its demands, no matter how grounded or abstract.
Animals, especially those early fish monsters, do not do this. They are optimized by evolution for an environment, and there they reside in instinct. Such narrow success is powerful, but collapses when pitted against the broadly-thinking-processing monkey.
Narrow and General Intelligence Software
Now let’s play this game in our fintech backyard.
Consider these beauties, shining in their mechanical splendor. Made of hardy metal, protected by a secure money dispenser mouth, equipped with nice fat plastic buttons. What more could you want from your bank than this profound money machine?
The number of ATMs is still growing, filling up cities and countries with their glorious cash dispensing favors. There are around 4 million devices across the world, growing most aggressively in regions with low penetration of modern digital banking services.
If the ATM is our pre-historic shark, what is the modern financial mind?
The iPhone install base is over 1 billion people. The device itself is weak and fragile, just like a human baby. If you drop it, it shatters. If you mess with the hardware jacks, it loses its powers. If you mess with its programming, it breaks. And yet, somehow, this thing is far more relevant to our lives — financially, economically, and broadly — than the ATM.
The answer, is of course, obvious. Smart phones are general purpose computers, and they have the tools to support general intelligence. We can use them for anything, and the software they power, distribute, and execute wraps like a cybernetic blanket around our minds.
The general intelligence protocol will outperform the narrow intelligence protocol.
The general intelligence agent will outperform the narrow intelligence agent.
The general AI will outperform the narrow AI.
It just takes time to play out.
It takes time for restaurants to start serving shark meat as a delicacy. Bon appetit!
The Role of Banks and Big Tech
It used to be a hard question — how do Goldman Sachs and JP Morgan compete with Google and Apple? Aren’t the big tech firms going to come in and eat their lunch? In 2017, when we were struggling with this question, the innovation spaces of open banking and embedded finance were still a blue ocean of possibility. It was not clear exactly how the structures would form and play out.
We don’t have all the answers now, but we certainly have more.