WEBVTT - Kopi Time E139 - Fintech Zeitgeist with Varun Mittal 0:00:05.980 --> 0:00:08.829 Welcome to Cie Time, a podcast series on Markets and 0:00:08.840 --> 0:00:12.680 Economists from DVS Group Research. I'm Theron Bei Economist. Welcoming 0:00:12.689 --> 0:00:15.229 you to our 139th episode. 0:00:15.920 --> 0:00:19.260 We are releasing this podcast in time for the 2024 0:00:19.270 --> 0:00:23.219 Singapore Fintech Festival. What I'd like to do is present 0:00:23.229 --> 0:00:26.540 some updated thinking on the state of fintech and who 0:00:26.549 --> 0:00:30.010 better to discuss this other than Varun. Mittal. Varun is 0:00:30.020 --> 0:00:33.509 the Chief innovation officer at a leading insurance company where 0:00:33.520 --> 0:00:37.918 he manages new product and distribution innovation, ecosystem partnerships and 0:00:37.930 --> 0:00:41.019 emerging technology rollouts like the A I Center of Excellence. 0:00:41.529 --> 0:00:44.270 Earlier in his career, Vern served as a partner at 0:00:44.279 --> 0:00:48.019 Ey leading its Fintech and ASEAN digital banking practice supporting 0:00:48.029 --> 0:00:51.819 fin tech start ups financial institutions and regulators. Veron Mittel. 0:00:51.880 --> 0:00:55.990 Welcome to COVID Time looking forward. Thanks for having you Vern. 0:00:56.040 --> 0:00:57.560 Give me one minute. I want to read you out 0:00:57.569 --> 0:01:00.630 some things you joined us for the first time was 0:01:00.639 --> 0:01:04.429 in 2021 in the pandemic days four years ago on 0:01:04.440 --> 0:01:08.300 episode 41. So I took the transcript of this conversation 0:01:08.309 --> 0:01:09.529 and I asked Chad GP T 0:01:09.870 --> 0:01:13.940 to prepare a summary of our hour long conversation. This 0:01:13.949 --> 0:01:15.529 is what it produced. In one second. 0:01:16.440 --> 0:01:19.449 The discussion revolves around the exciting developments in the world 0:01:19.459 --> 0:01:23.500 of fintech, particularly digital payments. Mittal highlights the significant impact 0:01:23.510 --> 0:01:26.518 of smartphone proliferation and internet access on the rise of 0:01:26.529 --> 0:01:29.800 digital finance. He argues that the post vaccine phase will 0:01:29.809 --> 0:01:33.260 see a further acceleration of digitalization leading to a shift 0:01:33.269 --> 0:01:37.199 towards remote work and distributed workforces. The conversation then delves 0:01:37.209 --> 0:01:40.199 into regulatory landscape of FINTECH, emphasizing the need for a 0:01:40.209 --> 0:01:43.419 risk based approach to regulate emerging technologies. 0:01:43.739 --> 0:01:46.970 Metal discusses the challenges of cross border payments, particularly the 0:01:46.980 --> 0:01:51.050 need to balance innovation with security and oversight. He emphasizes 0:01:51.059 --> 0:01:54.569 the potential of a train model where fintech companies enable 0:01:54.580 --> 0:01:59.160 smaller customers to participate in existing infrastructure built for institutional clients. 0:01:59.540 --> 0:02:02.269 The episode concludes with a discussion on the Chinese digital 0:02:02.279 --> 0:02:05.650 currency initiative and its potential for cross border payments and 0:02:05.660 --> 0:02:07.730 its implication for national monetary sovereignty. 0:02:08.070 --> 0:02:11.788 Mittal also shares insights on the digital banking landscape in Singapore, 0:02:11.800 --> 0:02:14.339 focusing on the potential for innovation in niche areas such 0:02:14.350 --> 0:02:17.788 as retirement planning for gig economy workers. He further highlights 0:02:17.800 --> 0:02:22.029 the importance of financial inclusion even in wealthy societies like Singapore. 0:02:22.538 --> 0:02:23.220 That's pretty good, 0:02:24.038 --> 0:02:28.389 not bad. Uh Let's begin with an update of the discussion. 