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Speaker 1: Welcome to Cie Time, a podcast series on Markets and

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Speaker 1: Economists from DVS Group Research. I'm Theron Bei Economist. Welcoming

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Speaker 1: you to our 139th episode.

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Speaker 1: We are releasing this podcast in time for the 2024

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Speaker 1: Singapore Fintech Festival. What I'd like to do is present

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Speaker 1: some updated thinking on the state of fintech and who

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Speaker 1: better to discuss this other than Varun. Mittal. Varun is

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Speaker 1: the Chief innovation officer at a leading insurance company where

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Speaker 1: he manages new product and distribution innovation, ecosystem partnerships and

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Speaker 1: emerging technology rollouts like the A I Center of Excellence.

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Speaker 1: Earlier in his career, Vern served as a partner at

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Speaker 1: Ey leading its Fintech and ASEAN digital banking practice supporting

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Speaker 1: fin tech start ups financial institutions and regulators. Veron Mittel.

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Speaker 1: Welcome to COVID Time looking forward. Thanks for having you Vern.

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Speaker 1: Give me one minute. I want to read you out

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Speaker 1: some things you joined us for the first time was

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Speaker 1: in 2021 in the pandemic days four years ago on

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Speaker 1: episode 41. So I took the transcript of this conversation

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Speaker 1: and I asked Chad GP T

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Speaker 1: to prepare a summary of our hour long conversation. This

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Speaker 1: is what it produced. In one second.

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Speaker 1: The discussion revolves around the exciting developments in the world

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Speaker 1: of fintech, particularly digital payments. Mittal highlights the significant impact

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Speaker 1: of smartphone proliferation and internet access on the rise of

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Speaker 1: digital finance. He argues that the post vaccine phase will

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Speaker 1: see a further acceleration of digitalization leading to a shift

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Speaker 1: towards remote work and distributed workforces. The conversation then delves

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Speaker 1: into regulatory landscape of FINTECH, emphasizing the need for a

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Speaker 1: risk based approach to regulate emerging technologies.

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Speaker 1: Metal discusses the challenges of cross border payments, particularly the

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Speaker 1: need to balance innovation with security and oversight. He emphasizes

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Speaker 1: the potential of a train model where fintech companies enable

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Speaker 1: smaller customers to participate in existing infrastructure built for institutional clients.

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Speaker 1: The episode concludes with a discussion on the Chinese digital

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Speaker 1: currency initiative and its potential for cross border payments and

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Speaker 1: its implication for national monetary sovereignty.

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Speaker 1: Mittal also shares insights on the digital banking landscape in Singapore,

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Speaker 1: focusing on the potential for innovation in niche areas such

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Speaker 1: as retirement planning for gig economy workers. He further highlights

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Speaker 1: the importance of financial inclusion even in wealthy societies like Singapore.

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Speaker 1: That's pretty good,

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Speaker 1: not bad. Uh Let's begin with an update of the discussion.

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Speaker 1: Your prediction that post vaccine phase will see a further

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Speaker 1: acceleration of digitalization. Well, that certainly happened. Which aspects of

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Speaker 1: the dynamic do you find the most compelling

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Speaker 2: the premises, institutions were forced to do digitization which they

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Speaker 2: could not go back So all the forms and the

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Speaker 2: processes which became digital, all the non face to face interactions,

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Speaker 2: which became digital.

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Speaker 2: Normally it would take them two years to get the

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Speaker 2: internal approvals that time, too much they had to, but

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Speaker 2: they could not ever go back. So a lot of

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Speaker 2: like I would say decades of progress happened in two

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Speaker 2: years and which cannot go back and then that becomes standard.

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Speaker 2: So if you could do it for two or three

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Speaker 2: of these products, why can't we do it for others?

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Speaker 2: So that generational shift which happened across financial institutions

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Speaker 2: that stays and that becomes the benchmark and you had

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Speaker 2: two of the players to do it. And then everybody

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Speaker 2: else uses that as a benchmark. And regulators also accepted that, OK,

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Speaker 2: we allowed Zoom based K for overseas customers during COVID.

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Speaker 2: So what changed now we can still allow. So suddenly

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Speaker 2: if you look at just as simple use case as

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Speaker 2: cross border or overseas customers, now that becomes default

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Speaker 2: and that reduces your cost of servicing, improves agility, improves productivity.

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Speaker 2: And if you look at the RO E for financial

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Speaker 2: institutions have improved since then,

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Speaker 2: pre COVID and post COVID, you significantly improvement in that

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Speaker 1: by all means, what about geographically? So in Singapore, I

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Speaker 1: think we can safely say some of these things that

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Speaker 1: you just mentioned were very much prevalent ASEAN

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Speaker 2: even more even more because those markets started with smartphones.

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Speaker 2: So and then everybody was forced to deliver every possible

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Speaker 2: service to them because the branches would just not exist

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Speaker 2: from that perspective. So if you look at today, the

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Speaker 2: number of Fintech who have bought banks in Indonesia is

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Speaker 2: more than the fintech who have got a banking charter

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Speaker 2: in the United States.

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Speaker 2: Literally half of the lending companies have a bank license

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Speaker 2: or ma corporation license and it's through a out that's fine.

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Speaker 2: But if you look at the fin with a banking

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Speaker 2: license or with a board seat or a stake in

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Speaker 2: Indonesia is more than most developed markets.

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Speaker 1: That

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Speaker 1: is actually fascinating. I remember during the pandemic uh to

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Speaker 1: your point of, you know, once the genie out of

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Speaker 1: the bottle doesn't go back.

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Speaker 1: My helper used to go every two weeks to the

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Speaker 1: money changers to get the cash when she could not

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Speaker 1: send money home like that. She then became fully reliant

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Speaker 1: on the digital ecosystem that my bank has. And since then,

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Speaker 1: she has always sent money like that back as

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Speaker 2: cheaper for her faster for her. She can now go

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Speaker 2: there to Lucky Plaza to hang out, but not for

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Speaker 2: this

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Speaker 1: purpose, not stand in line for like 2030 minutes that

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Speaker 1: we should see those labyrinthine lines. Absolutely. But between say

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Speaker 1: bank like fintech that are in the business of giving

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Speaker 1: out loans, but not necessarily in the business of taking

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Speaker 1: in deposits. There was a question, let's say three or

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Speaker 1: four years ago, that is there a regulatory arbitrage. I

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Speaker 1: remember having this conversation with you as well. Where do

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Speaker 1: we stand with that? And did the pandemic sort of

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Speaker 1: change thinking around that?

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Speaker 2: See the premise is this right? If there is arbitrage

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Speaker 2: is there for everybody, it's the beauty of financial services,

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Speaker 2: whatever you do, everything can be cloned and copied if

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Speaker 2: it works. And regulator allows give it maximum six months

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Speaker 2: and everybody will have it. So there is not such

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Speaker 2: a case of arbitrage from that perspective.

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Speaker 2: And again, wherever you see, right, where regulators find that

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Speaker 2: for example, if you see India, India, regulators have put

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Speaker 2: in different measures to control some, some some lending use

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Speaker 2: cases and stuff because they felt that it was going

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Speaker 2: outside the comfort zone from that perspective. So yes, there

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Speaker 2: would be times where innovators will come up with areas

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Speaker 2: which would be cases which have not been factored in before.

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Speaker 2: Sometimes you see regulators are usually behind the curve and

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Speaker 2: that's how it's supposed to be because otherwise it stifles

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Speaker 2: the innovation but it's a fine balance and overall the

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Speaker 2: water finds its level.

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Speaker 1: I want to actually to the very end of this conversation,

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Speaker 1: I want to come back to that issue that balancing part,

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Speaker 1: that's that's an important one. So you mentioned that the

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Speaker 1: ro es have improved both for banks and non banks.

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Speaker 2: Uh the non banks, most of them are not listed

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Speaker 2: from that perspective, but the ones were listed if you

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Speaker 2: look at, let's say the United States, for example, right?

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Speaker 2: They have been, they have been doing buybacks from that perspective.

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Speaker 2: So if you look at the S for them have grown,

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Speaker 2: so Roe may not be the right metrics for some

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Speaker 2: of the non banks because they they don't have a

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Speaker 2: loan book per se. But if you look at S

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Speaker 2: for them over the last three years, the PS has

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Speaker 2: improved different metric but underlying quality is the same,

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Speaker 1: right?

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Speaker 1: And the non bank financial sector in India, for example,

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Speaker 1: is going through massive expansion. What's your sense of their

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Speaker 1: performances

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Speaker 2: right now? It's a growth cycle. There probably might be

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Speaker 2: some uh I would say pit stops along the way

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Speaker 2: and regulators have identified like there are some areas, for example,

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Speaker 2: some people, they restricted them from lending or put some

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Speaker 2: extra caveats and stuff. Uh and regulators are looking at

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Speaker 2: it actively. So think of it, right. You have 100

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Speaker 2: plus NBF CS. If they pick out certain +45 or

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Speaker 2: six people on certain reasons, there must be some reasons

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Speaker 2: and also it sends a message out to everybody else.

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Speaker 2: So

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Speaker 2: not others may be doing it at a smaller stage.

