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Finance & Technology Collide


CONTEXT: The lines are blurring between these industries

WHY IT MATTERS: Collaboration is important - It solves countless business challenges

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Traditionally considered two different skill sets, finance and technology have always jostled for position in terms of business importance. Not only have the two operated independently, but their traditional locations have often reflected this. Take the US for example. While financial districts are littered across America, it’s hard to deny that New York is the centre and hub of Finance - many would agree the global one. And while it’s true the east coast is home to scores of tech companies; it’s not known as the centre or hub for tech innovation.

Anyone who hasn’t crawled out of a cave has heard of Silicon Valley. There are even tv shows about it. At times, we view it like it’s a sovereign country or a stand-alone economy. The west coast incubated and spawned the following companies & products - Google, Facebook (Meta), Apple, Twitter, Netflix, Uber, and Airbnb to name a few. Think about the impact of those companies. When was the last time you found something without the help of google (location or website)? When was the last time you connected socially without Instagram or Facebook? When was the last time you tried to do anything without your smartphone - (yes, there are other phones, but can you argue the catalyst for the smartphone market wasn’t the iPhone?) Have you stopped bingeing and gotten rid of your Netflix account? Didn’t think so. Imagine an election or a major news event without Twitter chirping out updates 24 hours a day. It wasn’t so long ago that was the norm. Not today. And let’s not forget how Uber and Airbnb gave consumers more real-time choices in terms of finding a reasonably priced ride and place to sleep.

So, in terms of disciplines, one could argue that finance and tech did not need to be in the same neighbourhood to succeed. We aren’t talking a few hours of distance either. New York and Silicon Valley are on the exact opposite sides of the continent, at the extremes of north and south. Not even in the same time zone. Kind of like separating the children into separate rooms. Of course, they spend a lot of time together, but separate rooms mean they have their own space to grow as individuals. The products we have today prove that the two siblings have worked well independently of each other. But what happens when they start to design and develop similar products and services that overlap? Products that are essentially both tech and finance?

Think about payment processors like PayPal, Stripe, Apple Pay, and even Square. They provide a way for two parties to transact - typically a consumer and a business, but any party. Goods or services are exchanged for some sort of value in real time. Sounds very commercial. Sounds very financial. Or is it? These companies fall under the tech category. But why? It boils down to the secret sauce. The black box. The golden goose is at the centre of the business.

When you pair it back, traditional financial services bundle up and repackage products and services in countless ways. But the underlying service is typically capital (or an instrument linked to capital). It’s all cash or credit. That’s essentially what they are providing. We all need it. Unless you are already wealthy, most of us need them. But even the wealthy still need them. Not for the capital but to leverage and grow their capital.

Compare that to tech companies. They provide a way for consumers to transact. So, on the surface, it looks very financial. But their black box (or a white box in Square’s case) is the hardware or software they create to process the task. Yes, there is lots of money moving around. But it wouldn’t move anywhere without their products. So, we label them tech companies.

So, the differentiator seems to be whether you build something (tech) or provide the river of money everything floats on (Product or Service).


So where does blockchain fit into this? When most people think of crypto, they think of a financial instrument. But using the definition above, is it? If blockchains are built by developers, logic would dictate that it is a tech product, not a financial one. Not convinced are you? Many would agree. Crypto can just as easily be labelled a financial product. And rightly so. The industry is famous - or infamous - for several things. You either got rich from it or lost a lot of money. Or, you are in the middle, perhaps working in the industry. If you are, your understanding of technology, in general, is likely above average.


So, we have a newly evolved industry that is arguably both tech and financial. The question is, will the 2 industries that spawned it, play nice and work together or will each try to jostle for dominance on where to steer it? Who is more crucial in the industry's development? The developers? Or the ones that commercialize it and drive mass adoption? The jury is out for now. But some critical challenges remain:

• How does the industry build trust so that scams and ponzis are firmly in the rearview mirror?
• Can the industry build a record of stability so that investors aren’t worried that their life savings will de-value in their sleep?
• How does the industry shake off its Wild West roots and adopt industry standards in terms of audit and governance?
• Can the industry create a standardized set of educational pillars to help investors understand the technological benefits?
• What role do legislators and regulators play?

All important and valid questions that are yet to be answered. One thing is for sure, these challenges are already conversion topics in jurisdictions where legislators and regulators are based.

So, the question for organizations is: If these two industries are morphing into one, what impact does that have on the services and products that businesses rely on? What impact will it have on your organisation if the business landscape is shifting?

Get in touch with us to discuss how your organisation can get ahead of the ball and not get left behind. Some industries have already felt the impacts of the technology (Banks). Make sure your business is equipped with the knowledge and understanding to leverage the benefits. Getting it right now is crucial to position for future opportunities.

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