1.1–2007 : The Big Bang
The changes we are observingare rooted in what has been defined by many as the most important crisis since the great depression. As often happens, every great crisis brings the seeds for a new species, able to reflect the changed context.
The stop of credit supply and the consequent loss of confidence in the financial markets, following the bankruptcy of some banks and insurance companies, led to a period of recession that crossed the American borders, spreading rapidly in several countries, and producing effects on all sectors globally.
The crisis finds its space in the popular culture. The best-seller “TooBig To Fail”, followed by its movie “The Big Short”, analyzes and narrates, to a large audience not necessarily experienced in finance, the origins of the crisis and the aspects that led to a global dimension.
“If we’re right, people lose homes. People lose jobs. People lose retirement savings, people lose pensions. You know what I hate about fucking banking? It reduces people to numbers. Here’s a number — every 1% unemployment goes up, 40,000 people die, did you know that?”
(Ben Rickert-TheBig Short)
The reaction of governments and central banks, first turns to contain the phenomenon, through injections of liquidity and then, to the minimization of its effects, introducing austerity policies bringing back terms such as “deficit” and “spread”. The crisis highlights even more the criticality of finance in the social-economic context, a result deriving from the deep and widespread connection between markets, companies and citizens. An infrastructure that should benefit from maximum security, trust and continuity.
1.2–2008 : Digitization at full speed
The digitization process, which had previously involved the mobile telephony industry with the introduction of 2G, record companies with DVD and digital photography, received a further evolutionary boost in June 2008, when Steve Jobs introduced the “AppStore”.
The importance of this passage must be sought in the high impact that this phenomenon has on the population and their lifestyle. The response of software developers is immediate, as the apps are able to make an already existing digital content in a new form at available and usable on mobile devices of millions of users. The adoption rate, only partially represents the effects of the change that is taking place: phones are equipped with GPS, accelerometers and other sensors embedding an opportunity for entertainment, work and social activities to be developed outside the office and to be available at all times with many new features.
The phenomenon has unprecedented proportions: in the first two months there were 100M downloads. Ten years later, the success was measurable with 6.5 million applications available in storesand the trend is so clear that all big players move together, from Google to Sony to Microsoft. Revenue from the app (in-app, paid-app, adv) reached 80 billion dollars in 2018.
The effects are not only reflected in economical terms, but it could be said that the apps also play an active role in educating the population to enter the digital world.
Although there is a widespread belief that apps are free and that no one pays for their use, the numbers show a completely different scenario. The chart below shows how revenues were initially coming from the app purchase (PaidApp) and advertising, while in the following years this changed introducing the “Freemium” model.
Freemium apps are free apps to download that contain “In-App” purchases. In-App REVENUES grew from 712 million US Dollars in 2011 to 36 billion in 2017.
Games, and therefore entertainment in general, are the ones accounting for the majority of the flows.The recent Pokemon Go phenomenon shows how some apps can reach important revenue streams as shown in the chart below: Pokemon Go made about 2 million dollars a day in July 2017 in the US market from Apple users.
Consumers of digital content or tangible goods concentrate their purchases in the stores, generating a further effect of digitization, which allows the stores to increase their functional spectrum, making them ”collectors of financial flows”.
Stores play a fundamental role among sellers and buyers not only for their main function of purchases “centralizators” or for the visibility they offer, but more particularly for their “safety” functions .The safety functions not only cover the aspects related to buyer transactions but it also extends to the developer side(seller). The stores are responsible for collecting payments from all users on a global scale, in various local currencies, and then converting them. Finally, they are responsible for transferring these funds, upon the occurrence of certain conditions, to a specific bank account, avoiding fraud and thus ensuring the completion of the transaction and the delivery of the good.
The user has a further level of guarantee deriving from the security rules that the stores impose and ensuring the custody of sensitive data. The user can also leverage the rating logic to be guaranteed that the object of the purchase is secure and that, once installed, it won’t offer a negative experience. The effects of these guarantees are reflected in the trust users grant to the stores which leadsthem to register their credit cards in the first place. The purchase then becomes immediate, eliminating any friction element and the stores collect billions of dollars per year.
Putting together the most important stores, including Amazon, Alibaba and Facebook, which also publish assets underlaying a revenue flow, they collectively collect flows of about $ 1 trillion a year.
About a year ago, the company founded by Mark Zuckerberg obtained a license for the issueof electronic money and payment servicesin Ireland, with the aim of exporting the system of payments between users of Facebook Messenger that is already active in the United Statesto Europe. On the other side Apple made its move with electronic wallet services highlighting the interest of stores to take an active role also in the provision of financial services typically limited to the banking system.