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Speaker 2: But if you, if if you say the the class

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Speaker 2: teacher sends puts punishment to two kids in the class,

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Speaker 2: then everybody

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Speaker 2: has

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Speaker 1: demonstration

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Speaker 2: of facts

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Speaker 2: that sends the message out to the rest of the class.

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Speaker 2: So and that is there for protection of consumers, right?

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Speaker 2: Because historically regulators get regulators are goalkeepers,

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Speaker 2: they get, they do not get as much credit for

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Speaker 2: the growth. They save, they get a lot more blame

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Speaker 2: for the ones they miss

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Speaker 1: very well put. And then coming to our part of

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Speaker 1: the region. So you mentioned Indonesia, we see a lot

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Speaker 1: of fintech related activities in the Philippines and Vietnam and

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Speaker 1: so on. And of course, here in Singapore, so give

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Speaker 1: us a sense of the financial performance of this side

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Speaker 1: of the world.

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Speaker 2: See overall, if you see a lot of them depend

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Speaker 2: on non banks

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Speaker 2: for the source of capital because not a lot of banks.

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Speaker 2: Now what has happened is banks have started to lend.

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Speaker 2: So if you look at some, your bank and the

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Speaker 2: bank in the same tower, they started to give 30

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Speaker 2: $50 million lines to the alternate lenders who are doing

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Speaker 2: downstream lending to the long tail. So when those lenders

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Speaker 2: are able to access that better cost of capital that

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Speaker 2: percolates it down.

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Speaker 2: Historically, their cost of capital were 12 to 15%. Now

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Speaker 2: they're able to uh they managed to bring their cost

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Speaker 2: of capital between 8 to 10%

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Speaker 2: from that. So if you the moment you are having

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Speaker 2: 200 to 400 basis points improvement in your cost of capital, why?

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Speaker 2: Because you have more data, you have proven your NP

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Speaker 2: A record, you have gone through cycles in credit. It's

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Speaker 2: all about cycles. You have shown that your book did

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Speaker 2: X things all through the COVID cycle which gives more

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Speaker 2: confidence for the larger financial players to give you those

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Speaker 2: lines from that perspective.

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Speaker 2: And that has changed. So historically, if you look at

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Speaker 2: the cost of capital for the best, some of them,

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Speaker 2: the cost of capital is the same, but the best

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Speaker 2: performers have managed to bring their cost of capital in

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Speaker 2: single digit. The not so nice performers still have their

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Speaker 2: cost of capital in double digit.

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Speaker 1: So we'll go back to India for one second. So

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Speaker 1: you mentioned the fact that in this region, you are seeing,

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Speaker 1: you know, banks being a source of underwriting for the

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Speaker 1: funding for a lot of non banks in India, private

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Speaker 1: capital markets are sufficient for NBFC to raise money.

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Speaker 2: Uh that's there. But the banks, there are also open

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Speaker 2: banks are not averse to that. The thing is that

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Speaker 2: regulators have put very clear loans, clear rules on non

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Speaker 2: evergreening of the loans. So what happened was they found

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Speaker 2: that there were a lot of evergreening of those loans happening.

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Speaker 2: So that's being handled. The Southeast Asian model is slightly

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Speaker 2: different because it's a credit line. And when you give

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Speaker 2: a credit line, it's by nature, it's default. Evergreen.

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Speaker 2: It's not like a term from that perspective. So if

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Speaker 2: you have already factored all the risks governance in while

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Speaker 2: giving an open open loop credit line which you can

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Speaker 2: draw down upon then it's, it's factored in. So that's

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Speaker 2: where the difference in. Indeed, it was not, it did

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Speaker 2: not start as evergreen

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Speaker 1: um related to that. Yeah, I remember in that pa

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Speaker 1: past conversation, I think the chat GP T summary also

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Speaker 1: picked that up, that you expressed this vision that uh

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Speaker 1: fintech will enable SME S to participate in the infrastructure

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Speaker 1: that is usually reserved for very large financial institutions. I

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Speaker 1: think that was still a work in progress back in

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Speaker 1: 2020 when we chatted, where do we stand there? Now?

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Speaker 2: A lot more has happened. I'll give you an example, right?

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Speaker 2: The number of index today who can issue SME cards

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Speaker 2: is much larger than four years ago because now you

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Speaker 2: have larger players. So for example, if you say Singapore, right,

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Speaker 2: f which is an Indonesian fintech can issue cards here

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Speaker 2: wise like British Fintech, they are issuing cards for other companies.

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Speaker 2: So tiger broker issues cards using wise infrastructure

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Speaker 2: from that perspective. So the card is one collections and

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Speaker 2: dispersal is another. So what has happened is the larger fintech,

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Speaker 2: they have already invested in that infrastructure.

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Speaker 2: So they have the ability to rent that infrastructure and

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Speaker 2: they grew up with the DNA that they are willing

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Speaker 2: to rent that infrastructure. Banks also do it. So now

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Speaker 2: they are competing with banks in some of those places

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Speaker 2: where banks, historically, banks would also rent that infrastructure but

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Speaker 2: they would rent to the person who has 100 million

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Speaker 2: line with them, 500 million line with them or 18

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Speaker 2: country bank account relationship IBG one client.

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Speaker 2: Uh, what FEX have done is they have brought it

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Speaker 2: down to IG three and G four from that perspective.

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Speaker 2: Absolutely

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Speaker 1: brilliant. We also at the retail level, the same conservative

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Speaker 1: parent who would think twice about finding some not very

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Speaker 1: famous bank name for their child's sort of, you know,

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Speaker 1: little wallet. Now, you know, revolute one day and something

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Speaker 1: the other day people are tried between cards, look at

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Speaker 1: the benefits and opening this account is so easy. But

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Speaker 1: clearly there is a

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Speaker 1: degree of comfort around the security guard rails, otherwise people

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Speaker 1: will not be using

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Speaker 1: these.

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Speaker 2: Absolutely. And which is why, right. So all of these,

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Speaker 2: they have to store the money with a bank like yours,

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Speaker 2: they cannot keep it anywhere else. So there are governance

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Speaker 2: around that this is segregated, money and everything. And regulators

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Speaker 2: have put very strong guardrails around how the MP license

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Speaker 2: and I'll give you an example, right? Four years back,

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Speaker 2: the limits for the wallets in Singapore was $5000 per

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Speaker 2: transaction and 30,000 per year.

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Speaker 2: Now it's changed to 20,000 per transaction and 100,000 per year.

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Speaker 2: So because the infrastructure improved, this use cases improved. So

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Speaker 2: the regulators also felt comfort to move the limits up

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Speaker 2: says we will enable unlock more use cases

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Speaker 1: that is sort of encouraging set of the developments. What

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Speaker 1: are the not so encouraging side of the developments in

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Speaker 1: the last four years?

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Speaker 2: I would say if you look at some markets, for example,

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Speaker 2: like if let's say India, right? So the India has

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Speaker 2: more f trading right now, futures and options trading than

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Speaker 2: some of the biggest capital markets. That's true. And as

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Speaker 2: for the Indian government statistics, Indian regulator statistics, more than 90%

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Speaker 2: of these retail people lost money.

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Speaker 2: So how some of the public markets and even if

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Speaker 2: you look at us, when you see the Wall Street

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Speaker 2: bets and gamestop meme, how public markets started to act

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Speaker 2: like a quasi casino in some shape and form in

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Speaker 2: different markets.

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Speaker 2: Us saw it in Gamestop Wall Street bets. India saw

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Speaker 2: it in f some of the markets are in different

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Speaker 2: shape and form. So that probably has not been a

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Speaker 2: great outcome from the democratization doesn't always work the good way,

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Speaker 1: right? And also it is enabled by the speed of

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Speaker 1: transaction and the ease of those interfaces. One has

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Speaker 2: think

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Speaker 2: of it this way, right? When you say that this

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Speaker 2: is zero transaction and it's a payment for order flow,

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Speaker 2: then you know that it's a hedge fund in the

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Speaker 2: other side

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Speaker 2: and it is illegal in most of the European markets

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Speaker 2: for a reason, it is legal in some markets and

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Speaker 2: that's absolutely there is jurisdiction, but you cannot do that

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Speaker 2: in Europe or India for that matter. But you

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Speaker 1: can

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Speaker 2: use

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Speaker 1: Robin Hood in the US to do

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Speaker 2: that. Exactly right. But then who suffers. So technically the retailers,

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Speaker 2: retailers feels that he is not paying

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Speaker 2: because the cost of transaction is free. But there is

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Speaker 2: on the other side, there is a mark up based

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Speaker 2: on the market making from the hedge funds from that perspective.

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Speaker 2: So I'm not saying there is nothing, there is nothing

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Speaker 2: illegal about it. That's the United States law and each

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Speaker 2: of those entities are subscribing to the law of that land.

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Speaker 2: I'm nobody to say whether the law is right or not.

