‘When we in the West look to America for innovation, we are looking the wrong way’

Our bank­ing, finan­cial and pay­ment ser­vices were invent­ed way back when in the indus­tri­al era, which is why our finan­cial sys­tem is built with a focus on the phys­i­cal dis­tri­b­u­tion of paper in a localised net­work focused upon build­ings and humans.

“The cheque is in the post” was the great­est inno­va­tion of that era and, as we auto­mat­ed things, we made faster hors­es. We moved from cheque to plas­tic cards and from branch pass books to auto­mat­ed bank­ing online, but the actu­al prod­ucts and ser­vices reflect that indus­tri­al era his­to­ry.

We talk about open bank­ing and the fin­tech rev­o­lu­tion, but it isn’t real­ly hap­pen­ing. The rea­son it’s not hap­pen­ing is that near­ly all our core-sys­tem infra­struc­tures were imple­ment­ed in the last cen­tu­ry, before Mark Zucker­berg was even born. Instead, we are try­ing to add funky, dig­i­tal, mod­ern net­work­ing over that bro­ken scrapheap of the past and it will fail.

I know it will fail as I trav­el the world non-stop and can see it. For exam­ple, while we are try­ing to make faster hors­es with faster pay­ments and faster banks, Asia is mak­ing tur­bo-charged motor cars that speed around the world. That is why Chi­na saw $15.5 tril­lion of con­sumer pay­ments pass through mobile pay­ments wal­lets in 2017, triple the vol­ume of 2016 and fore­cast to reach $50 tril­lion by the end of the decade.

China’s econ­o­my has leap-frogged the indus­tri­al era pay­ments via cheque books and plas­tic, and tran­scend­ed imme­di­ate­ly to mobile. The two tech­nol­o­gy giants of Chi­na, Ten­cent and Aliba­ba, have a very dif­fer­ent mod­el of the world too. To me they seem like Pay­Pal inte­grat­ed with Face­book and Ama­zon, a social, com­mer­cial and finan­cial ecosys­tem that is tight­ly inte­grat­ed.

But the sto­ry in Chi­na is of cars replac­ing hors­es. There is an even greater phe­nom­e­non tak­ing place in Africa. Chi­na has a new sys­tem that reimag­ines the old one. Africa had no sys­tem and is reimag­in­ing every­thing. Using that anal­o­gy of cars and hors­es, Africa is cre­at­ing finan­cial aero­planes.

Until the mobile phone arrived, Africans could only pay each oth­er by phys­i­cal­ly trans­act­ing cash. Most of the peo­ple in Nige­ria, Ugan­da, Tan­za­nia and oth­er sub-Saha­ran coun­tries had no bank account and no access to elec­tron­ic mon­ey.

There­fore, they had to move cash phys­i­cal­ly around, and it was inse­cure, dan­ger­ous and sub­ject to exces­sive risk. Now all Africans with a mobile sub­scrip­tion – more than four out of five peo­ple – are using their mobile to move mon­ey. One in three Africans with a mobile phone use it as a mobile wal­let. There is one big dif­fer­ence between the African mobile wal­let and the Chi­nese one how­ev­er, and that is the size of a trans­ac­tion.

Africans liv­ing on $2 a day can take out microin­sur­ance for 10 cents a day, they can save 5 cents a day and invest 7.5 cents a day, if they want to. Equal­ly, Africans, who his­tor­i­cal­ly could only sell their pro­duce to the near­est mar­ket­place in a small vil­lage or town, can now sell their offer­ings to any­one, any­where.

The dig­i­tal rev­o­lu­tion dri­ven by the mobile inter­net is cre­at­ing a ground-up reimag­in­ing of every­thing and when we in the West look to Amer­i­ca for inno­va­tion, we are look­ing the wrong way. We need to look to Asia, Africa and South Amer­i­ca. This is where the true trans­for­ma­tion is com­ing from.

Chris Skin­ner is author of a new book, Dig­i­tal Human, which describes how human­i­ty is being rev­o­lu­tionised through dig­i­tal inclu­sion