3 Ways the "Finternet" is Set to Revolutionize the Global Economy Current financial system is not able to cope with the demands of users says Nandan Nilekani, co-founder Infosys
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Nandan Nilekani, co-founder Infosys has termed 'Finternet' as a solution for tedious banking tasks such as taking loans, buying properties, transferring assets and bonds, and others.
"The Finternet is a new approach to global finance which is defined by the three 'U's' – it is user centric, unified, and universal – that is keeping the user at the centre and it has to be universal, that is it has to cut through asset classes of all types. The Finternet combines the best of the regulated world with the best that tokenization technology can offer us. It uses the basic construct of tokens and then enables universal interoperability and composability," Nilekani explained.
Such financial tasks may take days to complete and rely on time-consuming clearing and bundles of paperwork and the current financial system is not able to cope with the demands of users.
Tokenization of Everything
Tokenization is the process of converting rights to an asset into a digital token on a blockchain or similar technology. "From your savings account to your artwork, every asset can be tokenized. This process simplifies ownership, transfer, and trading across a unified global ledger," shared Nilekani.
For instance, take owning a piece of real estate, like an apartment. Today, selling this apartment or a portion of it requires a lengthy and complicated process, including finding buyers, dealing with paperwork, and adhering to local regulations. With tokenized fractional ownership, the apartment could be divided into, say, 1000 tokens, each representing a 0.1 per cent ownership in the property. These tokens can then be sold on a digital marketplace, allowing for fractional ownership. If someone wants to invest in real estate but can't afford an entire property, they can simply buy a few tokens. It is a smooth and fractionless process.
User-Centric Financial Systems
The Finternet prioritizes users; this financial service puts users at its centre and offers them complete control over their financial assets, whether it's deposits, real estate, or Non-fungible tokens.
"It is user centric, it puts the user at the heart of what we want to solve because users want more control over their life. It has to be unified, which means that it should come across all asset classes. It could be shares, it could be bonds, it could be deposits, it could be paintings, it could be horses, it doesn't matter," emphasized Nilekani.
Global Interoperability
Nilekani proposes a big internet architecture system where the tokens can be bought and sold across different ledgers and so on to create a phone transaction. Imagine you have digital tokens on a blockchain in India, and you want to use them to purchase goods from a company that operates on a different blockchain in Germany. Global Interoperability would allow these two blockchains to communicate and process the transaction without needing to convert the tokens or go through multiple intermediaries.
"What we need to do is bring the power of cryptography, the power of tokenization to all these things that have to be there. In other words, can we think of a way to do the best that tokenization technology can offer us and that's what the Big Internet does. Because it uses these basic constructs of tokens and then enables universal interoperability, explained Nilekani.
