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Blockchain. Tokenisation. Stablecoins. Digital wallets. Embedded finance. Artificial intelligence.
From digital wallets to AI, the real opportunity may not always be in the product everyone sees, but in the infrastructure that makes it work.
A few years ago, many of these terms belonged to the world of crypto enthusiasts, fintech start-ups and technology conferences.
Now they are increasingly finding their way into the financial system itself.
I remember when I used to carry a wallet filled with bank cards and cash. Gone are those days. Now I carry them on my phone.
Actually, on second thought, I can carry them on my wrist — my running watch.
Next, they’ll be telling me I need a chip inserted under my skin!
For those old enough to remember, I’m showing my age here, but it makes me think of Get Smart and its famous shoe phone.
Except we’ve now gone one better. My phone, and watch, can make payments, among plenty of other things, so I can leave my wallet — and sometimes even my phone, at home.
And this is really the point.
Technology that once sounded futuristic is quietly becoming part of the way we bank, pay, invest and move money every day.
Banks are changing how money moves. Payments are becoming more deeply embedded into everyday businesses. Financial products are being built into platforms that were never traditionally considered financial companies.
And increasingly, the technology behind all of this is becoming almost invisible to us.
Companies outside traditional banking are moving into the space, too. The lines between technology, payments, finance and commerce are becoming harder to define.
The opportunity beneath the surface
But this idea isn’t unique to financial technology.
Look at artificial intelligence.
Everyone is talking about the AI companies — the models, the chatbots, the robots and what they might eventually be capable of.
But increasingly, the conversation is moving underneath the AI itself.
Where are the chips coming from? Who is manufacturing them? Where are the data centres? Who supplies the power? Who builds the cooling systems, networking and everything else required to keep the whole thing running?
Even Elon Musk’s AI ambitions are increasingly focused on that physical layer, with his businesses investing in the infrastructure and chip manufacturing needed to support their growing computing demands.
It is a useful reminder that when a new technology takes off, the obvious company isn’t always the only interesting part of the story.
Sometimes you need to look underneath it – under the “hood”, if you like. Flying cars anyone?
And that brings us back to fintech – because the same principle applies to money.
While most of us see the payment, the banking app or the digital wallet, there is an entire layer of technology working underneath it, under the hood.
Would this not be a useful lesson for investors? I would think so!
So, when a new technology takes off, the company everyone is talking about isn’t necessarily the only part of the opportunity.
Broaden your thinking.
Sometimes the more interesting question is: what does that company — and the industry around it — need underneath it, to make all of this work?
For investors, the challenge is to look beyond the technology everyone can see — and understand the businesses making it possible.
And that’s where things start to get really interesting.
This is just the beginning. In the next installment of Let’s Get Smart, we’ll look at how the financial system is changing — and what it could mean for investors.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
