Dateline: Woking, 8th January 2023.

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It’s been an interesting year, to say the least, so now it’s coming to an end I can’t help but look back over an incredibly volatile period. Fintech is here to stay, but it has been a bumpy ride for some. Valuations are collapsing, frauds are rampant and there have been events. Serious events, ranging from war in Europe to COVID to weather. A lot of events, dear readers, events.

(When the British Prime Minister Harold Macmillan was asked what might most influence the future of his government in 1957, he famously replied “events, dear boy, events”.)

Fasten your seat belts, we’re not out of the turbulence yet.

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Whether looking back on over the wreckage of financial markets is of any value or not I couldn’t say, but this seems to be the sort of thing that people do at the end of the year. Whether this counts as the wisdom of crowds or not I couldn’t say, but here are my top 10 Forbes columns of 2022 ranked by the readers...

First, Apple Moves Into Open Banking concerning Apple’s purchase of a UK open banking company and the potential to bypass a lot of the current payments infrastructure by going directly to bank accounts.
Follow The Yellow BRIC Road looking at the potential for international trade without dollars.
What The Zelle Is Going On? concerning the use of Zelle for retail payments - but not in America!
Super Apps or Smart Wallets explaining why I think in Western markets the smart wallet approach would be better. I still feel that smart wallets (shared strong authentication) are a better choice than super apps (shared identity) but hey Elon Musk is a billionaire and I’m not so you should probably listen to him.
From Apple Pay To Apple Paid talking about Apple’s decision to turn iPhones into point-of-sale terminals. Of course you could already accept contactless payments on Android phones but Apple’s market entrance legitimises the sector as it always does. Phone-on-phone action ahoy!
When The CBDC Revolution Comes, It Won’t Be On The Blockchain commenting on early work in the field and expressing my scepticism that blockchains will be used for population-scale central bank digital currency. I remain firmly of the conviction that device-to-device transfer of balances stored in tamper-resistant hardware will be the chosen architecture.
If The Crypto Crash Is Another Tulip Bubble That Is Really Good News which takes a historical perspective to suggest that the regulatory response to the crypto winter, if intelligent, could be of benefit to all of us (ie, not only crypto “investors”).
How Do You Measure Open Banking putting forward my view that open banking is already changing the world of financial services and that the lack of account switching is not, and never has been, a useful measure of impact.
ChatGPT Is A Window Into The Real Future Of Financial Services reinforcing my view that revolution in financial services comes when customers get artificial intelligence (AI), not when banks do.
And finally, coming in at no.10, was New Ledgers, New Business Models And New Opportunities In Micropayments. In the face of all evidence to date, I really do think that a workable micropayments infrastructure (maybe the destiny of the new Twitter?) will enable new kinds of business.

Looking back, I think that the most important of these pieces is no.9, the one about bots. I wrote back in 2020 about the DARPA AlphaDogfight trials in which the robot fighter pilots defeated their human opponents in five dogfights out of five to make a point about strategy and the tendency (as is often said) to plan for the battles of the next war using the weapons of the last one.

This is true in finance just as it is in defence (look at what has been going on in Ukraine). A few years ago, John Cryan (then the CEO) said that Deutsche Bank was going to shift from employing people to act like robots to employing robots to act like people. They put this plan in motion and made big staff reductions while planning to spend €13bn on new technology and "making some humans at Deutsche unnecessary".

But as I wrote for Wired a few years ago, that is not a revolution. That is just banks improving their customer service and making some processes more efficient, as covered in some detail by McKinsey in their November 2022 report on AI on neo-banking. They talk about using AI for hyper-personalised services and the like and I am sure that such use cases will indeed be important. But as mentioned above, the revolution comes when the customers get AI.

Well, we’ve reached that point and are sliding into a world where the financial service providers, their customers and their regulators are all bots. This, it seems to me, is taking us into unpredictable new territory and I am personally fascinated to watch it develop.

Hello 2023

As for next year, I won’t be making any fintech predictions. Well, not beyond these three obvious ones, anyway...

The future’s so bright, I gotta wear VR shades.

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First of all, I am doubling down on the issue of bots. I am certain that many people in business continue to underestimate the accelerating impact of AI. We are seeing astonishing new tools being built on top of the aforementioned Chat GPT and its ilk. The bot revolution is coming faster than I had anticipated! Last year I wrote in Forbes that the battle for future businesses will take place in landscapes across which their bots will roam to negotiate with their counterparts (i.e., other bots at regulated financial institutions) to obtain the best possible product for their "owners" and I see these battles beginning in the very near future.

Second, I’m confident that a digital assets phoenix will arise from the flames of crypto. I rather agree with Goldman Sachs’ David Solomon, who talks about using the new technologies to reduce risks and build confidence in the financial system by making it more transparent and I think that is actually the core to a workable regulatory environment covering both “tradfi” and “defi”.

And finally, I’m fairly sure that the core strategies for most of the businesses that I work with will focus on embedded finance. I rather liked Simon Taylor’s view of this sector as delivering regulated financial products to point of need and I think that a great many customer-facing enterprises will exploit this. Last year Jamie Dimon singled out payments as a specific hill for banks to die on because payments, if banks lose the payments franchise to fintechs (or techfins) and are unable to execute strategies (eg, digital identity) that keep them in the transaction loop then they, have a data problem. He was obviously correct but the impending disintermediation is not only about payments and payments data. A key impact of new technology must be that the role of banks as intermediaries is reduced as fintechs step in, so all kinds of financial services that were traditionally the remit of retail banks will become embedded inside other services.

Well, that’s that. I’m off to put my feet up to enjoy playing Dungeons & Dragons, watching the titanic 3rd round FA Cup battle between Manchester City & Chelsea and making some Powerpoint slides for a meeting tomorrow (a duty that I fervently believe will soon fall to ChatGPT instead of human beings).

Thanks to everyone for their kind words in response to my meagre scribblings and onwards to a great 2023.

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