The modern world has witnessed three major economies. First, there was the industrial economy in which people earned money through physical activity. Then came the consumer economy in which people made money performing services. Next, the knowledge economy enabled people to earn money through leveraging intellectual capital and insight. 

In these past few years, we’ve been witnessing the birth of the creator economy, a new economy fueled by social media platforms and video sharing. This new working order democratizes the ability for anyone to become a celebrity. Here’s a look at four key facts of this new economy.

Who

While many consider the creator economy to be limited to YouTubers and Instagram influencers, it actually has a wider breadth. In essence, everyone with an online presence is a creator, since we are all making content and sharing it online in some form.

A more exclusive definition of a creator is anyone who monetizes content online. This represents not just social media influencers, but also includes those who create and sell NFTs, ebooks, podcasts, digital art, etc.

Because there are such low barriers to entry in the creator economy, even kids can do it. In fact, one of the most famous YouTube creators is Ryan, an 11-year-old with 30.9 million subscribers who posts videos of himself playing with toys. Ryan is reportedly worth $32 million.

The participation of kids in the creator economy is influencing how younger generations view their future. According to a recent study, one third of kids between ages eight and 12 want to be either a YouTubber or Vlogger when they grow up.

Size

The current size of the creator economy is over $100 billion and growing. YouTube alone expects a $30 billion stream of revenue by the end of 2021. Of the 50 million people that consider themselves a creator, around two million of these are professionals making six-figure salaries.

Where’s the money?

Just like other economies, one of the ways that creators are recognized for their contributions is by getting paid. While this payment used to come from ads, branded content, or sponsorships, today’s monetization looks different. That’s because, instead of relying on third party sponsorships and brands to receive payments, creators now receive payments via subscriptions, tips, and even by payments directly from the user.

One of the latest examples of this is TikTok, which recently introduced the concept of in-app tipping. Users with more than 100,000 followers can apply to begin receiving tips from their fan base. When they receive a tip, 100% of the compensation goes to the creator; TikTok doesn’t take a commission.

Creators aren’t just getting paid in dollars. Owners and creators of non-fungible tokens (NFTs) receive payment in cryptocurrencies in exchange for their work. For more on how NFT compensation works, check out our piece 7 Things to Know about the NFT Craze.

How to leverage the opportunity?

The most important part about the creator economy for banks and fintechs is knowing how to leverage the opportunity. The future of this economy is unlike any we’ve ever seen in that payment and monetization may not rely on traditional banking infrastructure. In fact, many participants’ future revenue will be decentralized.

What we know for sure, however, is that personalization and customer experience matter and will continue to reign, even when payments are thrown off the rails. Many digital banks are already capitalizing on this opportunity. Just take a look at Nerve, a bank for musicians; Karat Financial, a bank for digital creators; and Willa, an invoicing tool for creators.

These financial services firms are different from banks in that they understand the unique challenges that come with being a creator. For example, creators experience many of the same difficulties as the self-employed, such as difficulty qualifying for a loan. They also often times have lumpy cashflow and need help with budgeting and financial planning.

There is still time for traditional banks to come up to speed in the creator economy. The key to serving this unique customer base will be to expand your existing resources for self-employed customers by offering new services such as revenue-based financing and on-demand wage access. As with most things in today’s digital banking era, the only way to properly serve this new user base will be through partnerships.

Photo by Ben Eaton on Unsplash

The concept of Central Bank Digital Currencies (CBDCs) is already familiar to most in the banking and fintech industry. However, the idea that the U.S. will have a functioning CBDC of its own in the near future still seems far-fetched.

PwC’s CBDC global index ranks the U.S. 18th in the globe when it comes to the maturity of its retail CBDC project. This places the U.S. significantly behind countries including the Ukraine, Uruguay, and Turkey, which all rank among the top 10.

So when the U.S. rarely ranks below the top 10 in any global comparison, what’s holding it back when it comes to CBDCs? There are three major reasons, as outlined below.

