‘To cure banking, tap here. To purchase bombs, press here.’ The dilemma of taming disruptive tech.
Last week I was at Goldman Sachs to hear Giselle Frederick, founder and CEO of Zingr.
Zingr is a FinTech start-up ‘providing solutions to the unbanked’. Their product is a digital wallet that enables peer-to-peer payments without high commission charges. In other words, Zingr is democratising access to banking by making it easier and cheaper for people in Africa and the Caribbean to send remittances. And it’s all thanks to the blockchain.
The blockchain, or ‘distributed ledger’, is in vogue. It’s based on the idea of distributed trust. It allows anyone to transfer money across encrypted electronic ‘wallets’ without the need to pay financial service providers to mediate the transaction. Why’s this significant, I hear you cry?
Well, in principle, the blockchain brings down costs for transacting parties by removing the middleman. Traditional transactions — as in those done through a neutral authority like a bank or Western Union — incur annoying costs that can be up to a fifth of the sum transferred. Transactions that are done through the blockchain, however, remain in the sweet 0–1% region. This is hardly a bombshell for bank users in the West. But if you consider the positive implications this would have for donations to victims in natural catastrophes like Hurricanes Irma and Maria, expatriate workers, as well as loans for farmers in the developing world, this percentage difference is a big deal.
The blockchain also promises full anonymity of ownership and use of funds since everything’s traded in code. Do you feel a ‘but’ coming? Hold on, we’ll get there.
In the case of Zingr, this means faster clearance and settlements for cross-border payments. This is particularly handy for small businesses in places like Africa and the Caribbean that have illiquid currencies. It also provides banking for refugees and others who lack access to traditional identity documents.
Admittedly, I left the talk feeling inspired. I couldn’t help but feel breathlessly enthusiastic about what Zingr could mean for the African and Caribbean diasporas. It is Black History Month, after all.
Digitized money transfers via mobile phones has already revolutionised the banking sector in various developing countries. Take Vodacom’s M-Pesa system, which has been a hugely successful mobile-phone-based financial service in the developing world. Like Zingr, M-Pesa enables people without bank accounts to transfer money with ease using their mobile phones.
The app’s been lauded for giving millions in Kenya, DR Congo (whoop whoop!) and other parts of Africa and Asia access to the formal financial system and for reducing crime in otherwise largely cash-based societies. Zingr’s addition of blockchain into the mix is what really sets it apart as it may accomplish even greater feats than M-Pesa by further reducing transaction costs.
Lo and behold, the blockchain has a dark side (I did say there was a ‘but’ coming). What surprised me, however, was that Giselle and the room full of GS reps were rather nonchalant about this fact. Like, what happens when Zingr is used to buy and sell weapons, illicit drugs, or fraudulent cryptocurrencies? The anonymity of the blockchain makes it hard to jail crypto criminals like Arthur Budovsky who founded the cryptocurrency ‘Liberty Reserve’.
There’s a deluge of data to suggest that the increased opportunities for revenue combined with the decreased likelihood of detection make platforms like Zingr irresistible to criminals looking to make some moolah in the blockchain equivalent of the “dark net”. Slippery slope, anyone?
For better and for worse, Zingr is here. So what do we about it?
For starters, we need to check if Zingr passes Evgeny Morozov’s “solutionism” test. By that I mean we need to see whether or not Zingr is merely a quick technological fix to a really difficult problem.
According to Morozov, tech entrepreneurs have a terrible habit of refashioning complex social issues — like banking in the developing world — as “neatly defined problems” with “definite, computable solutions”. Michael Dobbins similarly branded solutionism as a flawed ideology that “presumes rather than investigates” the problems it’s trying to remedy.
Techies are renown for their unbridled optimism. Eric Schmidt, former Executive Chairman of Google, boldly declared that technology could “fix all the world’s problems”. Other tech moguls like Facebook’s Mark Zuckerberg and Amazon’s Jeff Bezos, too, have made grand assertions about technology’s limitless potential for solving the world’s greatest ailments. But like Morozov, I think these figures blindly brandish the solutionist flag. And while their monumental claims about technology make for sexy sound bites, they don’t confer any special legitimacy to the underlying problem of solutionism.
Silicon Valley has been known to produce useless technologies under the banner of solutionism. Most recently, this came in the form of a Wi-Fi connected juicer machine aptly named Juicero. What grand problem did it aim to solve? The mild inconvenience of squeezing juice into a cup. Sigh.
Or how about the Eye, a £148 iPhone case that is — wait for it — also an Android phone strapped to your iPhone? The easy solution would be to sellotape both phones together, but, hey, who needs simple solutions when you can have nonsensically overpriced efficiency. You could argue Zingr is the next instalment of the tragically comic trend of Silicon Valley’s solutions to non-problems. Their slogan, ‘providing solutions to the unbanked’, does appear, prima facie, to have an uncanny solutionist ring to it. However, I don’t think this is the case and the difference is one of context.
During her talk, Giselle was kind enough to tell the audience about her upbringing. She spent a good portion of her life in the Caribbean before moving to the UK to complete her degree in Software Engineering at City University London. Giselle remarked how she lamented being charged extortionate fees by Western Union when transferring funds to her younger siblings to help with their tuition fees.