0:02:28.399 --> 0:02:31.978 Your prediction that post vaccine phase will see a further 0:02:31.990 --> 0:02:36.279 acceleration of digitalization. Well, that certainly happened. Which aspects of 0:02:36.288 --> 0:02:38.210 the dynamic do you find the most compelling 0:02:39.089 --> 0:02:45.000 the premises, institutions were forced to do digitization which they 0:02:45.008 --> 0:02:47.500 could not go back So all the forms and the 0:02:47.508 --> 0:02:51.250 processes which became digital, all the non face to face interactions, 0:02:51.258 --> 0:02:52.300 which became digital. 0:02:52.869 --> 0:02:54.649 Normally it would take them two years to get the 0:02:54.660 --> 0:02:57.690 internal approvals that time, too much they had to, but 0:02:57.720 --> 0:03:00.839 they could not ever go back. So a lot of 0:03:00.899 --> 0:03:04.049 like I would say decades of progress happened in two 0:03:04.059 --> 0:03:07.410 years and which cannot go back and then that becomes standard. 0:03:07.429 --> 0:03:09.179 So if you could do it for two or three 0:03:09.190 --> 0:03:11.168 of these products, why can't we do it for others? 0:03:11.669 --> 0:03:15.508 So that generational shift which happened across financial institutions 0:03:15.929 --> 0:03:19.429 that stays and that becomes the benchmark and you had 0:03:19.440 --> 0:03:21.309 two of the players to do it. And then everybody 0:03:21.320 --> 0:03:24.589 else uses that as a benchmark. And regulators also accepted that, OK, 0:03:24.600 --> 0:03:28.758 we allowed Zoom based K for overseas customers during COVID. 0:03:28.770 --> 0:03:32.660 So what changed now we can still allow. So suddenly 0:03:32.669 --> 0:03:34.418 if you look at just as simple use case as 0:03:34.429 --> 0:03:38.080 cross border or overseas customers, now that becomes default 0:03:38.970 --> 0:03:43.759 and that reduces your cost of servicing, improves agility, improves productivity. 0:03:43.979 --> 0:03:46.610 And if you look at the RO E for financial 0:03:46.619 --> 0:03:48.229 institutions have improved since then, 0:03:49.009 --> 0:03:52.690 pre COVID and post COVID, you significantly improvement in that 0:03:52.970 --> 0:03:56.029 by all means, what about geographically? So in Singapore, I 0:03:56.039 --> 0:03:58.050 think we can safely say some of these things that 0:03:58.059 --> 0:04:01.559 you just mentioned were very much prevalent ASEAN 0:04:02.289 --> 0:04:08.460 even more even more because those markets started with smartphones. 0:04:08.690 --> 0:04:12.339 So and then everybody was forced to deliver every possible 0:04:12.350 --> 0:04:15.240 service to them because the branches would just not exist 0:04:15.399 --> 0:04:19.390 from that perspective. So if you look at today, the 0:04:19.399 --> 0:04:22.670 number of Fintech who have bought banks in Indonesia is 0:04:22.678 --> 0:04:24.809 more than the fintech who have got a banking charter 0:04:24.820 --> 0:04:25.790 in the United States. 0:04:27.600 --> 0:04:31.440 Literally half of the lending companies have a bank license 0:04:31.450 --> 0:04:35.029 or ma corporation license and it's through a out that's fine. 0:04:35.040 --> 0:04:38.029 But if you look at the fin with a banking 0:04:38.040 --> 0:04:41.118 license or with a board seat or a stake in 0:04:41.160 --> 0:04:44.899 Indonesia is more than most developed markets. 0:04:45.450 --> 0:04:45.609 That 0:04:45.619 --> 0:04:50.600 is actually fascinating. I remember during the pandemic uh to 0:04:50.609 --> 0:04:52.029 your point of, you know, once the genie out of 0:04:52.040 --> 0:04:53.109 the bottle doesn't go back. 0:04:53.380 --> 0:04:57.010 My helper used to go every two weeks to the 0:04:57.019 --> 0:04:59.700 money changers to get the cash when she could not 0:04:59.709 --> 0:05:02.850 send money home like that. She then became fully reliant 0:05:02.859 --> 0:05:05.600 on the digital ecosystem that my bank has. And since then, 0:05:05.609 --> 0:05:07.428 she has always sent money like