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Speaker 2: But what that does is a lot of people who

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Speaker 2: do not have enough financial literacy, who do not have

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Speaker 2: financial awareness and who have a lot of these Tik

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Speaker 2: Tok and Instagram influencers, right? So the problem of

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Speaker 2: the financial uncontrolled access and awareness is you have a

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Speaker 2: lot of non doctors prescribing medicines of financial freedom and

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Speaker 2: fire movement and different ideas and different telegram groups and

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Speaker 2: courses and everything who probably may not have the bad intentions,

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Speaker 2: but they may not have the

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Speaker 2: enough knowledge and awareness to do it. So one sided

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Speaker 2: ease of access with uh I would say non non

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Speaker 2: non sensitized information from that perspective and there is no

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Speaker 2: governance around it. So if you're doing medical advice, there

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Speaker 2: are regulations around it, but I have not seen much enforcement.

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Speaker 2: There's some enforcement have started to happen in India now.

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Speaker 2: But there's a lot more gap which needs to be

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Speaker 2: happened for governing and whether it's Tik Tok youtube reads Instagram.

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Speaker 2: It's all same family of those influencers telling people do this,

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Speaker 2: this and platforms saying I'll make it happen.

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Speaker 2: So the traditional definition of accreted investor sophisticated CK done

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Speaker 2: 1520 years ago may not fully be relevant for the

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Speaker 2: Instagram tiktok generation,

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Speaker 1: right? Actually, so that will lead me to a discussion

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Speaker 1: on so called democratization of wealth management. But I'll come

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Speaker 1: to that a little later. I want to talk about

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Speaker 1: one thing before that because you and I had a

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Speaker 1: long discussion about not just

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Speaker 1: payments but also digital currencies. And we talked about ERM

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Speaker 1: B at that time and it seemed like erb was

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Speaker 1: going somewhere at that time and we talked about the

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Speaker 1: digital wallets that the Chinese mobile phone companies have and

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Speaker 1: how even somebody sick in Africa could do payments and

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Speaker 1: settlement with some Chinese e commerce provider that hasn't really

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Speaker 1: gone very well. Has it,

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Speaker 2: it has

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Speaker 2: it is just not called table coins. Technically, Central bank

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Speaker 2: is the one issuing the currency. It is running on

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Speaker 2: a proprietary rail,

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Speaker 2: the underlying custody of the whatever is the fiat currency

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Speaker 2: is with a financial institution governed by the central bank.

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Speaker 2: What was that? What was called the National CBD C?

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Speaker 2: The central bank, digital currency is now stable coins.

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Speaker 1: I think the difference is that they can choose to

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Speaker 1: issue or not issue, which is a central bank decision.

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Speaker 1: Whereas a stable coin, a private sector entity can carry

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Speaker 1: that out.

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Speaker 2: But the actual underlying fiat is still sitting with the bank, right?

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Speaker 2: The funny joke was that one of the US Stablecoins

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Speaker 2: suddenly came up, says announcing publicly I can't verify it's

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Speaker 2: true that they are one of the top 10 US

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Speaker 2: treasury holders now

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Speaker 2: because they parked all the money in US treasuries. And

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Speaker 2: over the last 34 years, they became profitable because the

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Speaker 2: treasuries are making so much money just by holding on

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Speaker 2: to them, they could make so much. But now what

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Speaker 2: has done is it has again, there's enough democratization there

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Speaker 2: because now there are companies stripe just acquired when the

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Speaker 2: companies whose core infrastructure, core job is to help you

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Speaker 2: build and run a stablecoin infrastructure

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Speaker 2: and you can run it in multiple currencies and stuff

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Speaker 2: from that perspective. And as long as the money is

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Speaker 2: 1 to 1 collateralized auditable in that bank, it's a

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Speaker 2: much simpler way to run that from that perspective.

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Speaker 1: So are you saying that on digital currency, the private

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Speaker 1: sector sort of leap frog the public sector and the

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Speaker 1: public sector sort of fallen behind? And you can if

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Speaker 1: you want to want to un match to a domestic currency,

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Speaker 1: a stable coin provides a solution as good. Anything that

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Speaker 1: the central bank can offer.

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Speaker 2: The question is central banks are not averse to that.

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Speaker 2: Central bank's objective was to reduce the middleman fees, to

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Speaker 2: reduce the American Eggo police fees on merchant transactions from

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Speaker 2: that like that's in one use case, right? They want transparency.

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Speaker 2: So anything which is digital and trackable is transparent.

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Speaker 2: They wanted less oligopoly, they wanted less fees for intermediaries.

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Speaker 2: All of that, those objectives are all getting achieved from

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Speaker 2: that perspective. So there is nothing wrong about it. So

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Speaker 2: regulators can still central banks can still do it. Nobody

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Speaker 2: is stopping them. But if for example, people build specific

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Speaker 2: use cases. So for example, if you want to build

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Speaker 2: a stable coin

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Speaker 2: e commerce use case, the government will not wake up

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Speaker 2: in the morning. Let me let me allow you to

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Speaker 2: buy toast and allow you to buy food and shoes

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00:19:57,589 --> 00:19:59,660
Speaker 2: on e commerce website because you need to build a

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Speaker 2: lot of use case. How does the authorization work hold work,

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Speaker 2: refund work? That's a lot of infrastructure around that, right?

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Speaker 2: And when for example, it's multi party transaction and you

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Speaker 2: do

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00:20:11,180 --> 00:20:13,709
Speaker 2: apart as fees and other part needs to go and

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Speaker 2: you want to have make a checker flows. So there

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Speaker 2: are a lot of this work flows which needs to

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Speaker 2: be built along and it's great that the private sector

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Speaker 2: is building it and private sector is happy to build it.

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Speaker 2: Even on the central bank, digital currency, central bank, digital

401
00:20:28,430 --> 00:20:31,879
Speaker 2: currency or private currency backed by the central bank fiat

402
00:20:32,099 --> 00:20:33,040
Speaker 2: are different in

403
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Speaker 2: for different vehicles. The government funds. For example, if you

404
00:20:36,150 --> 00:20:38,819
Speaker 2: look at Thailand, for example, right, those are very usable

405
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Speaker 2: when it's direct benefits transfer, there are merits for the

406
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Speaker 2: government use case direct benefits transfer is a massive use

407
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Speaker 2: case across markets. You look at America from United States

408
00:20:48,209 --> 00:20:51,659
Speaker 2: to Thailand to India, to China. The direct benefits transfer

409
00:20:51,670 --> 00:20:54,130
Speaker 2: is a very large impetus. And when you are looking

410
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Speaker 2: at a post inflation side of environment and stuff and

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Speaker 2: welfare society is picking up there's merit for that.

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Speaker 2: So central bank digital currencies can do that use case

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Speaker 2: targeted subsidies, private builds its own right

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Speaker 1: targeted and sometimes digital coupons like in Singapore, we got

415
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Speaker 1: these $500 showing up into our accounts and but it

416
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Speaker 1: had to be used within the year and it had

417
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Speaker 1: to be for a specific purpose using a local Hawker

418
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Speaker 1: center or local grocery stores. I found

419
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Speaker 2: that very

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Speaker 2: money, right?

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00:21:23,910 --> 00:21:26,750
Speaker 2: Purpose bound money can be on central bank digital currency

422
00:21:26,760 --> 00:21:30,020
Speaker 2: as well as private currency and private markets always had

423
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Speaker 2: purpose bound currency. So airline miles is an example of

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00:21:32,439 --> 00:21:34,280
Speaker 2: purpose bound points

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00:21:34,839 --> 00:21:39,169
Speaker 1: can be hotel points as well. Ok? Since I alluded

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Speaker 1: that we're going to come to this issue and now

427
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Speaker 1: I want to talk about that fintech and wealth management

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Speaker 1: and fintech and financial inclusion.

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Speaker 1: Let's talk about these two. It seems to me that

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Speaker 1: these are two ends of a spectrum. One is for

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Speaker 1: rich people and one is for poor people, but maybe

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Speaker 1: they're not that far from each other.

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Speaker 2: Uh I'll give a third dimension to it. So financial

434
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Speaker 2: inclusion also looks at can they access insurance benefits? Can

435
00:22:03,349 --> 00:22:06,739
Speaker 2: they access the right protection needs at the price they

436
00:22:06,750 --> 00:22:10,219
Speaker 2: can afford in the format they can afford? From that perspective?

437
00:22:10,390 --> 00:22:13,949
Speaker 2: Can their employer enable that? And Singapore is a perfect example.

438
00:22:14,089 --> 00:22:19,739
Speaker 2: Singapore just mandated that all ride hailing and food delivery

439
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Speaker 2: drivers and workers will mandatory get insurance coverage

440
00:22:24,250 --> 00:22:28,218
Speaker 2: and will mandatory have CPF contribution from their platforms from

441
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Speaker 2: next year.