It’s easy to brand all new technologies as riding the solutionist wave but, unlike the folks at Juicero, Zingr wasn’t born out of a pointless desire to innovate for its own sake. Giselle has a clear understanding of an actual problem, a problem she’s personally had to grapple with. This insight is precious.
Giselle’s time in the Caribbean combined with her role at Urban Synergy, a charity that delivers career workshops in disadvantaged communities, means that she knows her stuff. Her real-world experience in these communities means that she can engage with the problem of banking without the narrow-mindedness you’ll find in Silicon entrepreneurs, who are mostly white men who’ve never been in the trenches of the developing world.
But before we can celebrate the fact that Zingr doesn’t neatly fall into the solutionist category, it’s going to have to cross a few more hurdles. Like, how do we predict and plan for the unintended consequences of the app?
We’ve already established that Zingr could be used to facilitate nefarious commerce that escapes public scrutiny and regulation. But by imposing disruptive controls on Zingr with our just-in-case hat on, there’s a high chance we’ll forgo all the benefits we would get from it. It might be my mum’s cooking, but I think I smell a serious dilemma.
I should add that digital tracing and policing of illegal commerce in the blockchain is a thing. Law enforcement agencies have succeeded in shutting down some criminal cyber-commerce sites. While this is true, putting power in the hands of central rule-making bodies kind of goes against the blockchain’s essential spirit of decentralisation, so I’m not so sure we’re in the clear.
Also, it would be really difficult, perhaps impossible, for anyone to foresee all of Zingr’s harmful effects or at least in enough detail to justify never letting it take off to begin with. That’s because no technology operates in a vacuum. Though we can agree that Zingr’s mission is good-natured, the known and unknown socio-economic issues it gives rise to are far too intricate and pressing to give it a swift pass.
For one thing, we have virtually no data on how Zingr will impact the role of African and Caribbean governments and central banks in setting monetary policy. We know for certain, however, that neither governments nor banks will benefit as much from being mediating institutions since transaction costs in peer-to-peer transfer systems like Zingr are close to zero.
So it’s possible that Zingr’s use of blockchain threatens to undermine the hard work that African and Caribbean banks have invested in establishing a working banking system, albeit an unsatisfactory one. If it ain’t (completely) broke, don’t fix it, one might say. Zingr promises to democratise banking by solving a local problem, at least local to the unbanked parts of Africa and the Caribbean, but it may open a whole can of global problems we can’t envisage right now. And it wouldn’t be the first.
Take Facebook, for example. When it first launched in 2004, we all got behind Zuckerberg’s great social mission of connecting everyone around the world with a single mouse click. Yet, today he stands accused of creating a product that’s tearing at the foundations of American democracy. How about Uber? Could Travis Kalanick have predicted that nine years later his seemingly benign taxi company would be the butt of multiple protests and legal actions? But is it fair to blame Zuckerberg or Kalanick for not seeing this coming? It’s not like they’re fortune tellers.
These two examples serve as cautionary tales of just how difficult it is to pinpoint where a new technology will go. Giselle is known for her philanthropic heart, but good intentions won’t be enough to guarantee that Zingr doesn’t morph into a blockchain-powered chimaera that plunges the banking world into a sea of nothingness.
Like a roaring lion, new tech can be a difficult beast to predict or tame. So should we just give up on Zingr altogether?
Maybe the problem here is with our definition of “unintended”. On the one hand, you could define “unintended” as (1) Giselle’s original intent — to democratise banking through Zingr — not being executed as she plans. On the other hand, it could mean (2) that things will happen outside the scope of Giselle’s intent because no one could have known in advance how Zingr would be used. It might not look like it, but these two definitions carry very different implications.
I would favour the second definition because — without wanting to sound too mystical — technology is in constant flux. As you’re reading this article, Elon Musk’s picking candidates to colonise Mars and robots are plotting to take our jobs. Just let that sink in for a moment. We can’t, therefore, expect Giselle’s original intent — to democratise banking through Zingr — to make total sense five or ten years from now because the world will be a very different place. No matter how many preventive policies you put in place or how effectively you design the app, some conniving smuck will figure out a way to subvert your well-intended goals and, BAM, a concomitant catastrophe emerges from the deep.
Herein lies the difficulty of governing emerging technologies.
It isn’t clear how far we’re willing to push the boundaries of technological innovation before it starts to eat away at the things we cherish the most. It’s easy to get excited about the prospects of new apps like Zingr, but an uncurbed appetite for innovation can at best result in pointless doodads, at worst unleash an onslaught of unforeseen socio-economic disasters that end up exacerbating our current state of affairs. So how do we resolve this dilemma?
We can start by embracing the reality that technology is constantly changing and choose to evolve alongside the technology. Contrary to the solutionism enthusiasts, that doesn’t mean we’ll able to solve the world’s problems permanently through technology alone. To paraphrase Uncle Ben and African proverbists, with new technology comes new responsibilities and it takes a village of disciplines, not just tech, to save the world.
To reject solutionism is to reject investing in senseless technologies that are totally out of touch with real and complex social problems. And it’s to accept that even the most well-intentioned technologies — like Zingr — may harbour potentially disastrous consequences, so we’ll have to make responsible trade-offs.
What constitutes a responsible trade-off, I hear you scream?
Well, let’s leave that for another post.
