An article written by Alex Rampell, General Partner at Andreessen Horowitz, caught my attention this week, its premise being that the “final frontier” for fintech will be the disintermediation of the “middlemen” between sovereign central banks and the citizenry they exist to serve. What’s implied, if not stated explicitly, is that we have reached a point in time where technology exists to eliminate the inefficiencies of our legacy banks and banking systems. Further, technology exists whereby the exclusion of so many from the banking ecosystem — particularly the underbanked and unbanked — may be eliminated. Mr. Rampell has made a solid, prima facie case on both counts. After all, to accomplish this financial disintermediation, at least in theory, one would need only to assemble the technological pieces: a network, mobile transmitting device (phone or wearable), and user ID (Mr. Rampell suggests something akin to a social security number).
But for me, the gating factor to a super-efficient, all-inclusive financial system has much less to do with the question of “can we?” – I know that we can – and everything to do with the question of “will we?”. And this is where, sadly, I fear that the realization of fintech’s “final frontier” will be subjugated to a dysfunctional political system.
A fact not lost on me after witnessing the political events of the last several weeks – Capitol Hill riot through Presidential Inauguration – is how severely outmoded our government is. From the people to the processes, from the policies to the implementation thereof. Almost every aspect of our lives is subjected to petty, tribalistic recriminations and zero accountability. As a result, nothing substantive gets done. If something does get done, it’s not done well. And if by some miracle something does get done well, it doesn’t get done on time.
We have systemic problems which need to be addressed, the financial system being one of those – and arguably one of the most important. To effectuate meaningful and positive change in the financial system through the disintermediation of the banking system and the leveraging of innovative financial technologies, the challenge won’t be the assembly of the technological components mentioned above. The true challenge will be the reconstitution of the political system. To Mr. Rampell’s point, the technological components and instructions for assembly are already available. However, from my perspective, the manual for assembling the Federal Reserve, House, Senate, Treasury Department, and banking lobby into one cohesive system has yet to be written.
– Adam T. Hark, Managing Director, Wellesley Hills Financial, LLC