Brett King: Banking Will No Longer Be as We Know It

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Brett King is an author, speaker and radio host with extensive experience in the financial industry. He’s worked with Deloitte[1], Center for Financial Services Innovation and Breaking Banks Radio. He’s also a Founder and Executive Chairman at Moven, a mobile banking app.

King is an advocate for innovations in the banking system. The main idea he puts forth in his books, interviews, and speeches – most recently at Money 20/20[2] October this year – is that banks are losing their dominance and we’ll most likely see a new era of “financial technologies without banks” services in the very foreseeable future.

We decided to ask him how the banking future looks and whether Blockchain[3] has anything to do with it.

Cointelegraph: You believe that the banking system might become less relevant in the future. Why do you think that and what kind of future is ahead?

Brett King: It’s not just the fact that most of the leading innovations, in terms of financial services experiences, are occurring through technology layers that the banks don’t know. It is proven historically. Look at precedents for the level of disruption we’re experiencing in financial services right now. Try to remember the level of disruption that occurred previously, say with the introduction of the motor vehicle and the systems changes around that – changing the way people travel, access to gas stations to get fuel for the vehicle, teaching people to drive, etc.

If you look at financial services right now, we’ve got Blockchain, we’ve got Artificial Intelligence[4], we’ve got changes in identity management, changes in the way you transmit money, changes in the way you access value stores in real time. Almost all of this experience layer that we’re gonna be delivering financial services through in the real-time world is not owned by banks. So that’s a challenge.

Now you could argue that they’ll be behind the scenes. But the fastest growing organizations that we see globally today are also not banks; they’re fintechs, they’re tech fins like Apple Pay or Alipay[5].

When you look at all the major ways you’ll access financial services in the future, you see that the trend is moving away from going to a bank.

CT: Does it mean banks will no longer be at the forefront?

BK: Banking will just be embedding a new life. But banks don’t wanna be obsolete. So where does that leave them? The key issue is whether you can leverage bank architecture and infrastructure to provide support for the technology-led banking world. The problem with that again is the infrastructure we have in banking today – legacy architectures are not very responsive to the sorts of changes and needs that we have.

CT: Can embedding technologies help?

BK: I think that if you look at 12-13 years ahead, say 2030, I would say that you probably have two billion people that’ll be using day-to-day banking services, independent of banks.  So they’ll be able to survive in the world using non-bank financial capabilities delivered through technologies.

CT: Do you mean that banks won’t even be behind it?

BK: No they won’t be involved in it. There could be banking as a partnership, like Alipay has with a bank, that store some funds for them. That doesn’t make them a priority infrastructure.

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Brett King at the Money 20/20 conference. October, 2017

CT: Do you think Blockchain technology could play a role as a substitute for banks?

BK: Blockchain is an absolute key. Let’s just take one example. I’ve talked a lot about the Internet of Things (IoT)[6] and the technologies involved, allowing IoT devices to conduct commerce. For example, an autonomous vehicle paying road tolls or is paid by Uber[7] for working, or paying for electricity at a supercharger station, or an Amazon drone that you can rent out to deliver your goods and services. And these devices are involved in actual commerce transactions.

But how do you give those devices a bank account? They don’t have an identity card, they don’t have a driver’s license. So, Blockchain is going to be a way for us to provide extensibility for those sorts of use cases that we can’t do with traditional systems.

CT: In such cases, providing an identity to these kinds of things is seen in Blockchain technology?

BK: Correct, and value stores as well.

CT: Fascinating! Last question, why do you think Blockchain technology ICOs are gaining momentum right now?

BK: We’re seeing innovation in a bunch of areas right now with the way we think about ecosystems. You have new platforms emerging, like Amazon, Uber, Airbnb, which within those ecosystems or platforms create their own marketplaces.

Just look at the ICO phenomenon, it’s natural that we’re gonna find new ways of creating ownership structures or rewarding utility and it goes beyond traditional venture capital markets and stock exchanges. Even the formation of the very early stock exchanges in many ways follows the way the ICO market is forming.

When you have Blockchain and ICOs you can have ownership, you can have participation across geographies that aren’t defined by traditional markets. So then the question is why should you limit ownership of the Blockchain business across borders? Why does it have to be in a specific market, like an IPO in the US market or the Hong Kong market; it really doesn’t make sense. We need something like a stock market that links to crowdfunding, which could be enabled on a global basis on an IP.

And if we talk about that, that’s how an ICO looks like. So I think it’s a natural progression of the way we think about creating ownership on the IP layer for these types of dynamic businesses.

I don’t think it’ll be without challenges – legally and so forth, but having said that I think it’s going to be a very interesting evolution over the next 20-30 years.