442
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Speaker 2: That's financial inclusion at max scale. And you're talking about

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Speaker 2: more than 100,000 drivers and delivery people and their family

444
00:22:37,060 --> 00:22:41,290
Speaker 2: members getting impacted at. And you can imagine this is

445
00:22:41,300 --> 00:22:43,948
Speaker 2: not the top end of the market, correct. It's somewhere

446
00:22:43,959 --> 00:22:49,420
Speaker 2: in like middle, lower, middle, somewhere there and it's financial

447
00:22:49,430 --> 00:22:52,469
Speaker 2: inclusion at risk and CPF it's retirement. But

448
00:22:52,819 --> 00:22:54,719
Speaker 2: yeah, I mean, there is an interest element, there is

449
00:22:54,729 --> 00:22:57,550
Speaker 2: an accumulation element onto it, there is a retirement element

450
00:22:57,560 --> 00:22:59,649
Speaker 2: onto it. So I would say there are a lot

451
00:22:59,660 --> 00:23:04,079
Speaker 2: of those kind of initiatives which have happened uh broadly

452
00:23:04,089 --> 00:23:07,459
Speaker 2: to be able to buy funds ETF or stocks that's

453
00:23:07,500 --> 00:23:10,458
Speaker 2: democratized enough. If you want access to it, you will

454
00:23:10,469 --> 00:23:12,479
Speaker 2: have access to it. There will be enough providers in

455
00:23:12,489 --> 00:23:16,089
Speaker 2: every market for that, that I would say is table stakes.

456
00:23:16,319 --> 00:23:18,239
Speaker 2: The question is what can you do beyond that?

457
00:23:18,589 --> 00:23:24,369
Speaker 2: Can you help people access more things around

458
00:23:25,469 --> 00:23:26,770
Speaker 2: systematic withdrawal plan.

459
00:23:27,630 --> 00:23:30,489
Speaker 2: When people want to have something as an additional layer

460
00:23:30,689 --> 00:23:33,540
Speaker 2: to the government pension plans in each market in an

461
00:23:33,569 --> 00:23:36,829
Speaker 2: inflationary environment. What can you do along with that? What

462
00:23:36,839 --> 00:23:39,010
Speaker 2: solutions can do that? Because you see the upper end

463
00:23:39,020 --> 00:23:42,170
Speaker 2: of the market is all about access and pricing, right?

464
00:23:42,660 --> 00:23:45,790
Speaker 2: Uh If you are worth 2 million $3 million

465
00:23:46,479 --> 00:23:49,030
Speaker 2: you should be able to access most things, not all

466
00:23:49,040 --> 00:23:52,829
Speaker 2: things and the more you go up, the better terms

467
00:23:52,839 --> 00:23:54,560
Speaker 2: you get, the better access you get. And that's a

468
00:23:54,569 --> 00:23:58,040
Speaker 2: simple ladder curve and that curve is simple. Everybody will

469
00:23:58,050 --> 00:24:00,560
Speaker 2: keep trying to compete with each other. They will go

470
00:24:00,569 --> 00:24:02,099
Speaker 2: and try to find you allocations for some.

471
00:24:02,300 --> 00:24:05,180
Speaker 2: So that, that I would not worry as much per se,

472
00:24:05,270 --> 00:24:08,760
Speaker 2: they will figure it out and they have enough on

473
00:24:08,770 --> 00:24:11,099
Speaker 2: the other side of the spectrum is where a lot

474
00:24:11,109 --> 00:24:14,439
Speaker 2: of intakes are coming with very interesting ways to support

475
00:24:14,449 --> 00:24:17,040
Speaker 2: these people. Like for example, how to build credit score

476
00:24:17,050 --> 00:24:17,760
Speaker 2: for these people

477
00:24:18,180 --> 00:24:21,719
Speaker 2: because they don't have salaries. Historically banks look at salary data,

478
00:24:21,930 --> 00:24:25,670
Speaker 2: salary doesn't exist if you are driving for taxi company

479
00:24:25,680 --> 00:24:28,459
Speaker 2: or delivering food. Even your bank statement does not say

480
00:24:28,469 --> 00:24:31,800
Speaker 2: salary every day, something is getting hit because it's daily settlement.

481
00:24:32,150 --> 00:24:34,319
Speaker 2: How do you get scoring for this? Can you have

482
00:24:34,329 --> 00:24:36,989
Speaker 2: credit builder products if you see Philippines, India, there are

483
00:24:37,000 --> 00:24:40,800
Speaker 2: a bunch of companies whose only product is credit builder

484
00:24:41,449 --> 00:24:44,188
Speaker 2: based on your incomes and expenses. They will start to

485
00:24:44,199 --> 00:24:46,179
Speaker 2: report it to the bureaus for you

486
00:24:47,089 --> 00:24:48,679
Speaker 2: and they will charge you a small fees and they

487
00:24:48,689 --> 00:24:50,869
Speaker 2: will help build a score for you so that you

488
00:24:50,880 --> 00:24:54,469
Speaker 2: can be financially included to be able to access credit

489
00:24:54,479 --> 00:24:58,989
Speaker 2: from the proper sources instead of nontraditional sources. And financial

490
00:24:59,000 --> 00:25:01,659
Speaker 2: larger financial institutions are happy. They like we are happy

491
00:25:01,670 --> 00:25:03,859
Speaker 2: if there is score for these people. Life is much

492
00:25:03,869 --> 00:25:06,889
Speaker 2: simpler for us. We want to extend credit. We thank

493
00:25:06,900 --> 00:25:08,669
Speaker 2: you for building the score for these people.

494
00:25:09,609 --> 00:25:13,719
Speaker 1: Um ok, so one end, low end of the income

495
00:25:13,729 --> 00:25:17,849
Speaker 1: spectrum gig workers. And are there certain provisions for them,

496
00:25:17,859 --> 00:25:20,459
Speaker 1: can that be done? And there are some solutions around

497
00:25:20,469 --> 00:25:23,339
Speaker 1: that particularly product access insurance and at the top end,

498
00:25:23,369 --> 00:25:26,339
Speaker 1: you're not that fussed about it. The market devotes a

499
00:25:26,349 --> 00:25:29,380
Speaker 1: huge amount of talent and well there people will get

500
00:25:29,390 --> 00:25:32,089
Speaker 1: nice interfaces, right? Let's talk about the third segment, which

501
00:25:32,099 --> 00:25:36,250
Speaker 1: is the mass affluent we see in the US, for example,

502
00:25:36,260 --> 00:25:39,270
Speaker 1: the whole Robin Hood phenomenon which probably has

503
00:25:39,839 --> 00:25:44,399
Speaker 1: appeal to the aspiring youth as well as others who

504
00:25:44,410 --> 00:25:49,119
Speaker 1: want to be wealthy and want to interface or an

505
00:25:49,130 --> 00:25:51,420
Speaker 1: experience through which they can sort of buy all sorts

506
00:25:51,430 --> 00:25:53,698
Speaker 1: of products. Doesn't have to be, be stock, perhaps even

507
00:25:53,709 --> 00:25:54,669
Speaker 1: something more sophisticated.

508
00:25:54,680 --> 00:25:54,790
Speaker 2: You

509
00:25:54,800 --> 00:25:56,629
Speaker 2: can buy presidential derivatives.

510
00:25:56,640 --> 00:25:56,859
Speaker 1: That's

511
00:25:56,869 --> 00:25:57,650
Speaker 1: right. That's right.

512
00:25:57,869 --> 00:25:58,819
Speaker 2: That's gambling in my

513
00:25:58,829 --> 00:26:03,079
Speaker 1: word. Correct. Absolutely. But what about your point? That as

514
00:26:03,089 --> 00:26:05,119
Speaker 1: you get wealthier, there are certain access you get.

515
00:26:05,520 --> 00:26:07,239
Speaker 1: What do you think of apps that are trying to

516
00:26:07,250 --> 00:26:10,390
Speaker 1: reduce that barrier, that even at a lower cost, you

517
00:26:10,400 --> 00:26:13,458
Speaker 1: can access certain things that only the very wealthy couldn't see.

518
00:26:13,479 --> 00:26:17,020
Speaker 2: There always a question was the barrier, the cost or

519
00:26:17,030 --> 00:26:19,899
Speaker 2: where is the barrier, sophistication of understanding of the product?

520
00:26:19,910 --> 00:26:20,250
Speaker 2: Was it there

521
00:26:20,260 --> 00:26:20,420
Speaker 1: for a

522
00:26:20,430 --> 00:26:20,780
Speaker 1: reason?

523
00:26:21,550 --> 00:26:25,139
Speaker 2: Right. Uh There is a new app which is recently launched,

524
00:26:25,150 --> 00:26:28,380
Speaker 2: they put structured products without advice, you can buy structured

525
00:26:28,390 --> 00:26:31,389
Speaker 2: products without talking to a human being from an app,

526
00:26:31,930 --> 00:26:35,459
Speaker 2: uh which includes knockoff and Kickoffs from that perspective.

527
00:26:36,479 --> 00:26:39,479
Speaker 2: OK. Technology can solve a lot of things, but uh

528
00:26:39,489 --> 00:26:44,010
Speaker 2: there are side effects also from that perspective. So my,

529
00:26:44,020 --> 00:26:47,560
Speaker 2: my view is uh technology can solve a lot of

530
00:26:47,569 --> 00:26:50,300
Speaker 2: these things. I'm not worried about technology lowering the cost

531
00:26:50,310 --> 00:26:53,319
Speaker 2: of those things, but not everything which can be done

532
00:26:53,329 --> 00:26:54,010
Speaker 2: digitally

533
00:26:54,699 --> 00:26:56,619
Speaker 2: should probably be done digitally,

534
00:26:57,890 --> 00:27:01,589
Speaker 1: right? And so investor knowledge, investor education,

535
00:27:01,599 --> 00:27:06,540
Speaker 2: suitability, suitability, right? Because if let's be practical, if people

536
00:27:06,550 --> 00:27:08,760
Speaker 2: are clicking three check boxes in the app, how many

537
00:27:08,770 --> 00:27:10,489
Speaker 2: times have you read the full terms and conditions when

538
00:27:10,500 --> 00:27:12,770
Speaker 2: you downloaded an app or created an account? Never.