Slow

The U.S. is a big ship to turn, partially because the country’s legislative process is slow. This is true especially when compared to other countries, such as China, which have more authoritarian control over citizens.

This lack of agility can be seen in other federal initiatives, such as FedNow, the U.S. central bank’s instant payment service. Initially announced in 2019, the service will begin a phased launch of real time payments in 2023 and aims to be fully operational by 2024. As American Banker noted, FedNow should instead be called FedLate. By the time the central bank rolls out instant payments, many other private industry players will have already stepped in. In fact, some already have. Ripple, The Clearing House, and Orum are already offering real-time payment solutions.

And the U.S.’s progress is slow not only when it comes to implementing a CBDC, but even in simply making the decision to implement one. Earlier this fall, the Federal Reserve announced plans to “soon” release its research on a CBDC. While this is an important first step, the report won’t even take a stance on whether or not the U.S. should issue a CBDC.

Fragmented

This is a big one. The U.S. government is siloed; there is no central authority of who would have direct oversight or responsibility for the issuance or regulation of a CBDC.

Government branches that would want a say in the matter include not only the Federal Reserve, but also the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Federal Trade Commission, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the Financial Stability Oversight Council, the Federal Financial Institutions Examination Council, the Office of Financial Research, and state and regional authorities.

This list doesn’t even include private commercial banks, which will be crucial to the rollout of a CBDC.

This large number of stakeholders is highlighted when contrasted with India, Kenya, and Brazil, which all have central digital payment systems that are overseen by their respective central banks.

Untrusted

Simply stated, many U.S. citizens don’t trust their government. This distrust is potentially the consequence of free speech mixed with 21st century communication technologies and sharing platforms such as Facebook and YouTube, which help spread misinformation and skepticism. If you’ve ever met someone who thinks that the Earth is flat, you know what I mean.

U.S. citizens’ reactions to a recently proposed measure, the IRS reporting mandate, illustrate that the distrust of the government isn’t just for conspiracy theorists. The IRS reporting mandate was part of President Biden’s Build Back Better bill, a bill that would have required financial institutions to report inflows and outflows totaling more than $600 from bank accounts to the IRS.

The purpose of the bill was to catch tax fraud; it would generate an estimated $463 billion in revenue over 10 years. However, many citizens on both sides of the political divide viewed the additional governmental surveillance as overreach. “While the intent of this proposal is to ensure all taxpayers meet their obligations—a goal we strongly share—the data that would be turned over to the IRS is overly broad and raises significant privacy concerns,” Democratic representatives wrote to Speaker Pelosi. “We have little information about how the IRS plans to protect or use this massive trove of data. Americans expect their bank or credit union to safeguard their financial information.”

If the U.S. government issued its own digital currency, many would switch to cash or alternative currencies. It is evident that U.S. citizens don’t want to offer data on financial habits to their government. Additionally, many would likely not appreciate that the government would be able to dictate how they spend a government-issued currency. Indeed, one of the most appealing aspects for governments of a CBDC is that they can control how and when certain funds, such as stimulus checks for example, are spent.

The last shall be first and the first last

Ultimately, the headline of this piece may be a bit dramatic. The U.S. may not necessarily be the last to establish its own CBDC. However, it is already lagging behind many developed countries and doesn’t appear to be making much progress.

“The reason you could say the U.S. is behind in the digital currency race is I don’t think the U.S. is aware there is a race,” Yaya Fanusie, an Adjunct Senior Fellow at the Center for a New American Security, and a former CIA analyst, said in an interview with TIME. “A lot of policymakers are looking at it and concerned…but even with that I just don’t think there’s this sense of urgency because the risk from China is not an immediate threat.”

And as TIME described, this disconnect may cause the U.S. to cede control of previously established global financial power. “With private companies pushing deeper into the digital currency space, rival countries seeking to seize leadership, and a public that is moving further away from physical currency,” the author wrote, “the U.S. is facing a world in which it may not control or even lead the world’s payment systems.”

