Chaos Theory & Financial Services | Part 1: The Unbundling

Digital Banking

Chaos Theory & Financial Services | Part 1: The Unbundling

By Aniket Tamboli · · 5 min read

There is a tenet of Chaos Theory that talks about how you can spot moments of order – patterns, interconnectedness and self-organization – within chaotic systems.

Take The Big Bang – the event that led to all entropy and then spawned cosmic systems. A universe, organized into galaxies organized into solar systems composed of planets, moons and asteroids that have defined and directly affected our reality and hence, our lives. Heavy.

But we aren’t here to philosophise about the universe’s creation and existence. We’re here because (as far-fetched as this might seem) the same theory applies to the universe of financial services.

Over the past decade, we’ve seen financial services being unbundled under the “I can do this better” scheme. Everything from payments and lending, to investments and insurance got a shiny overhaul as smart people saw opportunities to make very specific things a lot better.

What ensued was 10 years of disparate solutions for every little aspect of our money. The results were great, but ultimately chaotic. Don’t believe me? Take a look at the different finance apps on your phone.

In Part 1 of this series, we take a look at the birth of fintech and why although we now have a bunch of superior products, we are yet to enjoy a superior experience.

In the beginning, there was dissatisfaction

Fintech as we know it was born out of the dissatisfaction with traditional banks and their general disregard for experience and convenience. Payments were tedious; lending was inaccessible; investing was complex; insurance sales-driven; and a user-friendly way to utilise or manage your money across all these services – non-existent.

It’s no wonder that everyone decided to grab a slice of the pizza-pie and make it better. To say nothing of the fact that focusing on one service was the easiest way to start. And that’s how…

Payments got faster

When Paytm first landed on our phones, it showed us how technology, when utilised with a focus and purpose, could transform even the most basic financial transactions. Almost overnight, Paytm became the de-facto way for people to pay everyone from a friend, to the shopkeeper down the street.

Others took notice. The decoupling of a simple task quickly created an entirely new space with its own opportunities. Today, there’s no dearth of services that promise everything from single-tap-payments, to rewarding you for every transaction. For once, we thought that wallets are irreplaceable.

That was until the invention of the Unified Payments Interface (UPI) that got everyone hooked even quicker. We now have a formalised piece of tech that’s made payments incredibly easy and quick, no matter what bank you’re on or where you’re shopping. It’s not surprising that UPI regularly clocks over 1 Billion transactions every month. Nobody could have imagined such massive adoption of a new payment method in just 4 years.

Lending became accessible

Loans have historically been a daunting concept. From the tedious processes and paperwork it takes to acquire one, to the ridiculous interest rates, terms and conditions that tag along for the ride, loans were a risk that some willingly took while others simply weren’t eligible for.

Borrowing a little extra cash from family notwithstanding, everyone from college students to first-jobbers and chronic spenders wanted access to tiny credit lines (which banks didn’t find profitable) with reasonable interest rates (which banks didn’t find profitable) that could be issued in minutes (which banks didn’t think was possible) in a completely paperless way (you get the point).

Lo and behold! Today, apps like LazyPay, Walnut and Moneytap all provide exactly that, while massively simplifying the application process. No more sitting across from a banker who’s trying to judge if you deserve a loan based on how you speak, look or dress.

Investing got simpler

I still have a hard time understanding how I should invest my money. Mutual funds and the stock market have all existed for decades – centuries even. But picking between these options and their sub-options has always been a nightmarish task that required either a deep understanding of the matter, or a financial advisor who knew what they were talking about.

What was missing? Two things – first, a support system that helped you navigate all these options without any bias arising from vested interest; and two, an interface that made it easy to view, assimilate, understand and action all the information around these instruments.

Platforms like Groww, Scripbox, ET Money and Kuvera now help you clearly assess investment options and buy-in with just a few taps. While they haven’t quite done away with the need for a financial advisor, they have managed to make investing more approachable.

Money became modern

This universe of technology-driven financial apps finally brought our money into the modern times. Purpose-built apps and products breathed new life into age-old concepts and have even helped younger people get serious about navigating their financial journeys.

Taking a small loan isn’t just possible, but simple enough that a lot of us are willing to give it a shot. Easy credit lines not only gell well with our new-age lifestyles, but also spur our increasing spending-powers. Investment platforms like Groww have not only simplified investing, but ultimately gotten people interested by removing the hassle of dealing with traditional institutions.

What’s more – a slew of UI/UX focused products to manage your money are gaining popularity. In this newly formed universe, viewing, tracking and managing your earnings and expenditures is a pleasant experience in itself. Easy to understand graphs, category-wise breakdowns and simple tools like tagging expenses have not only satisfied the Spreadsheet junkies of yore, but also gotten the average joe to brag about how they are always on top of their finances.

Problem is – none of these services are connected. None of them talk to each other. None of them offer you a holistic view of your financial life. Everything said and done, the onus is still on us—the users—to figure out what’s best.

In the age of one-tap-conveniences and smart recommendations, that is effort we don’t want to put in.

Chaos: Beautiful, but to what end?

Let’s face it – we’d pick Google Pay over the IMPS (or even UPI) interface that our bank offers, any day! Those who understand investments are beginning to pick Zerodha and Groww over their bank-assigned relationship managers, cutting out the middle-man. And when it comes to checking out how much money we have left in our accounts and where most of it went, well, I routinely pick my money management app over the one my bank offers.

Thing is, I still have to visit anywhere between 3 to 5 different applications before I can understand exactly where I stand with my finances. But this problem isn’t about the effort involved (although that is a bit of a hassle); it’s about the inconsistency of experience and that while the individual components might have gotten a lot better, the whole system is still lacking.

Or simply put – I’d be able to do a lot more if I could access all of this information in one single place, with one consistent experience.

More on that in the next part.

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Digital Banking

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