539
00:27:13,420 --> 00:27:16,359
Speaker 2: That's the whole point, right? So which is why that

540
00:27:16,500 --> 00:27:18,750
Speaker 2: you have to accept that that's, that's the reality of

541
00:27:18,760 --> 00:27:22,170
Speaker 2: truth and that is where the whole point is, right?

542
00:27:22,380 --> 00:27:27,159
Speaker 2: Nothing about Wall Street bets was most of the things

543
00:27:27,170 --> 00:27:28,369
Speaker 2: I don't think were illegal.

544
00:27:29,619 --> 00:27:34,170
Speaker 2: But did they hurt enough ordinary people? Yes. Right.

545
00:27:34,959 --> 00:27:38,949
Speaker 2: The f is not illegal but does it hurt 95%

546
00:27:38,959 --> 00:27:41,750
Speaker 2: of the people who are doing it? Yes. So, which

547
00:27:41,760 --> 00:27:46,020
Speaker 2: is where there is a reason where, uh, the regulations

548
00:27:46,030 --> 00:27:50,650
Speaker 2: come from the perspective of sometimes sometimes the full free

549
00:27:50,660 --> 00:27:51,790
Speaker 2: markets may not always be.

550
00:27:51,800 --> 00:27:52,159
Speaker 2: Right.

551
00:27:52,930 --> 00:27:54,920
Speaker 1: So, it's interesting, you know, the, that we have had

552
00:27:54,930 --> 00:27:56,430
Speaker 1: so far, I don't think we have used the word

553
00:27:56,439 --> 00:27:58,890
Speaker 1: A I or Genai I even once. But when I

554
00:27:58,900 --> 00:28:02,290
Speaker 1: think about the latest chapter in the global financial stability

555
00:28:02,300 --> 00:28:05,790
Speaker 1: review of the IMF just came out last Thursday. It

556
00:28:05,839 --> 00:28:08,149
Speaker 1: the whole chapter is about the impact of A I

557
00:28:08,280 --> 00:28:12,198
Speaker 1: and gen A I on trading importance of regulation and

558
00:28:12,510 --> 00:28:15,399
Speaker 1: need for greater transparency on exactly what kind of model

559
00:28:15,410 --> 00:28:17,900
Speaker 1: banks are using and so on. So let's have a

560
00:28:17,910 --> 00:28:21,300
Speaker 1: little discussion about your thoughts on A I slash JA

561
00:28:21,310 --> 00:28:23,599
Speaker 1: I and, and how it's sort of fusing itself into

562
00:28:23,609 --> 00:28:24,969
Speaker 1: the fintech world

563
00:28:25,660 --> 00:28:30,369
Speaker 2: A I today is what internet was in 1999 2000.

564
00:28:30,979 --> 00:28:33,849
Speaker 2: Uh There will be a lot of capacity being built up.

565
00:28:34,189 --> 00:28:35,979
Speaker 2: There will be a lot of vision, there will be

566
00:28:35,989 --> 00:28:41,069
Speaker 2: relevant winners, there will be relevant use cases, but sometimes

567
00:28:41,079 --> 00:28:44,930
Speaker 2: the world runs a bit ahead. There will be use cases.

568
00:28:44,939 --> 00:28:49,020
Speaker 2: Absolutely phenomenal use cases which will happen, but it will

569
00:28:49,030 --> 00:28:53,300
Speaker 2: take time from that perspective because A I still can't

570
00:28:53,310 --> 00:28:54,010
Speaker 2: do my laundry.

571
00:28:55,880 --> 00:28:58,609
Speaker 2: Yeah. I still can't do my dishes. And there is

572
00:28:58,619 --> 00:29:01,410
Speaker 2: an element. And when you are doing all of these

573
00:29:01,420 --> 00:29:04,430
Speaker 2: new models, they're generating new stuff based on the past

574
00:29:04,439 --> 00:29:05,060
Speaker 2: trend data.

575
00:29:05,739 --> 00:29:08,180
Speaker 2: So they are when you are doing search use cases,

576
00:29:08,260 --> 00:29:12,300
Speaker 2: when you're doing unstructured, search use cases. Absolutely. Some of

577
00:29:12,310 --> 00:29:15,469
Speaker 2: the existing jobs will become a lot more simpler, more

578
00:29:15,479 --> 00:29:16,599
Speaker 2: productivity will happen.

579
00:29:17,140 --> 00:29:18,989
Speaker 2: And the way I would say is more content will

580
00:29:19,000 --> 00:29:20,829
Speaker 2: be created. So then you will need curation as a

581
00:29:20,839 --> 00:29:25,040
Speaker 2: service as simple. So then you will curation service because

582
00:29:25,050 --> 00:29:27,609
Speaker 2: if everybody is sending you emails written by Chad GPT

583
00:29:27,699 --> 00:29:31,709
Speaker 2: which are three pages long to ensure that no point

584
00:29:31,719 --> 00:29:34,829
Speaker 2: is missed, then you will use another counter service to

585
00:29:34,839 --> 00:29:39,199
Speaker 2: summarize and list the key points. So the swing works

586
00:29:39,209 --> 00:29:39,810
Speaker 2: both ways.

587
00:29:40,390 --> 00:29:43,489
Speaker 2: There will be relevant use cases and it would take time.

588
00:29:43,540 --> 00:29:47,300
Speaker 2: Financial institutions have already started. Financial institutions probably were the

589
00:29:47,310 --> 00:29:50,420
Speaker 2: first ones among the industry them and Pharma to start

590
00:29:50,430 --> 00:29:55,130
Speaker 2: to use heavy computing power to take decisions, credit decisions

591
00:29:55,140 --> 00:29:57,329
Speaker 2: and all of those. So all of that will continue,

592
00:29:57,339 --> 00:30:02,510
Speaker 2: there will be absolutely relevant use cases. But will we

593
00:30:02,520 --> 00:30:05,489
Speaker 2: be in a bright new shining world tomorrow morning

594
00:30:05,780 --> 00:30:09,229
Speaker 2: where there is a whole new lens, even printing press

595
00:30:09,239 --> 00:30:12,140
Speaker 2: did not do that. Internet also took a while. It

596
00:30:12,150 --> 00:30:17,760
Speaker 2: took a while and there will phenomenally be absolutely be winners.

597
00:30:18,180 --> 00:30:22,239
Speaker 2: But it's not that tomorrow there is no humans and

598
00:30:22,250 --> 00:30:23,359
Speaker 2: A I is doing everything.

599
00:30:23,829 --> 00:30:26,479
Speaker 1: Let me ask you a broader question, which is um today,

600
00:30:26,489 --> 00:30:28,910
Speaker 1: when we look back the first quarter century of the internet,

601
00:30:28,920 --> 00:30:32,150
Speaker 1: especially when the proliferation of social media, we now have

602
00:30:32,160 --> 00:30:35,660
Speaker 1: some regrets. Looking back that in terms of mental health,

603
00:30:35,670 --> 00:30:39,119
Speaker 1: of young teenagers, we probably did not put enough guardrails

604
00:30:39,130 --> 00:30:40,130
Speaker 1: around social media

605
00:30:40,219 --> 00:30:43,040
Speaker 1: and it has certainly in the western world, but maybe

606
00:30:43,050 --> 00:30:45,640
Speaker 1: all over the world, it has been an issue affecting

607
00:30:45,739 --> 00:30:49,339
Speaker 1: our Children in particular. Do you think that having been

608
00:30:49,349 --> 00:30:53,300
Speaker 1: chastened by that experience, regulars will be a little more

609
00:30:53,739 --> 00:30:56,510
Speaker 1: sort of intrusive with the A I processes

610
00:30:57,760 --> 00:31:00,380
Speaker 2: they would like to. So there was a recent case

611
00:31:00,390 --> 00:31:04,060
Speaker 2: of one of the A I companies being sued because

612
00:31:04,290 --> 00:31:09,459
Speaker 2: the A I companion got, I would say misguided the

613
00:31:09,469 --> 00:31:12,369
Speaker 2: kid to commit suicide, just read about it. Yes. Right. So,

614
00:31:12,510 --> 00:31:15,150
Speaker 2: but the challenge with this thing is a lot of

615
00:31:15,160 --> 00:31:18,060
Speaker 2: these models are open sourced.

616
00:31:18,650 --> 00:31:20,819
Speaker 2: You could pick the model and run your own service.