that back as 0:05:07.440 --> 0:05:10.399 cheaper for her faster for her. She can now go 0:05:10.410 --> 0:05:13.910 there to Lucky Plaza to hang out, but not for 0:05:13.920 --> 0:05:14.130 this 0:05:14.140 --> 0:05:16.519 purpose, not stand in line for like 2030 minutes that 0:05:16.529 --> 0:05:21.170 we should see those labyrinthine lines. Absolutely. But between say 0:05:21.890 --> 0:05:26.869 bank like fintech that are in the business of giving 0:05:26.880 --> 0:05:29.660 out loans, but not necessarily in the business of taking 0:05:29.670 --> 0:05:33.019 in deposits. There was a question, let's say three or 0:05:33.029 --> 0:05:35.738 four years ago, that is there a regulatory arbitrage. I 0:05:35.750 --> 0:05:38.049 remember having this conversation with you as well. Where do 0:05:38.059 --> 0:05:39.649 we stand with that? And did the pandemic sort of 0:05:39.660 --> 0:05:40.510 change thinking around that? 0:05:41.049 --> 0:05:43.659 See the premise is this right? If there is arbitrage 0:05:43.670 --> 0:05:47.329 is there for everybody, it's the beauty of financial services, 0:05:47.339 --> 0:05:50.750 whatever you do, everything can be cloned and copied if 0:05:50.760 --> 0:05:54.339 it works. And regulator allows give it maximum six months 0:05:54.350 --> 0:05:56.970 and everybody will have it. So there is not such 0:05:56.980 --> 0:05:59.170 a case of arbitrage from that perspective. 0:05:59.459 --> 0:06:02.589 And again, wherever you see, right, where regulators find that 0:06:02.649 --> 0:06:05.820 for example, if you see India, India, regulators have put 0:06:05.829 --> 0:06:09.250 in different measures to control some, some some lending use 0:06:09.260 --> 0:06:11.799 cases and stuff because they felt that it was going 0:06:11.809 --> 0:06:14.929 outside the comfort zone from that perspective. So yes, there 0:06:14.940 --> 0:06:18.040 would be times where innovators will come up with areas 0:06:18.049 --> 0:06:21.390 which would be cases which have not been factored in before. 0:06:21.760 --> 0:06:26.350 Sometimes you see regulators are usually behind the curve and 0:06:26.359 --> 0:06:28.829 that's how it's supposed to be because otherwise it stifles 0:06:28.839 --> 0:06:32.359 the innovation but it's a fine balance and overall the 0:06:32.369 --> 0:06:33.390 water finds its level. 0:06:34.510 --> 0:06:37.659 I want to actually to the very end of this conversation, 0:06:37.670 --> 0:06:39.488 I want to come back to that issue that balancing part, 0:06:39.500 --> 0:06:43.669 that's that's an important one. So you mentioned that the 0:06:43.779 --> 0:06:47.320 ro es have improved both for banks and non banks. 0:06:48.380 --> 0:06:52.039 Uh the non banks, most of them are not listed 0:06:52.339 --> 0:06:55.208 from that perspective, but the ones were listed if you 0:06:55.220 --> 0:06:57.268 look at, let's say the United States, for example, right? 0:06:57.589 --> 0:07:00.339 They have been, they have been doing buybacks from that perspective. 0:07:00.350 --> 0:07:03.659 So if you look at the S for them have grown, 0:07:03.890 --> 0:07:06.140 so Roe may not be the right metrics for some 0:07:06.149 --> 0:07:08.160 of the non banks because they they don't have a 0:07:08.170 --> 0:07:11.250 loan book per se. But if you look at S 0:07:11.260 --> 0:07:13.609 for them over the last three years, the PS has 0:07:13.619 --> 0:07:17.299 improved different metric but underlying quality is the same, 0:07:17.309 --> 0:07:17.529 right? 