In January 2008, after graduating from business school, I became a Management Consultant in Oliver Wyman’s Financial Services practice. One year later, we were in the midst of a global financial crisis.
Over the next five years, working with institutions around the world, I became acutely aware of the opaque and siloed nature of the financial services industry. I also witnessed the world-wide inequality in financial access. I’d been raised to value inclusion and promote equality and prior to business school I had worked for the IIED, a global think-tank working to strengthen the voices of the world’s most vulnerable people. Needless to say, this widespread inequality and even capitalizing on those vulnerable populations struck a chord.
To give you some background, as I outlined in a previous blog, two billion people worldwide still lack access to regulated financial services. Without financial services, access to education, health, housing and overall opportunity for growth and development become more difficult.
To me, this issue was so important that I left management consulting to explore ways in which technology could help solve it. Along this journey, which included setting up a new social enterprise partnership for Kiva in Burkina Faso to helping build a successful e-commerce platform for Kenyan artisans, I discovered bitcoin, the cryptocurrency which has now captured so many headlines. I’d heard of it but only in the context of Silk Road. In 2013, my brother, who I was staying with at the time in NYC, got me to look at it in a different light and I started to take bitcoin seriously. For a global nomad obsessed with the problem of traditional financial services excluding nearly a third of the world’s population, a borderless, electronic currency, completely independent from existing financial systems and with near-zero transaction fees seemed a very exciting proposition.
As luck would have it, from sheer coincidence at the end of 2013, I met an investor in NYC who was interested in establishing the UK’s first bitcoin exchange. By April 2014, I was back in London and already heavily immersed in the world of cryptocurrency, attending conferences in San Francisco, Amsterdam, New York, Toronto, in the midst of the pre-launch of Ethereum. These were the days when alts were riding high and when most women in the space used a feminine nouns in their handles — BitcoinWife, BitcoinGirl, Bitcoin Mistress (for the record, I’ve always just been Diana).
Over the next three years, I worked with teams on solutions such as digital wallets and remittance. Naturally, the on-the-ground realities are complex. But after five years in the financial services industry, I knew that was going to be the case. I tried not to allow my pragmatism (read: hyper-realism) take over but to embed myself with the hyper-positivity, unwavering confidence and comfort with embellishment which seemed to come to naturally to the entrepreneurs of Silicon Valley. Three of the greatest challenges I saw were:
The cost of operating in the highly centralized and regulated finance industry: compliance is extremely expensive and there are many small costs in consumer finance and payments from various intermediaries which the banks today eat, gaining profit elsewhere, and which consumers aren’t used to having to pay. Along with the regulatory barriers, particularly when looking at financial inclusion, comes the issue of a verifiable identity for KYC purposes
The incredibly delicate and not entirely rational relationship people have with money: numerous studies show that people hardly ever switch their bank. A similar desire to stick with a trusted brand is seen with the popularity of Western Union, despite the high cost of sending money. People recognize and are comfortable with the brand, have been using it their whole lives and can trust that the money will arrive where it is supposed to go (often in geographies where that kind of functionality is not taken for granted…)
The necessary learning curve for both a new technology and new types of services: If you and the person you’re dealing with are set up with bitcoin wallets and have a balance, then transacting with bitcoin is very quick and easy — it can be like handing someone digital cash. But if you need to set up a wallet, try to buy some bitcoin and then find someone who will exchange it into the goods or services you want, this can be a process taking several days. For many people, it’s their first introduction to public key cryptography. And sending their bitcoin to the wrong address or losing their private key can be a very costly mistake.
The opening of financial services is a long journey. To make these services accessible, inclusive and relevant, there are many pieces to the puzzle, some of which I touched on above:
Approved and accessible identity solutions
Regulatory environment supportive of innovation and inclusion
Two-way financial education: service providers understanding actual customer needs and customers understanding how and which products and services can help, not hurt, them
With the above understanding, ideally offerings can excite and better serve consumers, helping to build their loyalty and trust
What’s particularly exciting for me is how technology can also help solve the areas listed above. As many of us know by now, bitcoin is not just a currency and what it has brought us is not only a technological innovation but also a shift in perspective which goes far beyond the financial services sector. As much as four or five years ago, people started using bitcoin’s underlying technology, blockchain, for non-financial use cases. These include authenticating university degree certificates, identifying sellers of counterfeit pharmaceuticals and even public notarization of marriage. It has become increasingly clear that bitcoin’s core technology, blockchain, will not only change how we transfer value, but will bring a paradigm shift to our systems of trade, identity, and governance.
This spirit of open access and empowerment of individuals is what draws me in: that this technology can be used to strengthen community participation and enable access to information, rather than maintain power in the hands of the few.
We may no longer be forced to trust systems which have continually failed us. How can we forget how the 2008 global financial crisis exposed the murky impenetrable underpinnings of the financial services industry? Wikileaks exposed potential government corruption and information kept from the public. And of course Snowden’s revelations of the shocking extent of global mass surveillance. These events helped emphasize for many of us, including myself, the extent to which the powers running our society have lacked accountability — and these would only be suspicions without such revelations, without the whistleblowers risking their personal freedom, without transparency...
More on that one later.
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