Photo by Sides Imagery from Pexels

Non-fungible tokens, better known as NFTs, have been making their way into mainstream culture this year. From “breeding” digital kitties to collecting NBA trading cards, the possibilities of buying and selling digital media are endless.

If you’re NFT-curious, one of the best ways to discover more is to create or purchase your very own NFT. If you already have a crypto wallet, it is fairly simple. Create your own by uploading a photo to OpenSea or check out the OpenSea marketplace to browse media. It only took me around five minutes to create my first NFT:

As a quick-fire way to help you sort the ins and outs of NFT trading, here’s a quick list of seven things you need to know about the NFT craze.

1. NFTs are not just for fintech nerds

The fact that NFTs leverage the Ethereum blockchain doesn’t scare off creators nor buyers. Multiple marketplaces, including the aforementioned OpenSea, Binance, and Rarible make it very simple to upload, buy, and sell NFTs. As Time reports, teenagers as young as 15 are already making millions of dollars by creating, buying, and selling NFTs.

2. NFTs are good for creators

Instead of sacrificing commissions to art houses, publishing companies, and other middlemen, creators can keep the majority of the purchase price for their work. OpenSea, for example, charges only a 2.5% fee. Additionally, some NFTs enable the artist to receive a royalty payment each time the NFT is sold or changes hands.

3. NFTs benefit buyers

The value of buying and owning NFTs is a bit less clear than the value for creators. Aside from exercising bragging rights, NFT owners can use the NFT as a speculative tool by buying and selling NFTs, or they could use their purchase as a way to more directly follow and support artists.

4. Anyone can create an NFT

As long as a user has a crypto wallet and is able to upload media, they can create their own NFT. My NFT is proof of this– while I am certainly not an artist (I failed art in the fifth grade), I was able to upload a photo I already had to quickly create my own.

5. NFTs are one-of-a-kind

As the name suggests, NFTs are non-fungible, meaning they cannot be exchanged with assets of the same type. In other words, unlike currency which can generally be exchanged one-for-one (I can pay you a dollar for your dollar), each NFT is completely unique.

6. Yes, NFTs can be copied or downloaded

Because NFTs are digital media, they can easily be reproduced. Anyone can take a screenshot of an original NFT or download a copy of a video. The value, however, is in owning the original NFT. As an example, there are many copies of Van Gogh’s Starry Night, but none are as valuable as the original.

7. NFTs can potentially bridge the digital/ physical divide

While NFTs are restricted to digital assets, it is possible to use NFTs as a type of verification method for the purchase of an original, physical item. For example, Nike has patented a way for sneaker collectors to track ownership and verify the authenticity of sneakers.

Photo by Fakurian Design on Unsplash

At FinovateFall last week, Citizens Bank of Edmonds CEO Jill Castilla described how she is leading her bank through the pandemic. In her 16-minute address, she described how her bank navigated the decision making process and leveraged fintech relationships to help their small business customers survive COVID lockdown.

Citizens Bank of Edmonds was founded in 1901, has $400 million in assets, and 55 employees. The bank aims to serve everybody and has a goal to be the best at everything. And while that sounds like a lofty goal, the bank has proven that it is up to the task by implementing unique solutions that come alongside customers to meet their needs.

So what does it take to be such a successful bank in both the eyes of competitors and customers? Here are three takeaways from Castilla’s keynote that are worth considering.

Communication is foundational

By today’s standards, Castilla is very liberal about offering up her contact information. During the pandemic, she was quick to share her cell phone number; she even tweeted it out multiple times! Providing this open line of communication to both staff and customers was key to ensure that nobody fell through the cracks. Castilla even concluded her keynote by sharing her phone number, saying, “You’re welcome to text me any time.”

But it doesn’t end there. When the pandemic hit, Castilla made sure to contact all of Citizens Bank of Edmonds’ business customers to determine their main areas of stress. And when the bank had to close its lobby, it sent employees to meet customers at the curb to schedule time slots to serve its customers and maintain the personal touch.