0:07:17.799 --> 0:07:20.410 And the non bank financial sector in India, for example, 0:07:20.420 --> 0:07:23.059 is going through massive expansion. What's your sense of their 0:07:23.070 --> 0:07:23.779 performances 0:07:25.160 --> 0:07:28.000 right now? It's a growth cycle. There probably might be 0:07:28.010 --> 0:07:31.869 some uh I would say pit stops along the way 0:07:31.880 --> 0:07:35.589 and regulators have identified like there are some areas, for example, 0:07:35.600 --> 0:07:38.578 some people, they restricted them from lending or put some 0:07:38.589 --> 0:07:42.359 extra caveats and stuff. Uh and regulators are looking at 0:07:42.369 --> 0:07:44.230 it actively. So think of it, right. You have 100 0:07:44.239 --> 0:07:47.660 plus NBF CS. If they pick out certain +45 or 0:07:47.670 --> 0:07:51.140 six people on certain reasons, there must be some reasons 0:07:51.299 --> 0:07:53.220 and also it sends a message out to everybody else. 0:07:53.230 --> 0:07:53.480 So 0:07:53.950 --> 0:07:56.809 not others may be doing it at a smaller stage. 0:07:56.820 --> 0:08:00.890 But if you, if if you say the the class 0:08:00.899 --> 0:08:05.010 teacher sends puts punishment to two kids in the class, 0:08:05.019 --> 0:08:05.929 then everybody 0:08:05.940 --> 0:08:06.290 has 0:08:06.299 --> 0:08:06.980 demonstration 0:08:06.989 --> 0:08:07.500 of facts 0:08:07.790 --> 0:08:10.529 that sends the message out to the rest of the class. 0:08:10.540 --> 0:08:13.410 So and that is there for protection of consumers, right? 0:08:13.420 --> 0:08:17.809 Because historically regulators get regulators are goalkeepers, 0:08:18.359 --> 0:08:20.829 they get, they do not get as much credit for 0:08:20.839 --> 0:08:24.040 the growth. They save, they get a lot more blame 0:08:24.049 --> 0:08:25.140 for the ones they miss 0:08:25.200 --> 0:08:28.760 very well put. And then coming to our part of 0:08:28.769 --> 0:08:32.400 the region. So you mentioned Indonesia, we see a lot 0:08:32.409 --> 0:08:35.489 of fintech related activities in the Philippines and Vietnam and 0:08:35.500 --> 0:08:37.380 so on. And of course, here in Singapore, so give 0:08:37.390 --> 0:08:39.419 us a sense of the financial performance of this side 0:08:39.429 --> 0:08:40.090 of the world. 0:08:40.260 --> 0:08:45.530 See overall, if you see a lot of them depend 0:08:45.539 --> 0:08:47.049 on non banks 0:08:47.440 --> 0:08:50.460 for the source of capital because not a lot of banks. 0:08:50.469 --> 0:08:53.229 Now what has happened is banks have started to lend. 0:08:53.409 --> 0:08:56.739 So if you look at some, your bank and the 0:08:56.750 --> 0:08:59.859 bank in the same tower, they started to give 30 0:08:59.869 --> 0:09:03.580 $50 million lines to the alternate lenders who are doing 0:09:03.590 --> 0:09:07.250 downstream lending to the long tail. So when those lenders 0:09:07.260 --> 0:09:10.320 are able to access that better cost of capital that 0:09:10.330 --> 0:09:11.260 percolates it down. 0:09:12.140 --> 0:09:16.119 Historically, their cost of capital were 12 to 15%. Now 0:09:16.130 --> 0:09:18.890 they're able to uh they managed to bring their cost 0:09:18.900 --> 0:09:20.929 of capital between 8 to 10% 0:09:21.460 --> 0:09:23.598 from that. So if you the moment you are having 0:09:23.609 --> 0:09:28.439 200 to 400 basis points improvement in your cost of capital, why? 0:09:28.609 --> 0:09:31.109 Because you have more data, you have proven your NP 0:09:31.119 --> 0:09:33.280 A record, you have gone through cycles in credit. It's 0:09:33.289 --> 0:09:36.440 all about cycles. You have shown that your book did 0:09:36.450 --> 0:09:40.159 X things all through the COVID cycle which gives more 0:09:40.169 --> 0:09:43.989 confidence for the larger financial players to give you those 0:09:44.000 --> 0:09:45.750 lines from that perspective. 0:09:45.979 --> 0:09:49.099 And that has changed. So historically, if you look at 0:09:49.109 --> 0:09:51.539 the cost of capital for the best, some of them, 0:09:51.549 --> 0:09:53.699 the cost of capital is the same, but the best 0:09:53.710 --> 0:09:55.950 performers have managed to bring their cost of capital in 0:09:55.960 --> 0:09:59.330 single digit. The not so nice performers still have their 0:09:59.340 --> 0:10:00.789 cost of capital in double digit. 