July 20, 2020

Tech for good’s moment is here, its potential catalyzed by a global pandemic.  What can tech do, you ask?  The world’s fastest supercomputer clocks in at 148.6 petaflops (quadrillion floating operations/sec).  Google and NASA reported they solved a problem with a quantum computer 200 million times faster than a regular chip-powered machine and the world’s fastest recorded internet speed blazes at 44 terabits/sec – capable of downloading 1,000 HD movies in a second.  Furthermore, the breathtaking algorithmic capabilities of software, as in artificial intelligence, are infinitely scalable and advancing fast.  There is promise and peril here, but so what?  Our immense computational ability can and should be applied to solve outsized societal problems, especially in the business of money.

Money has undergone a significant innovation and it has the potential to widen economic participation funnels. Specifically, the blockchain has the potential to disintermediate (read: lower the cost of) financial services and greatly simplify the inefficient, noise-ridden and slow value transfer constructs that have left billions of people on the margins. One can begin to imagine a world in which economic participation is broadly shared and the prohibitive cost of distrust lowered.

While the potential for fintech innovation is immense, barriers persist and inertia is outsized. For instance, reliable and fast internet connectivity, a condition precedent for leveraging technology, continues to be a real barrier because in America the digital divide mirrors the economic divide.  Cross border transfers, simplified data analytics, value exchange authentication, nimble asset and liability repositories and neural networks all have great appeal individually. Collectively their potential is boundless and policymakers continue to be vigilant as they ensure that the stability of the financial system is preserved.

We have passed a tipping point and the business community is in fact embracing sustainable innovation, including in financial services. As the Business Roundtable puts it, “to redefine the purpose of a corporation to promote an economy that serves all.” Blackrock’s Larry Fink’s letters to CEOs talk about a transparent capitalism.  He argues that squeezing financial gain out of companies on a quarterly basis at the expense of longer term and sustainable prosperity is ultimately value destroying.  A long horizon lens to shared prosperity is starting to become capitalism’s mantra and the drumbeat of change, however faint, grows more persistent. 

Financial services will be key to the continued transformation of the productive use of capital.  This thing has a name: capitalism. Milton Friedman’s September 1970 New York Times article, “The Social Responsibility of Business is to increase its Profits,” crystallizes a view that has been taken for granted for five decades. This is due to the crisp profit maximization, single-purpose concept.  It alone, mostly due to its simplicity and clarity, has shaped capitalism for the last half century.  But that’s changing right in front of our eyes and tech can lead the way.

What we are witnessing in real time on the streets for America is in equal parts a call for social justice and economic access – they are highly intertwined.  Fintech and the blockchain can help deliver economic access on-ramps with increased efficiency as proven with the $660 billion of PPP loans.  The average small business PPP loan size was a little over $106,000; those made by fintech companies around $28,000.  This points to the fact that technology-first enterprises enabled access to the smallest businesses and they were the ones that needed the relief the most.

The United States is living through several simultaneous crises and technology, including that applied to financial services, has one of the biggest and most urgent use cases of all time.  Now.