Communications of the ACM
Fintech Platforms and Strategy
Credit: Anton Khrupin
Ten years from now, will Google and Amazon play more of a role in managing your investment portfolio than Fidelity? Finance has traditionally been about trust. We trust banks to hold our money and give it back to us when we want it; and we trust brokerage firms to buy the securities we want at market prices and to debit and credit our accounts accordingly. Because trust is so important, we have historically held banks and financial firms to much higher standards of compliance and control than other businesses. Financial institutions are required to follow well-defined processes with oversight and failsafe plans aimed at minimizing risk and maximizing public trust. These processes have traditionally involved humans, even as they have been increasingly augmented with technology over time.
But the last 20 years have seen the emergence of a fundamentally new and different phenomenon enabled by Internet connectivity and access: the "platform" business. In platform businesses, many complex processes, including compliance and checks-and-balance procedures, are performed securely by machines. Along with this platform phenomenon, newer generations of humans have co-evolved to be more comfortable trusting machines to make or support decisions. It would have seemed unthinkable 10 years ago to imagine trusting autonomous driving vehicles to take over the wheel, or trust robots to perform surgery on us. But we are increasingly doing just that in a growing number of real-world areas. Broadly, we seem comfortable trusting machine-made decisions in domains in which the risks are acceptable: mistakes are relatively infrequent and their consequences do not exceed a reasonable tolerance threshold.1
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