0:10:01.359 --> 0:10:02.979 So we'll go back to India for one second. So 0:10:02.989 --> 0:10:05.530 you mentioned the fact that in this region, you are seeing, 0:10:05.539 --> 0:10:08.059 you know, banks being a source of underwriting for the 0:10:08.070 --> 0:10:10.859 funding for a lot of non banks in India, private 0:10:10.869 --> 0:10:14.020 capital markets are sufficient for NBFC to raise money. 0:10:14.450 --> 0:10:17.750 Uh that's there. But the banks, there are also open 0:10:17.760 --> 0:10:20.390 banks are not averse to that. The thing is that 0:10:20.590 --> 0:10:24.390 regulators have put very clear loans, clear rules on non 0:10:24.400 --> 0:10:27.358 evergreening of the loans. So what happened was they found 0:10:27.369 --> 0:10:29.669 that there were a lot of evergreening of those loans happening. 0:10:30.179 --> 0:10:34.289 So that's being handled. The Southeast Asian model is slightly 0:10:34.299 --> 0:10:37.200 different because it's a credit line. And when you give 0:10:37.210 --> 0:10:40.030 a credit line, it's by nature, it's default. Evergreen. 0:10:40.390 --> 0:10:43.359 It's not like a term from that perspective. So if 0:10:43.369 --> 0:10:46.608 you have already factored all the risks governance in while 0:10:46.619 --> 0:10:49.140 giving an open open loop credit line which you can 0:10:49.150 --> 0:10:52.619 draw down upon then it's, it's factored in. So that's 0:10:52.630 --> 0:10:55.090 where the difference in. Indeed, it was not, it did 0:10:55.099 --> 0:10:56.409 not start as evergreen 0:10:57.559 --> 0:11:00.419 um related to that. Yeah, I remember in that pa 0:11:00.429 --> 0:11:02.569 past conversation, I think the chat GP T summary also 0:11:02.580 --> 0:11:05.239 picked that up, that you expressed this vision that uh 0:11:05.250 --> 0:11:09.260 fintech will enable SME S to participate in the infrastructure 0:11:09.270 --> 0:11:12.750 that is usually reserved for very large financial institutions. I 0:11:12.760 --> 0:11:14.739 think that was still a work in progress back in 0:11:14.750 --> 0:11:16.739 2020 when we chatted, where do we stand there? Now? 0:11:17.559 --> 0:11:19.510 A lot more has happened. I'll give you an example, right? 0:11:19.679 --> 0:11:22.890 The number of index today who can issue SME cards 0:11:23.119 --> 0:11:26.590 is much larger than four years ago because now you 0:11:26.599 --> 0:11:29.729 have larger players. So for example, if you say Singapore, right, 0:11:30.030 --> 0:11:32.770 f which is an Indonesian fintech can issue cards here 0:11:32.780 --> 0:11:36.969 wise like British Fintech, they are issuing cards for other companies. 0:11:36.979 --> 0:11:39.969 So tiger broker issues cards using wise infrastructure 0:11:40.840 --> 0:11:44.400 from that perspective. So the card is one collections and 0:11:44.409 --> 0:11:50.330 dispersal is another. So what has happened is the larger fintech, 0:11:50.340 --> 0:11:52.530 they have already invested in that infrastructure. 0:11:52.940 --> 0:11:55.780 So they have the ability to rent that infrastructure and 0:11:55.789 --> 0:11:58.580 they grew up with the DNA that they are willing 0:11:58.590 --> 0:12:01.080 to rent that infrastructure. Banks also do it. So now 0:12:01.090 --> 0:12:03.619 they are competing with banks in some of those places 0:12:03.650 --> 0:12:07.380 where banks, historically, banks would also rent that infrastructure but 0:12:07.390 --> 0:12:09.569 they would rent to the person who has 100 million 0:12:09.580 --> 0:12:13.709 line with them, 500 million line with them or 18 0:12:13.719 --> 0:12:18.200 country bank account relationship IBG one client. 0:12:18.789 --> 0:12:21.179 Uh, what FEX have done is they have brought it 0:12:21.190 --> 0:12:24.229 down to IG three and G four from that perspective. 