Look forward

Castilla watched Frozen II during lockdown and the quote, “All one can do is the next right thing” caught on. In trying to make decisions for the bank, Castilla and her team would consider “the next right thing.” In other words, they would think about what the best decision would be for the future, and not for the present moment.

Castilla offered the example of using the mantra to determine if Citizens Bank of Edmonds should host its annual block party at a time when COVID was just getting started. Thinking about the next right thing made it easy for the bank to call off the party.

And while a block party may seem trivial, consider this mantra implemented for a larger, more strategic decision making. Questions such as, “should we make an investment in AI technology?” or, “should we partner with this up-and-coming fintech?” are a bit easier to answer when filtered through the lens of the next right thing.

Focus on the needs of clients

This takeaway ties back into the first two points, because if financial institutions maintain a foundation of communication while focusing on the next right thing, they will ultimately be doing what is best for their clients.

“Doing the right thing will help you find your people,” Castilla said during her keynote, “And talking about what’s important to you out on social media and the digital space will help you connect with people.” She also noted that both banks and fintechs are trying to do what is best during this challenging time, adding, “Collectively and individually, while working together and on our own, we’re going to change the world for [consumers and small businesses], we’re going to provide greater access to credit, we’re going to have a better understanding of what their financials are, (and) we’re going to help them run more successful businesses.”

Photo by Adi Goldstein on Unsplash

Even though super apps aren’t common in the U.S. or Europe, most everyone in fintech across the globe is familiar with them. Super apps serve as a one-stop shop that allow users to access multiple services from a single place.

In Asia, the hot spot for super apps, users are able to use super apps for everything from ordering groceries to hailing a cab to managing their finances. Apps including WeChat, AliPay, Paytm, and Grab are commonplace across Asia. In fact, WeChat has more than 1.2 billion monthly active users; 78% of people in China between the ages of 16 and 64 are using WeChat.

It is the “super” nature of these apps that makes them so successful; they are a platform and do not just fulfill a single purpose. With a combination of in-house technologies and third party integrations, the apps serve a range of consumer needs. Many super apps began with only a single purpose, accumulated a large number of users, and then began adding new capabilities.

What does it take to become a super app? Starting with a massive user base helps, and providing a range of tools for everyday tasks and activities will help keep those users coming back. Below are 10 common capabilities of successful super apps.

Social

As the popularity of WeChat has proven, social tools are sticky. Building communication, collaboration, and sharing capabilities into an app not only builds a user base, but also creates a community around a brand.

Ecommerce

Shopping is taking place increasingly online, which means that ecommerce purchases are becoming a large part of consumers’ everyday lives.

Food delivery

Everybody needs to eat. And between online grocery orders and takeout meal deliveries, super apps can help users meet this need.

Transportation services

Just as important as having food and online purchases delivered is having the means of getting from one location to another. Included in this category are ride hailing services, car sharing services, and bike or scooter sharing services.

Personal finance

Another one of life’s essentials is managing finances. From budgeting for daily expenses to planning for retirement, banking and finance tools are key components of a super app.

Travel services

Offering travel services, such as travel insurance, concierge services, and rental car discounts, is commonplace for many financial services companies. Super apps offer more robust capabilities, however, such as flight comparison and booking tools, train schedules and ticketing services, and hotel booking capabilities.

Billpay

Paying bills is a regular occurrence for most people, so including utility billpay and a mobile top-up feature will give users yet another reason to log into a super app on a regular basis.

Health services

The healthcare industry is fragmented. So providing health services, such as appointment booking, tele-health calls, records management, general health information, and ask-a-nurse services in a single place provides a lot of value for end users.

Insurance

Similar to the health industry, insurance comes with a lot of moving pieces. Offering a digital lock box with insurance cards, contact information, coverage options, and payment history is a valuable tool that can help keep users organized.

Government and public services

Rounding out the list of life’s necessities in the digital realm are government and public services. Super apps can host social security cards and information, public transportation payment options, and library card information.

Photo by Mehdi on Unsplash