Do you remember a time when the exchange of value occurred through a seemingly simple, physical transaction? The thing you wanted had a price, you paid for it in person with some form of paper currency and then received the thing that you paid for in return.
Well, I don’t remember this time. Ever since I’ve had any meaningful purchasing power, I’ve completed transactions electronically. I simply viewed a number in my bank account, and after a given transaction occurred, my account displayed the transaction itself as well as the remaining balance available to me. I received my goods or service and was on my way, often giving little thought to the implication of the value exchange.
My relationship with money, for as long as I can remember, has been a virtual one. This is true for much of my generation. But what about the next? What does their relationship with money look like? Or perhaps the more suitable question: what does their relationship with “value” look like?
With apps like MoneyBrilliant, or even the recent update to CBA’s mobile banking app, which enables you to store alternative assets like loyalty points, how will our net worth be determined? Will these, and various other alternative assets have an effect on our ability to secure a loan, create or diversify wealth?
I’ve been thinking about how digital assets and the way we measure value is evolving for quite a while now, however the catalyst to begin writing about it was CBA’s recent mobile banking app update.
I saw the below when I logged on and thought “CBA’s finally joined the party”, which raised further questions about how far this will go and who the primary player might be.
How long is it until my online profile and reputation have an associated value, a value that I can capture and utilise? Does my Facebook profile and reputation have a higher value than LinkedIn? Or does my LinkedIn profile merely have in impact on professional endeavors, such as securing s business loan or overdraft from a traditional institution or perhaps even the crowd?
Switching the context back to CBA, I wonder whether or not my bank has a role to play in aggregating and enabling me to make use of this value? It would appear that the Commonwealth Bank certainly think they do have a role to play. In the AFR on 1 June, CBA’s CIO David Whiteing said, “I have a view that a bank account will become a storer of value, rather than a storer of currency value, so why can’t a bank account be used to store loyalty points in the same way that you can use the slider on a Qantas website to decide whether you are paying with points or dollars?”
The bank of the future is beginning to sound much more interesting.
When I take a very high-level macro-view, it’s hard not to notice the rapid evolution occurring within the finance industry. Just take a look at the below infographic from intelligence platform DealIndex’s 2015 report.
Everything from P2P lending, to equity crowdfunding to blockchain have the potential to impact how we create, store and exchange value. But, what that value is, where it is created and how it’s amplified is what’s of most interest.
We know that data currently has a value, but over time, my prediction is that our online reputations, and therefore the value of that data, will increase significantly. What this means for a generation of data natives, those whose entire lives have been partially captured online and whose expectations of online experiences far surpass that of previous generations, is the value traditional currency represents exists only as pat of the picture.
Envisage a world where your net worth doesn’t just consist of tradition liquid or illiquid assets such as securities, property or cash, but where it consists of a multitude of assets created through the actions and interactions you make online and in the physical world each and every day. Your eBay profile has a value associated with it, providing leverage when making online purchases. Your LinkedIn profile, and the professional reputation captured within the product might enable you to directly earn value, or in-directly earn value through leveraging your profile and reputation to increase your salary or consulting rate. Your Apple Watch, FitBit or Hexoskin, the things that track and measure your activities, may enable you to earn direct value that can be converted into some form of currency, or by granting access to a given party you may receive a direct benefit that has value to you, in your context.
These new forms of assets, combined with the likes of more traditional assets mentioned above become measurable and usable. The total becomes your net worth, and ultimately, are endless in their possibility.
Through digital assets, the way in which we define, create, capture and use value is evolving rapidly. This will cause friction and in some cases confusion, but the opportunity exists to utilise these non-traditional or emerging assets to grow ones individual wealth or simply increase day-to-day purchasing power. For organisations, this provides the opportunity to build more context rich relationships with customers, and in the process, drive new product capabilities and top-line revenue.
In the long run, what’s now considered alternative finance or an alternative asset will simply become finance and assets, enabling you and I to buy, sell and exchange quickly and freely. This is an interesting future indeed, and based on recent progress, one that might not be as far away as you think.