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Part 2 Tech is neutral and bad young Fintech is as bad as old legacy Fin. 

The Google founders famously put “don’t  be evil” into their corporate code of conduct, softening it to “do the right thing” in 2015 and de-emphasized it again in 2018.

The reality is that tech companies have only one mandate which is profit for shareholders. Keeping customers and talent happy is aligned to that mandate.  That is true even if they have Fin or Health or Clean as a moniker in front of Tech.  Technology is neutral – it can be used for good or bad ends – and companies are amoral – only humans are moral or immoral.

The pitch that young Fintech is better than old Fin is as wrong as saying Millennials are better than Boomers.  It is a pitch to consumers – investors know what the real mandate is or they would not invest.

Quiz what is worse?

A. Taking money from poor people via PayDay Lending (Fintech)

B. Taking money from poor people via Overdraft Fees (Fin)

The reality is that there is no difference and if Fintech ventures can find a way to charge Overdraft Fees they will do so.

Which brings us onto the Blockchain fans who say they can replace “don’t  be evil” with “cannot be evil”. Actually no programer will take on the task of coding “evil” into a smart contract, but let’s get more specific. Let’s say that the founders promise to never charge interest higher than LIBOR (or whatever replaces LIBOR). You can code that into a smart contract and make it as unchangeable as 21 million Bitcoin.   

There are other reasons to be optimistic that are best illustrated with an example. People who travel or work cross border know that consumers get ripped off on FX rates. When Transferwise launched they spent money to change public perception. Later regulation took up the baton and told you via your ATM receipt how much you had been charged – accelerating the change in consumer perception. Now Neobanks such as Revolut offer free FX and soon all banks will do so. That is how capitalism is supposed to work.

Some subjects are too complex for our short attention spans, so we do 4 posts one week apart (see here for 1,3, 4 some may not be published yet), each one short enough not to lose your attention but in aggregate doing justice to the complexity of the subject. Stay tuned by subscribing.

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