FinTech and Digital Finance

10

JUL 2017

Posted by Prabhu Guptara | Uncategorised

My sabbatical is over, and I have returned to the fray!

Though my blog was originally intended to range broadly over the all the fields of business, and may still do so, I find that at present the most interesting and significant developments are taking place in Digital Finance.

So, for the moment, that will be the focus.

Let me begin by saying that Digital Finance is having huge impact, but there are some some worrying factors to consider:

– Between 2013 and 2016, $62 billion had been invested from around the globe just in FinTech. Clearly, many investors are betting on this sector, and on individual initiatives within it. They foresee an opportunity to make money by helping the sector gain “efficiencies”

– However, every “efficiency” means a job lost for one or more humans

– That means lower capacity to spend money by (ex-)employees, alongside the well-known chilling effect that lower spending by each group has on other groups, even if the latter have money to spend.

Or let’s look at another aspect of the matter. Only *8* humans now own as much of the world’s resources as half the human population. In January 2017, that was the report from Oxfam International.

However, just a year before that (2016), Oxfam had reported the number of people who had as much wealth as the bottom half of the world’s population was *62*!

And it was only a year earlier (2015) that Oxfam had reported the number of people who had as much wealth as the bottom half of the world’s population was *85* !!!

In other words, wealth concentration increased from 85 individuals in the 2015 report, down to 62 men in 2016, a huge drop! And from those 62 individuals in 2016, down to only 8 individuals in the 2017 report.

If that incredibly swift trend continues, less than 10 individuals will end up owning perhaps as much as 80% of the world in a few years.

So what use are such “mass technologies” as Fintech when the men concerned can simply talk to each other to decide whatever they wish?

Yes, Fintech will allow their decisions to be implemented at speed, but will that really matter to these men? Only if these men continue competing against each other – which is certainly possible! – but history also shows that small groups of individuals don’t always compete, they often form oligopolies or ruling cliques.

Whether that sort of consolidation continues is partly a matter of politics, and partly a matter of the choices made by these few individuals.

While we work for the best policies to be put in place and to be implemented, let us continue to admire the amazing inventiveness of everyone involved in the world of digital finance.