What is Finance 3.0?

Mesh is helping to shape a new world of capital markets, taking the complexity of traditional finance and compressing it into a secure and seamless next generation of markets. We call this future “Finance 3.0”. Here’s a look at how we got here, and what Finance 3.0 means for investors and issuers.

Finance 1.0: Where It Started

Finance 1.0 hearkens back to the earliest days of trading: the markets, agoras and salt bazaars of the ancient world. “Capital markets emerged when people started getting onto ships and sailing across the world,” explains Mesh CEO Connie Bloem. “You’d have ship owners saying, ‘I’m going on a journey, and I’ll return with riches – but I need money to do it.’ Investors would support them by entering into a bond, based on the promise of receiving greater returns on their capital when the trader returned from their voyage.”

Finance 2.0: Connected and Compliant

Finance 1.0 evolved into Finance 2.0, driven by the Industrial Revolution.

“More and more companies started to participate in the capital markets, but to be the first person to make more money, to create better return on investment for your investors, you needed to trade more quickly and you needed quicker access to the market,” Bloem explains. “Banks, by virtue of having more capital, could invest a bit more into technology and systems, building massive tech stacks to ensure they could trade the fastest and make better profits.”

But while Finance 2.0 is all about regulatory compliance and hyperconnectivity, it’s not a perfect system. In fact, the financial system is deeply flawed: markets are centralised and intermediated, access to capital is limited, and onerous regulations are stifling innovation.

Finance 3.0: Open To All

If Finance 1.0 was yesterday and Finance 2.0 today, then Finance 3.0 is the financial markets of tomorrow, powered by digital applications. “A good example of a Finance 3.0 application is PayPal, which enables instant payment transfers,” says Bloem. “All of a sudden normal people had the financial markets right at their fingertips, and small fintech companies could do in days what banks would take weeks to do. The question then became: What if more people had access to the capital markets? With technologies such as the blockchain, that is now possible.”

That future is still being shaped, and Mesh is playing an active role in shaping it by breaking down the traditional barriers to access, eliminating the need for intermediaries, and providing secure, technology-driven solutions that help to restore trust. Finance 3.0 is decentralised, built on blockchain technology that provides the financial system with scalability, transparency, security, and easier access.

What Finance 3.0 Means

Our vision for Finance 3.0 is an elegant, end-to-end flow of activities across the entire market. Where the whole market works together, knowing that real value is unlocked when we optimise across the entire ecosystem, rather than having each player sitting in their own silo trying to extract the highest rent.

“The market doesn’t need greater and faster trading, it needs more unique assets,” says Bloem. “It needs to attract more people to bring their capital to the market to invest. The baseline of the Finance 3.0 dream, is one where capital markets are easy to access, simple to use and more transparent. It’s based on platforms such as Mesh coming to the fore and connecting the entire global capital market into one elegant marketplace.”

This description of Finance 3.0 sounds both optimistic and futuristic, but Mesh has been building towards this future for many years to make it real and achievable today. The Mesh platform is built on the blockchain, ensuring that all operations within our ecosystem are secure and immutable. This eliminates most operational and regulatory risks, and issuers and investors can trade with trust in the ecosystem.

In Finance 3.0, regulation doesn’t represent constraint; it represents real protection for all participants. And with limited operational and regulatory risk, you can trade across organisational and jurisdictional boundaries, with trusted and known participants, in trusted and known assets.That’s the promise of Finance 3.0: decentralised capital markets, open and accessible to all.