The Forefront of Financial Innovation Belongs to Tech


This week, The Wall Street Journal reported Apple's plans to offer peer-to-peer payments for its customers. Of course, between this news, Apple Pay, and the dozen other non-finance companies entering the financial sector, this comes as no surprise.

If you ask me, there are two super interesting takeaways from this developing trend of non-finance companies tackling the financial sector. First, I'm intrigued by the way non-finance companies have been pushing innovation and change within the finance sector lately. To date, a lot of the financial developments taken by non-finance companies have centered on payments -- e.g., Facebook payments, Google Wallet, WeChat payments, and Apple Pay --  and this is an analogous effect to what has been playing out in the banking space, as non-bank companies like Lending Club, OnDeck, Wealthfront, and Vouch are introducing new approaches to offering consumers financial services that used to be accessible only via bank branches.

All of the above are microcosmic examples of a larger theme: financial innovation isn't just being driven by traditional financial service providers; it's also coming from tech companies who have built loyal consumer followings and are now offering financial services in novel ways.

Second, from a payments industry-insider perspective, it's interesting to note that the disruptive, innovative tech companies of the 2000s (PayPal) are now ripe for disruption themselves. For example, Facebook's integration of payments into its Messenger App is indicative of a secular trend towards the integration of financial services directly into consumer experiences.

This is a trend as old as commercial exchange itself. Consider the act of buying a car: Why make a consumer go into their bank first to get a loan when the car dealership can offer to underwrite a loan right on the spot? Facebook is doing something similar by bringing payments into their Messenger app so that users don't have to leave the app to split the cost of movie tickets or pay back a friend for lunch. You're already talking about products and experiences to buy with your friends, so why not take care of those payments right in the chat window too?

I believe this kind of integration with financial services will continue as we reach new levels of fluidity and access among economic exchanges. It is a change I for one am particularly excited to witness and to be apart of.

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