617
00:31:21,079 --> 00:31:24,459
Speaker 2: Who is la the company operating the model, the company

618
00:31:24,469 --> 00:31:27,729
Speaker 2: who built the model and you can't track what's the

619
00:31:27,739 --> 00:31:31,099
Speaker 2: sources of data. So and again, same thing happens in

620
00:31:31,109 --> 00:31:35,869
Speaker 2: social media. I don't think Mark Zuckerberg creates a content

621
00:31:35,880 --> 00:31:38,920
Speaker 2: which is causing a mental health problem. It's the content

622
00:31:38,930 --> 00:31:42,540
Speaker 2: created by people on the platform, not

623
00:31:43,199 --> 00:31:46,790
Speaker 2: an employee per se, a Facebook or Tik Tok for

624
00:31:46,800 --> 00:31:49,099
Speaker 2: that matter. Right. So the question is, where does the

625
00:31:49,109 --> 00:31:52,380
Speaker 2: liability stop So the regulations needs to look at our

626
00:31:52,390 --> 00:31:56,170
Speaker 2: platforms liable for misinformation on their platform. Now they are

627
00:31:56,189 --> 00:31:58,410
Speaker 2: now they are taking a position that yes, you are

628
00:31:58,420 --> 00:32:01,800
Speaker 2: right earlier, the position was no, you are not right.

629
00:32:01,810 --> 00:32:04,020
Speaker 2: So there will have to be positions on that and

630
00:32:04,199 --> 00:32:07,030
Speaker 2: there needs to be right balance of what is freedom

631
00:32:07,040 --> 00:32:08,569
Speaker 2: of speech and what is censorship.

632
00:32:09,150 --> 00:32:11,599
Speaker 2: And that's a debate which America is figuring it out

633
00:32:11,609 --> 00:32:13,510
Speaker 2: in their own way. Asia is figuring it out in

634
00:32:13,520 --> 00:32:17,290
Speaker 2: their own way. And I believe it would dwell down

635
00:32:17,300 --> 00:32:20,599
Speaker 2: to country levels because the definition of what is freedom

636
00:32:21,089 --> 00:32:21,969
Speaker 2: is different,

637
00:32:22,239 --> 00:32:24,530
Speaker 1: right? But let me just draw Harold back to the

638
00:32:24,540 --> 00:32:29,650
Speaker 1: world of fintech, that a Robinhood type app, which initially was,

639
00:32:29,660 --> 00:32:32,380
Speaker 1: the criticism was, you know, it promotes addictive behavior. It's

640
00:32:32,390 --> 00:32:34,589
Speaker 1: a bit like, you know, Facebook promotes addictive behavior. You

641
00:32:34,599 --> 00:32:36,849
Speaker 1: keep on looking for likes and keep on looking for

642
00:32:36,859 --> 00:32:37,410
Speaker 1: new feeds

643
00:32:37,709 --> 00:32:41,619
Speaker 1: similarly that, you know, in a gamified environment, you feel

644
00:32:41,630 --> 00:32:43,189
Speaker 1: like going to the app all the time and it

645
00:32:43,199 --> 00:32:45,369
Speaker 1: shows you second by second, how much your wealth is

646
00:32:45,380 --> 00:32:48,140
Speaker 1: going up or down that sort of stuff. Would we

647
00:32:48,150 --> 00:32:51,729
Speaker 1: see uh some degree of friction being imposed by regulators?

648
00:32:51,739 --> 00:32:55,410
Speaker 2: It's tough to regulate it because, because you, you can't

649
00:32:55,420 --> 00:32:58,010
Speaker 2: expect regulators to come and check every screen of the

650
00:32:58,020 --> 00:32:58,680
Speaker 2: app in the

651
00:32:58,689 --> 00:32:59,609
Speaker 1: Uiux part.

652
00:32:59,619 --> 00:33:03,839
Speaker 2: It's, it's not reasonable and practical from that perspective.

653
00:33:04,920 --> 00:33:09,209
Speaker 2: They can, for example, require like for example, in Europe,

654
00:33:09,329 --> 00:33:13,270
Speaker 2: if you are doing CFD trading, they would make you

655
00:33:13,400 --> 00:33:16,800
Speaker 2: accept a disclaimer that, you know, that 80% more than 80%

656
00:33:16,810 --> 00:33:20,319
Speaker 2: of the customers who do this lose money. So it's

657
00:33:20,329 --> 00:33:22,689
Speaker 2: like that. So you can put up the warning in

658
00:33:22,699 --> 00:33:25,130
Speaker 2: your face on a cigarette pack. But either you are

659
00:33:25,140 --> 00:33:27,099
Speaker 2: banning the cigarettes. If you are not banning the cigarettes,

660
00:33:27,109 --> 00:33:29,089
Speaker 2: you can put that warning. But then if somebody goes

661
00:33:29,099 --> 00:33:31,989
Speaker 2: and still does it and does it as a cautious choice,

662
00:33:32,000 --> 00:33:33,270
Speaker 2: you can put up an age limit.

663
00:33:33,760 --> 00:33:36,119
Speaker 2: So let's take example, right? Cigarettes, you put an age limit,

664
00:33:36,229 --> 00:33:38,160
Speaker 2: you put, you can even say like only from this

665
00:33:38,170 --> 00:33:40,270
Speaker 2: time to this time, I'll check your ID while I'm

666
00:33:40,280 --> 00:33:43,780
Speaker 2: selling you, I'll put an image of like this swollen

667
00:33:43,790 --> 00:33:46,020
Speaker 2: lung and everything. But if you still do it,

668
00:33:46,699 --> 00:33:49,859
Speaker 2: then there is a layer to which you will defend

669
00:33:49,869 --> 00:33:51,920
Speaker 2: the person. And then after that is the freedom line.

670
00:33:52,530 --> 00:33:55,699
Speaker 2: So I would not expect the US layers to get,

671
00:33:55,709 --> 00:33:59,939
Speaker 2: but you cannot have quantity dropping, ok? Then I will

672
00:33:59,949 --> 00:34:03,140
Speaker 2: have stars dropping. So I don't think it will go

673
00:34:03,150 --> 00:34:07,239
Speaker 2: there but probably more on acceptance like, OK, every month

674
00:34:07,250 --> 00:34:08,080
Speaker 2: they need to do it.

675
00:34:08,500 --> 00:34:10,270
Speaker 2: It could go even to the level of every time

676
00:34:10,280 --> 00:34:12,020
Speaker 2: they log into the app. The first screen needs to

677
00:34:12,030 --> 00:34:14,750
Speaker 2: say you acknowledge that you are doing this. I mean

678
00:34:14,760 --> 00:34:16,919
Speaker 2: that's the extreme I couldn't think of, but I don't

679
00:34:16,929 --> 00:34:18,909
Speaker 2: expect them to come and start designing apps for people.

680
00:34:19,600 --> 00:34:23,689
Speaker 1: You know, earlier, we were talking about the transparency associated.

681
00:34:23,699 --> 00:34:25,350
Speaker 1: We were discussing in the country of the stable coin

682
00:34:25,360 --> 00:34:28,510
Speaker 1: and you were mentioning that, you know, the regulators one

683
00:34:28,520 --> 00:34:32,520
Speaker 1: lower cost transparency and and the digital ecosystem builds it.

684
00:34:33,050 --> 00:34:36,580
Speaker 1: But in terms of the crypto ecosystem,

685
00:34:36,928 --> 00:34:40,538
Speaker 1: that's where the ransomware and the cyber attack related payments,

686
00:34:40,549 --> 00:34:44,749
Speaker 1: everything seems to be taking place so clearly that despite

687
00:34:44,759 --> 00:34:47,678
Speaker 1: being a digital distributed ledger where you can see things

688
00:34:47,688 --> 00:34:50,438
Speaker 1: going on, there are ways for people to hide behind them.

689
00:34:50,688 --> 00:34:53,259
Speaker 1: Uh So talk a little bit about where you think

690
00:34:53,268 --> 00:34:55,937
Speaker 1: the crypto ecosystem has evolved in the last four years.

691
00:34:56,239 --> 00:34:58,799
Speaker 1: And and how do we deal with this issue? That

692
00:34:58,809 --> 00:35:00,468
Speaker 1: seems to be a lot of illicit activity is in

693
00:35:00,479 --> 00:35:01,589
Speaker 1: that ecosystem.

694
00:35:01,668 --> 00:35:02,509
Speaker 2: See, uh

695
00:35:03,669 --> 00:35:07,500
Speaker 2: yes, there is, but honestly, they get a lot more blame.

696
00:35:07,800 --> 00:35:12,830
Speaker 2: Nobody took a ship full of cash to Panama. The

697
00:35:12,840 --> 00:35:16,709
Speaker 2: historically money laundering happened through the financial institutions, through the

698
00:35:16,719 --> 00:35:20,649
Speaker 2: proper channels and everything. So it's not that crypto are

699
00:35:20,659 --> 00:35:24,659
Speaker 2: the only people, there are wrong things about their systems. Absolutely.

700
00:35:25,530 --> 00:35:27,419
Speaker 2: And which is why there are companies who are doing

701
00:35:27,429 --> 00:35:30,259
Speaker 2: this tracking analysis. How could FB recover a lot of

702
00:35:30,270 --> 00:35:33,459
Speaker 2: that during their investigations and everything? Even when you see

703
00:35:33,469 --> 00:35:38,479
Speaker 2: an FX thing happen, they could track a bunch of

704
00:35:38,489 --> 00:35:42,199
Speaker 2: the assets and stuff, they could do that. Honestly, you

705
00:35:42,209 --> 00:35:43,459
Speaker 2: can't do that with cash.

