In this final Part 4 we try to wipe the muck off our crystal ball and figure out what this market will look like when it replaces what we have now – the “rebundling phase of innovation”
To a few of us in the business, the nuanced differences between various Fintech offerings is endlessly fascinating. To most people, the only interesting thing is how to get all that boring money stuff done as quickly and cheaply as possible so that one can do something more interesting.
Unbundling means getting market traction by doing one or maybe two things very well. Once you get market traction, you offer your API and other APIs to anybody who wants to rebundle by combining multiple features into a better customer experience. That is when banks will face competitor who offer the bundled services that mainstream customers expect; those competitors can get to scale quickly using APIs and will have a tiny fraction of the incumbent bank’s cost base.
It is much easier to figure out in which direction the puck is heading than to assess how fast it is moving. However we can get some clues from Amara’s law and Ridley’s amendment.
Amara’s law states:
“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”.
Ridley’s amendment (my term) puts some timelines around this:
“Amara’s Law implies that between the early disappointment and the later underestimate there must be a moment when we get it about right; I reckon these days it is 15 years down the line. We expect too much of an innovation in the first ten years and too little in the first 20, but get it about right at 15.”
That feels about right to me. Which means that 2020 is when we become sceptical and 2025 when we “get it about right” and 2030 when we marvel that we used to do it any other way.
Note both were stated more humbly as observations, others called them laws. They are not designed to be precise, more like the kind of heuristic that you use to judge the speed of a car when crossing the road.
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