CEO and Co-founder at Hedera Hashgraph – Mance Harmon shares a few thoughts on the evolving fintech segment and his future plans for his fintech startup in this GlobalFinTechSeries interview.
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Can you tell us a little about yourself Mance (including your hobbies!) and what your fintech journey has been like so far?
My background is in computer science. I have an MS in Computer Science from the University of Massachusetts and a BA in Computer Science from Mississippi State University. In the 1990s, I was in the military, doing machine learning research for the Air Force Senior Scientist for Machine Intelligence, which is where I met my co-founder, Dr. Leemon Baird. I founded two tech start-ups with Leemon. Having sold one of those start-ups on to a Fortune 500 company, I moved on to work at Ping Identity as Head of Architecture, while Leemon spent time designing a new, decentralized protocol, Hashgraph.
Of course, soon thereafter, Hedera Hashgraph was born. Specifically, Leemon wanted to solve the problem of how you maximize security at the protocol level, and achieve something called Asynchronous Byzantine Fault Tolerance – the theoretical limit, in terms of security, for a distributed consensus algorithm – while at the same time maximizing performance in terms of throughput.
The discovery of hashgraph in 2015 was so profound and compelling that we knew we had to take it to market. So in 2015 we started a company to begin to develop and commercialize the hashgraph technology, and we’ve been working on it ever since.
In my spare time, I enjoy riding motorcycles and playing guitar, both of which are hobbies that I’m fortunate enough to share with my children.
Given your expertise and experience in the tech industry so far, we’d love to hear about some of your biggest learnings and hurdles.
Having worked in technology for a number of decades, one quote that always resonates with me is from Bill Gates. “Most people overestimate what they can do in one year and underestimate what they can do in ten years.” We are very early on in the development of distributed ledger technology (DLT), and are just starting to scratch the surface of what it can do and how it can improve our lives. Bitcoin was born during the last financial crisis, and much other innovation comes as a result of a clear need for things to be done differently, and the system to work differently for a larger group of people. I am confident that the same kind of innovation will come from the broader distributed ledger industry now.
How will the fintech segment shape up in the next couple of years, given the constant innovations and investments in certain areas? What do you think this landscape will look like in future?
Emerging technologies, particularly within the DLT vertical, will have a huge impact on the direction of the fintech space. Not only will DLT innovations inform the trajectory of fintech more broadly, they have the potential to re-define the fintech space as we know it, delivering new levels of transparency and financial inclusion. Additionally, evolving regulatory frameworks and data protection constraints will also prove transformative for the fintech landscape in the years ahead. The likes of CCPA, GDPR and a potential U.S Data Privacy Act, if enacted, will prove to be the external forces powering a new era of user-centric fintech models, in which consumer privacy is paramount.
Could you talk about some of the other innovative fintech apps and platforms in the industry that according to you are set to be new game-changers for this niche?
Broad exploration of DLTs among financial institutions has been well documented over the past few years, with DLT being widely recognised as a mechanism of genuine transformation for a range of financial players – a status that is underpinned by the principles of immutability, transparency and the facility to store assets across multiple devices. More specifically, the area of DeFi (Decentralized Finance) has experienced significant growth in recent years, with the total value locked in decentralized finance more than doubling between 2018 and 2019. Within the global DeFi ecosystem, digital assets and open protocols continue to be integrated with traditional financial structures. Decentralized financial protocols have made way for a multitude of other innovative fintech apps and platforms that are changing the ways in which we exchange assets, and ultimately transforming the world of traditional banking and finance. New decentralized applications built on Hedera Hashgraph provide showcase examples of a DLT-powered fintech space. One such viable application is Zeux, a fiat and cryptocurrency application that allows users to spend digital currency at any point of sale system that accepts Samsung and Apple Pay.
For me, the core tenets that define the viability of fintech solutions are usability and trust. It is critical that applications can be seamlessly integrated into legacy systems, ensuring a straightforward transition that doesn’t impede business operations. Applications that enable swift onboarding of users while also demonstrating a clear, valuable use-case will resonate with key decision makers. The principles of speed, cost efficiency and transparency combine to form enticing app propositions, but the trust piece is critical. In terms of trust, applications that are regulatory compliant, auditable and incorruptible will set themselves apart in the marketplace, particularly in light of the data privacy shift that has unearthed regulations such as GDPR and CCPA.
We’d love to know what some of your top FinTech predictions for 2020 are? What are some of the headlines you foresee taking over this space, say by the end of the year?!
With enterprise adoption fast increasing, 2020 will be a very exciting time for the DLT industry. DLT has already been integrated into a range of organizations and systems, changing the way the world interacts, and increasing the speed and security of transactions.
DLT is currently going through the ‘trough of disillusionment’, as defined by the tried and true Gartner Hype Cycle. Believe it or not, this is the most exciting time to be in the DLT space. I believe that this year, we will enter the slope of enlightenment, when people and organizations really learn and begin to use the technology for practical, useful purposes that will change how companies, applications and users interact.
Three specific predictions I have for the fintech space are:
- Gig economy companies and subscriber based businesses getting into banking. We’re seeing Uber, Airbnb, Lyft, and others look to launch banking solutions to pay their workforce. Many of them already offer prepaid cards to their employees to pay them.
- Telecom companies will start to bank their subscribers as well. T-mobile is already exploring this. One of the fastest ways to bank the unbanked will be having mobile phone companies deliver that experience.
- We’ll see continued interest in crypto as a result of an increasing number of companies paying their workforce with stablecoin solutions like Tether. These companies will benefit from lower fees and ease of use.
Tag (mention/write about) the one person in the fintech industry whose answers to these questions you would love to read!
Dee Hock, the founder of the Visa credit card association (initially BankAmericard), and author of ‘One From Many’). His ideas about distributed, fair governance form the basis of the Hedera Governing Council — which is the body of enterprises and organizations, from diverse sectors and geographies, who steward the development of Hedera Hashgraph. Comprising up to 39 multinational entities from a range of industries and entities, the Governing Council is specially designed to ensure decentralized governance of the Hedera platform. So far, these include IBM, Google, Wipro, Nomura Holdings, DLA Piper, Deutsche Telekom, and more.
Your favorite Finance Tech quote
It is broader than FinTech, but crucially important to building a decentralized financial system of the future, that all can benefit from:
“It is essential to employ, trust, and reward those whose perspective, ability, and judgment are radically different from yours. It is also rare, for it requires uncommon humility, tolerance, and wisdom.” — Dee Hock
We’d love to know what some of your future plans for Hedera Hashgraph are?!
At Hedera Hashgraph we are really excited to further develop our network and community. In September 2019, we launched our public mainnet – an historical milestone in the Hedera journey. In the coming months, we look forward to announcing new members of the Hedera Governing Council, as more large enterprises come on board.
Aside from this, in 2020 our focus will be on making it easier for applications to onboard, integrate with other parts of the DLT ecosystem, and develop highly scalable applications that meet their needs. I am really looking forward to seeing more decentralized applications built on the Hedera network. I love to see how they take shape – both from the perspective of app development and the wide range of industries they are disrupting.