Posted by Mark Ranta on 08 Jul 2020
The boon the “Great Recession” has had on the technology space has been a hot topic during our quarantine period. Just looking at the sheer volume of companies and products we rely on in our day to day life that sprouted in the aftermath of our last recession (June 2009) is mind-boggling. Whether it is ordering groceries from home on InstaCart (est. 2013), food from Postmates (est. 2011), daydreaming about when you will be able to take vacations again scrolling through Instagram (est. 2010), or maybe even looking to lower your loan obligations on SoFi (est. 2011).
Our lives and experiences in the past 10 years all have been drastically changed by smartphones and the app-based ecosystem and economy that followed. And of course, there has been a theme of instant gratification running throughout. Many of the great ideas coming out of the last recession were focused on making life simpler and available instantly. As we may have predicted with Moore’s law (the number of transistors per silicon chip doubles every year), technology advances have enabled the market to create real-time experiences and launch companies, and now more than a decade later, we all rely on real-time in aspects of our life.
Payments and banking services, initially slow to react to the new market dynamics of the last decade, are now rapidly coming alive with activity. At the epicenter of this trend, is the first new central payment system to enter the market in four decades, The Clearing House’s RTP® System, which launched in 2017. Putting that in perspective, if you graduated college after 1995, the payment systems keeping our country functioning were already up and running when you were born. For fun, this also happened in 1995.
With the new market infrastructure in place, we are just beginning to see the start of innovation in banking and payments. Similar to the companies launched as part of the app-based ecosystem in the post great recession technology boom, banking is poised for its moment of innovation. Oddly enough, it’s on the eve of another large-scale recession.
It remains to see how these innovations will manifest as a better user experience e.g., more visibility into where your money is or where it is going, new products and services from banks such as instant loans, or personalized products to meet everyone's distinct needs such as instant payroll. But one thing’s for sure, the foundation of a real-time ecosystem in banking and payments is rapidly taking shape and I’m excited to see where innovators take us over the next decade.