706
00:35:44,260 --> 00:35:46,500
Speaker 2: You can't do that with cash with crypto. At least

707
00:35:46,510 --> 00:35:50,729
Speaker 2: you have some trail. Is it the perfect trail? Maybe not,

708
00:35:50,909 --> 00:35:54,939
Speaker 2: maybe not. You have concepts like mixers and everything, which

709
00:35:54,949 --> 00:35:58,259
Speaker 2: can be used to istic it the thing. But is

710
00:35:58,270 --> 00:36:00,530
Speaker 2: it better than cash most likely? Yes.

711
00:36:01,429 --> 00:36:04,110
Speaker 2: Should there be more guards? Absolutely on the on ramps

712
00:36:04,120 --> 00:36:06,669
Speaker 2: and off ramps. Most regulators are putting the guard rails

713
00:36:06,679 --> 00:36:09,590
Speaker 2: on the on ramps and off ramps because if you

714
00:36:09,600 --> 00:36:12,590
Speaker 2: keep circulating in the crypto ecosystem, yes. But the moment

715
00:36:12,600 --> 00:36:15,189
Speaker 2: you have to come back outside, then at the entry

716
00:36:15,199 --> 00:36:18,800
Speaker 2: and the exit, you can be asked to justify and stuff.

717
00:36:18,810 --> 00:36:20,600
Speaker 2: Uh details from that perspective

718
00:36:21,370 --> 00:36:25,360
Speaker 1: should cross border transactions of fiat versus cross border transactions

719
00:36:25,370 --> 00:36:26,709
Speaker 1: of crypto be treated differently.

720
00:36:27,600 --> 00:36:30,489
Speaker 2: Uh It's a sovereign matter. Some countries have control currency,

721
00:36:30,500 --> 00:36:31,540
Speaker 2: some countries do not.

722
00:36:32,409 --> 00:36:37,030
Speaker 2: So try to remit ideas freely out of Indonesia is

723
00:36:37,040 --> 00:36:39,520
Speaker 2: very different than you want to do, remit sing dollars

724
00:36:39,530 --> 00:36:42,799
Speaker 2: out of Singapore. So that, that's a sovereign matter. It's

725
00:36:42,810 --> 00:36:46,600
Speaker 2: not a question of crypto or fiat. It's a, it's

726
00:36:46,610 --> 00:36:47,469
Speaker 2: a sovereign matter.

727
00:36:48,439 --> 00:36:52,259
Speaker 1: But do you see instances where let's say, I mean, speaking,

728
00:36:52,270 --> 00:36:56,330
Speaker 1: we have some terrorist incidents somewhere in the world and

729
00:36:56,340 --> 00:37:00,300
Speaker 1: we realize just like in 9 1124 years ago, the

730
00:37:00,310 --> 00:37:03,870
Speaker 1: Western Union was the payment method with which the terrorists did.

731
00:37:03,879 --> 00:37:06,139
Speaker 1: The financing that we see this time it is done

732
00:37:06,149 --> 00:37:09,020
Speaker 1: through the ecosystem. Could there be a massive backlash then

733
00:37:10,080 --> 00:37:12,459
Speaker 2: see premises this right. Uh

734
00:37:13,320 --> 00:37:16,219
Speaker 2: There will be a fraction of the transactions on that.

735
00:37:16,229 --> 00:37:18,839
Speaker 2: And from that question, is this always right. What was

736
00:37:18,850 --> 00:37:21,120
Speaker 2: the on ramp and offer Western Union is still not banned?

737
00:37:21,870 --> 00:37:23,239
Speaker 1: Right. Correct. Right.

738
00:37:23,250 --> 00:37:26,969
Speaker 2: There were, there were probably issues which were rectified and

739
00:37:26,979 --> 00:37:31,939
Speaker 2: everything but it still operates just they just acquired a

740
00:37:31,949 --> 00:37:37,699
Speaker 2: large payment player in Singapore last week. So there are gaps,

741
00:37:37,870 --> 00:37:39,939
Speaker 2: there will always, it's a Tom and Jerry game,

742
00:37:40,610 --> 00:37:43,790
Speaker 2: they will always find something and it will always be

743
00:37:43,800 --> 00:37:48,469
Speaker 2: chasing the mouse game from that perspective. But that doesn't

744
00:37:48,479 --> 00:37:52,000
Speaker 2: mean the platform needs to be shut down the gaps.

745
00:37:52,260 --> 00:37:54,889
Speaker 2: We find gaps, we fix them. And it's not that

746
00:37:55,610 --> 00:37:58,689
Speaker 2: the back enough financial institutions have been penalized for hundreds

747
00:37:58,699 --> 00:38:00,919
Speaker 2: and billions of hundreds of millions and billions of dollars.

748
00:38:00,929 --> 00:38:03,979
Speaker 2: Nothing to do with the crypto ecosystem for supporting some

749
00:38:03,989 --> 00:38:06,469
Speaker 2: country or remitting money to a country which was on

750
00:38:06,479 --> 00:38:08,760
Speaker 2: the sanctions list, which had nothing to do with crypto.

751
00:38:09,040 --> 00:38:09,620
Speaker 2: So

752
00:38:10,000 --> 00:38:12,729
Speaker 2: did we shut down that global bank with 100 and

753
00:38:12,739 --> 00:38:16,580
Speaker 2: 50 year old history? No, yes, there were punitive action.

754
00:38:16,590 --> 00:38:20,229
Speaker 2: There were mitigation measures put in place. It's the same thing, right?

755
00:38:20,250 --> 00:38:21,510
Speaker 2: It's the same yardstick.

756
00:38:21,949 --> 00:38:25,250
Speaker 1: So you are fundamentally differentiating between technology, which you are

757
00:38:25,260 --> 00:38:28,060
Speaker 1: basically saying is innocent and then there are actors which

758
00:38:28,070 --> 00:38:31,610
Speaker 1: you say could or could not be innocent. But I

759
00:38:31,620 --> 00:38:33,500
Speaker 1: just want to harp on that issue one more time

760
00:38:33,510 --> 00:38:36,419
Speaker 1: that when we say that the technology is innocent,

761
00:38:36,750 --> 00:38:40,860
Speaker 1: but there could be algorithms that can promote addictive behavior.

762
00:38:40,870 --> 00:38:43,870
Speaker 1: There could be algorithms that can help you hide things

763
00:38:44,510 --> 00:38:45,729
Speaker 1: and that's where regulation comes

764
00:38:45,739 --> 00:38:45,979
Speaker 1: in.

765
00:38:46,030 --> 00:38:48,580
Speaker 2: As you see in China. For example, they put a

766
00:38:48,590 --> 00:38:53,340
Speaker 2: restriction that kids below this age cannot do online gaming, right?

767
00:38:53,350 --> 00:38:54,340
Speaker 2: They put the regulation.

768
00:38:55,139 --> 00:38:57,839
Speaker 2: Yes, because those games were addictive and stuff. They put

769
00:38:57,850 --> 00:39:00,409
Speaker 2: the regulation, they put some caps on the number of

770
00:39:00,419 --> 00:39:04,870
Speaker 2: hours per login for spending on certain platforms to control

771
00:39:04,879 --> 00:39:08,729
Speaker 2: the addictiveness in the young Children. Absolutely, I fully agree

772
00:39:08,969 --> 00:39:11,679
Speaker 2: and each country will have to take a call for.

773
00:39:11,689 --> 00:39:14,620
Speaker 2: What is that threshold? The threshold will be different by

774
00:39:14,629 --> 00:39:15,350
Speaker 2: different markets.

775
00:39:16,280 --> 00:39:20,759
Speaker 1: Since you mentioned, China, let's conclude on China, the

776
00:39:21,830 --> 00:39:25,159
Speaker 1: tech crackdown over the last half a decade has seemed

777
00:39:25,169 --> 00:39:27,879
Speaker 1: to take some shine away from the entrepreneurial energy that

778
00:39:27,889 --> 00:39:29,850
Speaker 1: we used to see in China in the previous decade.

779
00:39:30,159 --> 00:39:33,939
Speaker 1: But at the same time, Tik Tok is a global brand.

780
00:39:34,000 --> 00:39:36,560
Speaker 1: It's so big and influential that you know, some countries

781
00:39:36,570 --> 00:39:40,500
Speaker 1: like the US think about banning it. X So let's

782
00:39:40,510 --> 00:39:43,179
Speaker 1: talk a little bit about the vitality of the Chinese

783
00:39:43,189 --> 00:39:44,459
Speaker 1: fintech ecosystem.

784
00:39:45,419 --> 00:39:49,350
Speaker 2: I would say it's a very large domestic market over

785
00:39:49,360 --> 00:39:52,419
Speaker 2: the last few years, they have invested in assets across

786
00:39:52,429 --> 00:39:55,949
Speaker 2: the world. One of their assets in the Philippines recently

787
00:39:55,959 --> 00:39:58,969
Speaker 2: was valued at $4.8 billion which technically is worth more

788
00:39:58,979 --> 00:40:00,060
Speaker 2: than all of Gojek is worth

789
00:40:01,590 --> 00:40:05,350
Speaker 2: from that and Indonesia is a bigger market from that perspective.

