Think piece—longer read: buckle up! ; )
Electroneum as a Next-generation Financial Services Ecosystem
From the layman’s point of view it will not necessarily be obvious the extent to which the banking industry is currently under considerable tension. Yet it is an increasingly recognised and written about fact that its profits remain elusive, margins are decreasing and revenue growth is slowing. All of which is arguably due, at least in part, to the rise of non-banking platform/fintech companies and their formidable capability to disrupt the most profitable aspects of banking value chains.
Thanks to the explosive and unexpected success of blockchain-technology and various other technological innovations of the past decade or so, banks have all of a sudden found themselves not only on the back foot but also behind the curve. Catching up and trying to re-gain some balance in a field increasingly dominated by next-generation—and increasingly data-driven—financial services ecosystems is in fact a rather serious business: It has been estimated that new and emerging players could well capture up to a third of incumbent banks’ revenues by 2020.
As banks ponder and try to predict the way blockchain-technology based new digital currencies (or ‘cryptocurrencies’—to the initiated) are changing the very concept of “money”, they are increasingly having to position themselves as similarly dynamic and multi-faceted platforms which can—or at least could , in principle—bring together financial services, risk management and payment services as dictacted by an enforced metamorphosis into super-agile data aggregators and service brokers. What is rather remarkable, of course, in all of this is that the destination some banks are apparently just in the process of planning to eventually get to—in the hope of remaining relevant— has already been reached by newcomers. Case in point, indeed, is Electroneum and its already developed and ready-to-be-deployed-globally combined offer of a mobile-banking and open revenue platform for the unbanked.
In actual fact all the remaining bastions of traditional banks and banking systems are being eroded rapidly before our eyes. For instance, banks can no longer claim the upper hand in terms of providing the type of coveted but also generally legally prescribed predictive security and compliance that up until now have lent them a special status in society. By embracing and actively implementing KYC, Electroneum has arguably elevated itself to a more or less equal footing with traditional banks in this regard, too—evidencing a level of insight bordering on the visionary by the team propelling its growth. A point, incidentally, which clearly hasn’t been and will not be lost on potential business partners either. By being pro-active and embracing real-life and evolved frameworks based on statutory requirements as well as basic societal values, Electroneum has turned a criticism and potential stumbling block around cryptocurrency applications into a positive and a source of guaranteed business-growth: If you “have” KYC, businesses who “need” KYC will adopt or work with you with alacrity.
Now if you paid attention up to this point, you ought not be entirely surprised by the following suggestion: What if electroneum isn’t simply a cryptocurrency—admittedly operating a hybrid-application of the underlying technology? What if—due to its effectively already built, gradually unfolding multi-faceted infrastructure—we began to think of it as a bank or, better still, a new type of banking infrastructure, indeed a next-generation financial services ecosystem ?
But let’s unravel this suggestion a little.
What is a next-generation financial services ecosystem?
In their ‘LOOK OUT 2020+ BANKING Radar—providing the initial starting-point for the present exploration—Atos, a global leader in digital transformation, identified 10 disruptive technologies that will shape the future of banking. Surprisingly, or perhaps unsurprisingly, three of these areas are already in place and serve as the core elements of Electroneum’s model and offer to its business partners: API Platform, Blockchain and Instant Payments.
Crucially, the Atos paper also argues that banking is at the beginning of a strategic transformation to a ‘platform of service model’, in which the lowering of cost/income ratio, the creation of new revenue streams, the provision of 360 degrees customer engagement and the streamlining of predictive trust and compliance will be key. Areas which Electroneum happens to be already engaged with or is working on—from its cost-saving solution to mobile network providers around the world; to its soon to be released gig-economy marketplace connecting the developed world with the talent and untapped resources of the unbanked; to its partnerships with KYC compliant exchanges.
We may also note that in describing the “road ahead” for banks, the Atos paper concludes that ‘To thrive, banks will need to create the right partnerships and convene the largest ecosystem to enrich their offering, monetize their data and turn it into profit.’ To anyone familiar with Electroneum’s journey to date, the ideas in this recommendation will sound more like echoes than new revelations: The journey to find the right partnerships and to build a large ecosystem is precisely the journey Electroneum has been on all along!
So the overall picture that emerges is pleasantly surprising to say the least: It would seem that Electroneum is apparently way ahead of the pack in terms of creating a fully sustainable financial services ecosystem rooted in already developed, owned and deployed transformative technologies, the types of which banks and banking systems are only beginning to aspire to!
And whether it is right and useful to start thinking of Electroneum as a bank longer term is perhaps beside the point. But what must surely become plain for all to see now is this:
Electroneum as a global financial services ecosystem is not just a remarkable idea—
it’s on the verge of becoming a remarkable fact!
** As the paper explains: a) API platforms are at the heart of any digital strategy to attract ecosystem partners; b) the Blockchain is not only a potential game-changer for conducting business with parties without prior trust relationships but can also revolutionize audit trails as well as the microservice economy; and finally, c) Instant Payments, driven by data and enabling a superior customer experience, will be an inevitable element of our increasingly cashless society.
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