Web3 and the battle for your wallet

How it started

Paying people used to be very simple: the employer paid the worker in cash or with a check. A direct relationship between 2 parties. Over time, as taxes and benefits were added, paying people became more complex and other parties joined. Payroll providers started to run payroll on behalf of employers, and banks entered the picture to support direct deposits.

The outcome of payroll, the salary, is more valuable than you think. When you know how an employee spends her money, you can use that data to make predictions and sell services. And that’s something that young fintechs realized early on.

In the beginning, fintechs focused on disrupting banks. But they always knew that the real value sits in the data. They’ve designed their services to get access to that data. For a long time, the incumbents, the banks, were able to hold them off, but not anymore.

Under the Open Banking Standard (PSD2 Directive in Europe), banks must allow third party access to a customer’s personal and financial data, if the customer approves that. Using APIs, these fintechs and online financial service vendors can offer new services. The APIs can e.g. look at a client’s transaction data to identify the best financial products and services for them. Or they can get approved for a mortgage. The customer receives a better outcome (with the trade-offs being privacy and security).

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