Super apps may consolidate an array of finance apps into a seamless, simplified and single user experience, but while all looks well on their dazzling new consumer-centric interfaces, the financial rails and pipes undergirding the system aren’t next-gen — they’re last gen.
To a growing number of players, primarily FinTechs, it’s time for a top-down overhaul. That’s the opinion of Andy Bromberg, CEO at Eco, the digital wallet with aspirations to do it all, if only existing financial infrastructure supported a unified vision of money management.
In a recent conversation with Karen Webster as part of PYMNTS’ “One Thing” series, zeroing in on targeted improvements, Bromberg said, “A lot of businesses out there have re-imagined the top layer, the interface with which you interact with your money, but they haven’t done anything about the infrastructure or the deeper alignment between you and the product.
“We’re trying to re-imagine the infrastructure on which it’s all built and offer benefits that can come with upgrading from old and broken infrastructure that’s been around for decades, predating the internet, [bring about] a new paradigm, and pass those benefits back to you.”
To operationalize that vision, Bromberg said that both people and companies must break old habits.
Referring to blockchain, which he sees as infrastructure 2.0, Bromberg asked, “Why use this ACH system? Why make risk decisions [based] on users’ funds? Why use the wire system when you can use this amazing globally distributed near instantaneous, near free, peer-to-peer way to transact instead?”
Research supports this. PYMNTS’ report The Cryptocurrency Payments Opportunity: Driving Crypto Adoption And Use Around The Globe, an i2c collaboration, notes that “creating crypto payment experiences that are as seamless as typical debit or credit transactions is the market’s next great challenge, and doing so also could grant merchants and consumers key benefits. Addressing these issues could open cryptocurrencies to other use cases, such as cross-border payments, but there still are some hurdles to clear before this can occur.”
Get the report: The Cryptocurrency Payments Opportunity
Removing the Middlemen
Deviating slightly from the “One Thing” focus, Bromberg also took aim at intermediaries, saying that part of Eco’s mission is to take “middlemen” out of the equation and give consumers more direct control over accessing and moving their money, facilitating this with blockchain instead of older payment rails.
As he sees it, “All of these middlemen have been inserted into every single financial transaction, and of course, they all take a cut. For us, the question is how can we remove those middlemen? How can we make transactions as direct and efficient as possible? Oftentimes for us, that means leveraging crypto or blockchain technology on the backend.”
A financial system built for the connected economy leverages blockchain’s ability for direct peer-to-peer (P2P) transactions. Offering users the ability to send money instantly or near-instantly makes “the experience of interacting with your money better and more efficient,” Bromberg said.
Picking on the automated clearing house network (ACH) as an example, Bromberg said consumers “may have heard of ACH, they may roughly know that it’s a way to move money, but they don’t know what it is. [At Eco], we talk about how that system came from the Pony Express centuries ago, when couriers on horses put checks in bags and moved them from bank to bank, and eventually to a clearing house.
“It’s not like anyone sat there and said, ‘we want slow transactions, and we want to route things between banks in this inefficient way,’ but that’s just the way it got built up,” Bromberg said.
He continued that it can be an uphill climb to communicate this information and then introduce better technology — like the internet, blockchain and crypto — which can materially improve how consumers experience financial products.
See also: Eco Channels Starbucks To Create Primary Digital Accounts
Genuine Instant Transfers, Sans Risk
Just as the Pony Express had to gain the trust of banks and consumers when it was the most reliable rail of its time, blockchain, crypto and decentralized finance (DeFi) must also gain trust before they can scale, and nudge-out legacy systems and processes.
“When I think DeFi … I’m thinking about decentralized lending platforms and decentralized exchanges and all sorts of products that allow people to exercise new financial primitives around money,” he said. “That’s not the sort of stuff that we are dealing with right now.”
Instead, Eco wants to maintain focus on “infrastructure to move money, for example, using stablecoin denominated assets to move money from one place to another.”
As Bromberg sees it, blockchain removes the inherent risk in P2P transfers and other “instant” money apps that are not actually instantaneous on the backend.
“When you send a transaction instantly via a peer-to-peer payment app, there’s effectively a credit being extended by one party,” he told Webster, “and that’s the thing that you can start to remove when you move to this instant transaction infrastructure.”
See also: Blockchain, Stablecoins Set to Deliver ‘Tangible’ Value to B2B Payments, Financial Services
Using the plumbing analogy, Bromberg explained that even when upgrading, both old and new pipes must coexist for a time. He continued that when using Eco, users still have to ACH money into the app, “because if you want to get it out of your bank, that’s the only way to get it out.”
Bromberg said these hybrid interactions will continue for now, adding that he feels “serving as a bridge … is a really valuable place to be.
“I do think it develops in parallel,” he said. “I’m not one of those people out there saying there’s going to be a bang and all of a sudden everything will be crypto, and everything will be blockchain.” In the case of Eco, that means a forthcoming in-app bill pay feature, among other things.
For now, Bromberg is focused on “reaching feature parity with every other platform out there and giving you better benefits for everything you do across your whole financial life.”
“In 2022 the mission is for us to add as many features as we can so you can manage your whole life and treat Eco as your primary account and the only place that you have money,” Bromberg said.
Read also: Digital Wallet Eco Notches $26 Million In a16z Crypto-Led Round
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