New Money Review podcast

New Money Review podcast

Paying for the new cold war

June 14, 2019

In our latest podcast, Shamir Karkal, chief executive of fintech firm Sila, talks about payments, fintech firms’ valuations, monopolies, Facebook’s new Globalcoin, the intensifying technology cold war and blockchains. 

Some highlights from the podcast:

Europe as a fintech hub

“The number of innovators, the amount of innovation and the infrastructure for innovation is happening so rapidly, much more rapidly than in the US, where the pace of change is now slower than in Europe.”

Fintech valuations

“Measured against the whole financial services industry, fintech still has a small market share. But the story of innovation is that, when change is happening at an exponential pace, for a very long time it seems like nothing is happening. And then in a few short years everything changes.”

Payments and settlement

“Payments will get embedded into every part of your life. If you have spent a bit too much on a night out, maybe an Alexa app will warn you next morning at breakfast to rearrange your finances to meet your next rent payment. And more and more of the apps will start working together.”

“The world will become more customer-centric and more about creating amazing experiences. That’s all people will pay for. And the power will move from banks and financial institutions to people.”

“The clunkiness, the disjointedness and all the problems of the traditional settlement systems are the barriers to entry into the business of these developing [fintech] giants. It takes a long time to figure it out, but once you do, you have a big advantage over the next competitor.”

“It would be nice to see global payment systems being built by international consensus, that are state of the art and being deployed across multiple geographies at the same time. But you don’t even see that happening in one country, the US, let alone internationally. That’s the promise of blockchain, but those technologies are still very early in what could be a 50-year journey.”

A massive power shift in finance

“Out of the 30,000 banks globally that control the $15trn payments pie, only a few hundred will survive in a decade or two. But you’ll have a few large platforms and a few million apps.”

“Almost anything that Facebook launches will be massively successful because of the size of their user base. But they have some serious trust issues. Especially when it comes to money, the trust factor is hugely important. Their new payments coin will probably end up working on a regional basis.”

The new technology cold war and blockchain

“If history’s any guide, the new technological world war between the US and China won’t be fought in those countries. It will be fought everywhere else, in Asia, Africa, Latin America and maybe in Europe.”

“During the last cold war between the US and USSR, India tried pretty heroically not to be aligned with either side. Something similar is happening now in digital finance—India is pursuing a third way, not the US model of having no infrastructure, nor the Chinese model of a privately owned infrastructure, but building a state-of-the-art infrastructure as a public good.”

“I do like to believe that the blockchains will get there. And if there is one global payments system, I hope no one owns it or controls it, that it’s open-access and blockchain-based.”