790
00:40:05,659 --> 00:40:11,089
Speaker 2: So some of those assets have done well from that perspective.

791
00:40:11,100 --> 00:40:13,860
Speaker 2: So from that perspective, it it takes time, there are

792
00:40:13,870 --> 00:40:16,500
Speaker 2: cycles and stuff. And as an economist, like you have

793
00:40:16,510 --> 00:40:16,949
Speaker 2: seen

794
00:40:17,350 --> 00:40:20,620
Speaker 2: the whole Japan cycle come through, sometimes there are economic

795
00:40:20,629 --> 00:40:26,429
Speaker 2: cycles where some countries are balancing society and progress and

796
00:40:26,439 --> 00:40:28,830
Speaker 2: definition of progress from that perspective. And there is a

797
00:40:28,840 --> 00:40:32,259
Speaker 2: reset which happens in that. And if you look at

798
00:40:32,270 --> 00:40:35,819
Speaker 2: from the regulators perspective, right, there was a point where

799
00:40:35,830 --> 00:40:37,449
Speaker 2: the regulators lost

800
00:40:38,370 --> 00:40:41,549
Speaker 2: fair, fair level of visibility to empty money supply

801
00:40:42,229 --> 00:40:45,290
Speaker 2: because so much transactions are happening through the two large

802
00:40:45,300 --> 00:40:50,350
Speaker 2: wallet ecosystems that when the central bank starts to lose

803
00:40:50,360 --> 00:40:53,229
Speaker 2: visibility on M one M two money supply controls and

804
00:40:53,239 --> 00:40:56,540
Speaker 2: through puts and thresholds from that perspective to be able

805
00:40:56,550 --> 00:40:59,929
Speaker 2: to define how do you manage the interest rates? That's

806
00:40:59,939 --> 00:41:01,709
Speaker 2: the time when the regulators have to come. In that

807
00:41:01,719 --> 00:41:05,050
Speaker 2: the case, we embrace private sector,

808
00:41:05,350 --> 00:41:08,770
Speaker 2: we acknowledge all of this, but there are areas which

809
00:41:09,120 --> 00:41:12,080
Speaker 2: we need to manage because we have to manage holistically

810
00:41:12,100 --> 00:41:16,229
Speaker 2: from that perspective. So that's again checks and balances.

811
00:41:16,610 --> 00:41:19,530
Speaker 1: What we have seen the checks and balances in China

812
00:41:19,540 --> 00:41:22,679
Speaker 1: is that harbinger for other regulators that they would also

813
00:41:22,689 --> 00:41:23,969
Speaker 1: do some things like that.

814
00:41:24,340 --> 00:41:27,090
Speaker 2: Some of them depends, right? So if you look at it,

815
00:41:27,100 --> 00:41:29,320
Speaker 2: uh some of them, for example, they started to put

816
00:41:29,330 --> 00:41:33,530
Speaker 2: limits on social media usage or gaming, age limits and everything.

817
00:41:33,810 --> 00:41:37,270
Speaker 2: So those cultures who can accept those kind of limitations

818
00:41:37,479 --> 00:41:40,218
Speaker 2: will start to do it. However, you will see some

819
00:41:40,229 --> 00:41:42,830
Speaker 2: cultures who will be very, very against it, who will

820
00:41:42,840 --> 00:41:46,069
Speaker 2: revolt at the idea that this is my definition of

821
00:41:46,080 --> 00:41:50,689
Speaker 2: freedom of speech, freedom of expression, freedom of access. So

822
00:41:50,889 --> 00:41:53,709
Speaker 2: it's a way that's their model.

823
00:41:54,020 --> 00:41:56,209
Speaker 2: India is another model. India just banned to talk straight away,

824
00:41:56,459 --> 00:42:00,560
Speaker 2: but equally addictive Instagram reads and youtube shorts are allowed

825
00:42:00,729 --> 00:42:04,239
Speaker 2: from that perspective. So some countries will do that model approach,

826
00:42:04,729 --> 00:42:06,280
Speaker 2: other countries will do differently.

827
00:42:06,429 --> 00:42:10,310
Speaker 1: I'm thinking in terms of non bank, financial sectors, extension

828
00:42:10,320 --> 00:42:15,479
Speaker 1: of credit and that's somehow becoming loosely attached or more

829
00:42:15,489 --> 00:42:19,280
Speaker 1: loosely attached into the monetary transmission system. So to your

830
00:42:19,290 --> 00:42:19,639
Speaker 1: point

831
00:42:19,870 --> 00:42:23,899
Speaker 1: that was getting worried about losing control over water money supply.

832
00:42:24,060 --> 00:42:25,389
Speaker 1: Would we see elsewhere?

833
00:42:25,399 --> 00:42:25,500
Speaker 2: I

834
00:42:26,100 --> 00:42:30,449
Speaker 2: do not see non bank players to be that strong

835
00:42:30,719 --> 00:42:33,199
Speaker 2: in other markets to be able to cause that level

836
00:42:33,209 --> 00:42:34,090
Speaker 2: of worry.

837
00:42:35,709 --> 00:42:38,689
Speaker 1: So Alibaba Tencent were different.

838
00:42:39,050 --> 00:42:43,280
Speaker 2: They they they they built the financial infrastructure rails. So

839
00:42:43,290 --> 00:42:46,370
Speaker 2: when the internet commerce boomed and everything, they literally built

840
00:42:46,379 --> 00:42:50,310
Speaker 2: the social media rails, e-commerce rails. So they built the highways,

841
00:42:51,129 --> 00:42:52,750
Speaker 2: they built the highways from scratch

842
00:42:53,419 --> 00:42:55,959
Speaker 2: versus let's say take Thailand, right? So prompt was built

843
00:42:55,969 --> 00:43:00,169
Speaker 2: not by one company, right? In, in the Philippines was

844
00:43:00,179 --> 00:43:03,159
Speaker 2: not built by one company up was not built by

845
00:43:03,169 --> 00:43:07,010
Speaker 2: one company. It was a collection of like 30 2030

846
00:43:07,020 --> 00:43:10,520
Speaker 2: 40 banks per se. And N PC is not owned

847
00:43:10,530 --> 00:43:14,919
Speaker 2: by one individual. From that perspective, pay now was not

848
00:43:14,929 --> 00:43:19,860
Speaker 2: built by a bank or a fin tech. Yes, everybody

849
00:43:19,870 --> 00:43:21,459
Speaker 2: was involved but it was not like

850
00:43:21,889 --> 00:43:25,689
Speaker 2: DBS owned it or OCBC owned it or wise owned it. Right.

851
00:43:25,919 --> 00:43:28,179
Speaker 2: So which is why a lot of regulators learned that

852
00:43:28,189 --> 00:43:31,820
Speaker 2: lesson that some of these public infrastructure needs to be

853
00:43:31,830 --> 00:43:32,620
Speaker 2: supported and

854
00:43:33,939 --> 00:43:37,520
Speaker 2: led by the like supported and nudged by the government,

855
00:43:37,530 --> 00:43:39,949
Speaker 2: the private sector can have equity stake in it, but

856
00:43:39,959 --> 00:43:41,979
Speaker 2: they need to be there on that to enable it.

857
00:43:42,219 --> 00:43:44,120
Speaker 2: Otherwise private people will build it and then you will

858
00:43:44,129 --> 00:43:46,509
Speaker 2: have to come later to regulate it. So the lesson

859
00:43:46,520 --> 00:43:50,060
Speaker 2: for the private for the regulators was that embrace it soon,

860
00:43:50,219 --> 00:43:54,159
Speaker 2: control it, govern it house and you drive the direction

861
00:43:54,169 --> 00:43:55,889
Speaker 2: of it rather than wait.

862
00:43:57,090 --> 00:43:59,569
Speaker 1: I think that's a very good lesson and I think

863
00:43:59,580 --> 00:44:02,350
Speaker 1: that's a very good point to end our conversation. Warren Mittal.

864
00:44:02,360 --> 00:44:03,739
Speaker 1: Thank you very much for your time and thank you

865
00:44:03,750 --> 00:44:06,750
Speaker 1: so much. Thank you. Thanks to our listeners as well.

866
00:44:06,760 --> 00:44:09,669
Speaker 1: Copy time was produced by Ken Del Rich Violet, Lee

867
00:44:09,679 --> 00:44:13,399
Speaker 1: and Daisy Sherman provided additional assistance. All 139 episodes of

868
00:44:13,409 --> 00:44:16,389
Speaker 1: our podcast are available on youtube as well as on

869
00:44:16,399 --> 00:44:21,709
Speaker 1: Google and Spotify and Apple. Uh for our research content,

870
00:44:21,719 --> 00:44:24,570
Speaker 1: you can find them all by Googling D BS Research Library.

871
00:44:24,580 --> 00:44:25,469
Speaker 1: Have a great day.