This is what truly successful consumer fintech looks like: the most valuable fintech company in the world, Ant Financial, has an e-commerce and payment platform so popular in China that their users' account balances fuel the world's largest money-market fund. Its near-peer competitor in the area — also in China, the least cash-driven large economy in the planet — is WeChat Pay, which allows people to pay products and services through the same chat interface they use to buy them, communicate with people, get their news, and do most of what they do online.
But what makes these products successful is how they feel, or rather how they don't. Making a payment through Ant's Alipay often requires nothing more than taking a photo of a QR sticker glued next to a vending machine or shop counter (if you wondered why the latest version of Apple's mobile operating system now has a built-in QR scanner running in their camera app, that's why; it's an obvious feature for a different, in some senses more technologically advanced society). And using WeChat Pay is even more frictionless: the Chinese spend even more timen on WeChat than the rest of the world spends on Facebook, and they use it for a larger number of activities, including making purchases – and then paying for them with the same unconscious reflex that it takes to send an emoji.
The concept of time preference — "a thing now is more valuable than the same thing later" — is one of the cornerstones of financial theory, but it's not just true at the time scale of years, quarters, and weeks, but, even more crucially, milliseconds. That's a time scale that's usually left to computers doing high-frequency trading, but humans live there too.
We can describe the situation by using the guiding metaphor of Daniel Kahneman's Thinking, Fast and Slow: We have, in a sense, two minds, System 1 and System 2. System 2 is rational, capable of language, planning, and financial analysis. System 1 is emotional, instinctive, driven by what feels good or bad right now, has very little interest in the future, and no concept of comparison shopping.
System 1 is, in other words, the ideal consumer. And one of the surest keys to it is speed. As long as the time span enclosing the desire, the action, and the immediate reward is short enough — if it's seconds instead of hours or even minutes — the process can completely bypass System 2's guidance and become nearly automatic.
We know we should go to bed, but refreshing Instagram takes less than a second, and there might be a nice new picture. We'll feel tired tomorrow, but tomorrow is System 2's problem. We don't exit Netflix before the next episode. We eat that chocolate. We make that purchase on Amazon Prime. We press that button on the slot machine one more time. We point the phone at the sticker, or enter an ok on the chat. The phone we already had in our hands, the chat we were already on.
This isn't a quantitative difference in user experience against traditional financial services, but a qualitative one in terms of product category. Any financial service actionable at the very moment that desire is triggered, and offering its reward a second later or so, is literally engaging a different set of customers (the same one targeted by Facebook, Twitter, Instagram) that just happen to share a customer's brain. And if System 1 gets to spend, invest, or otherwise use their money, System 2 is more than happy to wash it hands off it.
For all of its technological and regulatory sophistication, the end goal of every new financial technology supporting a customer-facing product is to move into that time scale. Financial and software engineering intersect with quantitative psychology and user experience design: Predictive and recommendation algorithms are deployed to reduce to time between a vague desire, finding a matching product, and purchasing it to below the threshold of symbolic rationality — make it seconds and it's a habit, make it twenty minutes and it's something to think about.
Even most uses of blockchain technologies, ultimately, aim at avoiding the non-automatic, non-instantaneous interactions, information queries, reassurances, and protocols between different organizations that make processes so slow that they trigger System 2, turning opening a chocolate bar into going to a grocery store. Finance backends love simplicity (except for the incumbents who have mastered arcane complexity as a competitive advantage), but consumer-facing finance is just figuring out how much value it can extract for the kind of streamlined legal and technological simplicity that makes possible the kind of speed that makes using sophisticated financial products as unthinkingly intuitive as refreshing Facebook.
The most valuable market positioning isn't mindshare, but muscle memory. Google, Facebook, Amazon, Alipay, WeChat — they all thrive in that short window of opportunity where a single click, a gesture with your phone, or a word on a chat can close the deal.
Traditional financial organizations are behind the curve on this; witness their creation of online bank branches, which are technical successes but also conceptually obsolete. It's not a matter of resources or technology, but one of strategic and analytical frameworks. In a world where software has made the frontiers between "business lines" nonsensical — all that matters is when and for how long you have a person's attention, what you know about them and their world, and what you can consistently promise to do with that — no organization is guaranteed victory or defeat.
High-frequency trading, after all, was one of the most influential results of the previous fintech revolution. The current is also one of ultra-fast, algorithm-driven activity, except that this time the competition takes place in the inside, and mostly under the surface, of customer's minds.