I don’t know which platform(s) will be the predominant foundation for the next wave of finance.
What I do know (or strongly believe, at least) is that the next wave of finance is going to take place on a decentralized network.
Call it Fintech 3.0 (which some already have).
A recent experience in migrating my 401k served as (yet) another reminder of just how antiquated our financial infrastructure is.
My Assets, My Choice?
When I decided to move on from Gtmhub, the leading provider of OKR software in the world, I decided it made more sense to consolidate my 401k from there with a previously existing one.
So, in a DeFi world, I wanted to move my 401k tokens from wallet A to wallet B. That’s a simple send, right?
Well, not quite.
First, I had to fill out a paper form and send it in with my signature.
Then, about 2 weeks later, I received 2 checks in the mail. One of them was for the Roth 401k portion and one for the traditional 401k portion.
Ok, great, which was which?
One of the checks had $400 more than the other, but I couldn’t immediately see which one was which based on the letter they sent me.
And, of course, I couldn’t take the Roth funds and deposit them into a traditional 401k or vice versa.
And, btw, I have 2 receiving accounts, one traditional 401k, one Roth 401k.
But I first had the problem of trying to figure out which one was which.
After digging around the website and then into my recycling bin (because I had tossed some of the paper that had come in the mail with the check), I finally figured it out. Instead of 1 minute, it took me about 15 or 20.
[In the meantime, I had sent an email to the 401k plan administrator asking for help (since the 800 number went to a “you have reached us after hours” message). The auto-response said I’d get a reply within 24-72 hours.]
Ok, so now I have to take those checks and send them in the mail to my preferred 401k plan and hope that they get there and don’t get lost in the mail.
All of this is because the fund administrator for wallet A can’t just send the funds directly to wallet B.
What will literally take seconds in a DeFi world, with cryptographic confirmation that it occurred is taking weeks in a “traditional” financial world, with no objective proof that it is happening.
And, of course, during all of this time, the capital is not being deployed effectively.
It’s Time to Upgrade the Infrastructure
People talk about the “aging infrastructure” of America and point to things like roads and bridges. Those need to be updated, for sure, but that’s a physical foundation layer.
What’s becoming obvious is that the financial infrastructure that powers our banks and other parts of the system are just as antiquated as the roads and bridges.
This is what Web 3 is all about.
A rearchitecting and rebuilding of the underlying financial infrastructure that allows capital to move freely, the way that roads and bridges allow cars to move freely.