0:12:24.390 --> 0:12:24.880 Absolutely 0:12:24.890 --> 0:12:30.219 brilliant. We also at the retail level, the same conservative 0:12:30.229 --> 0:12:34.090 parent who would think twice about finding some not very 0:12:34.479 --> 0:12:37.500 famous bank name for their child's sort of, you know, 0:12:37.510 --> 0:12:40.630 little wallet. Now, you know, revolute one day and something 0:12:40.640 --> 0:12:42.900 the other day people are tried between cards, look at 0:12:42.909 --> 0:12:45.710 the benefits and opening this account is so easy. But 0:12:45.719 --> 0:12:46.469 clearly there is a 0:12:46.900 --> 0:12:49.280 degree of comfort around the security guard rails, otherwise people 0:12:49.289 --> 0:12:49.919 will not be using 0:12:49.929 --> 0:12:50.280 these. 0:12:50.289 --> 0:12:52.968 Absolutely. And which is why, right. So all of these, 0:12:52.979 --> 0:12:55.000 they have to store the money with a bank like yours, 0:12:55.559 --> 0:12:58.449 they cannot keep it anywhere else. So there are governance 0:12:58.460 --> 0:13:02.718 around that this is segregated, money and everything. And regulators 0:13:02.729 --> 0:13:05.780 have put very strong guardrails around how the MP license 0:13:05.859 --> 0:13:08.859 and I'll give you an example, right? Four years back, 0:13:08.869 --> 0:13:12.400 the limits for the wallets in Singapore was $5000 per 0:13:12.409 --> 0:13:14.679 transaction and 30,000 per year. 0:13:15.190 --> 0:13:18.489 Now it's changed to 20,000 per transaction and 100,000 per year. 0:13:18.880 --> 0:13:22.619 So because the infrastructure improved, this use cases improved. So 0:13:22.630 --> 0:13:27.169 the regulators also felt comfort to move the limits up 0:13:27.210 --> 0:13:29.650 says we will enable unlock more use cases 0:13:30.510 --> 0:13:34.419 that is sort of encouraging set of the developments. What 0:13:34.429 --> 0:13:36.718 are the not so encouraging side of the developments in 0:13:36.729 --> 0:13:37.640 the last four years? 0:13:38.609 --> 0:13:42.679 I would say if you look at some markets, for example, 0:13:42.869 --> 0:13:45.309 like if let's say India, right? So the India has 0:13:45.320 --> 0:13:49.449 more f trading right now, futures and options trading than 0:13:49.460 --> 0:13:53.169 some of the biggest capital markets. That's true. And as 0:13:53.179 --> 0:13:57.559 for the Indian government statistics, Indian regulator statistics, more than 90% 0:13:57.570 --> 0:13:59.859 of these retail people lost money. 0:14:00.900 --> 0:14:02.890 So how some of the public markets and even if 0:14:02.900 --> 0:14:04.960 you look at us, when you see the Wall Street 0:14:04.969 --> 0:14:10.439 bets and gamestop meme, how public markets started to act 0:14:10.450 --> 0:14:12.760 like a quasi casino in some shape and form in 0:14:12.770 --> 0:14:13.559 different markets. 0:14:13.929 --> 0:14:16.690 Us saw it in Gamestop Wall Street bets. India saw 0:14:16.700 --> 0:14:18.929 it in f some of the markets are in different 0:14:18.940 --> 0:14:22.630 shape and form. So that probably has not been a 0:14:22.640 --> 0:14:28.049 great outcome from the democratization doesn't always work the good way, 0:14:28.390 --> 0:14:30.979 right? And also it is enabled by the speed of 0:14:30.989 --> 0:14:33.590 transaction and the ease of those interfaces. One has 0:14:33.599 --> 0:14:33.989 think 0:14:34.000 --> 0:14:35.390 of it this way, right? When you say that this 0:14:35.400 --> 0:14:38.179 is zero transaction and it's a payment for order flow, 0:14:38.190 --> 0:14:40.179 then you know that it's a hedge fund in the 0:14:40.190 --> 0:14:40.750 other side 0:14:41.349 --> 0:14:44.890 and it is illegal in most of the European markets 0:14:44.900 --> 0:14:48.159 for a reason, it is legal in some markets and 0:14:48.169 --> 0:14:51.159 that's absolutely there is jurisdiction, but you cannot do that 0:14:51.169 --> 0:14:54.059 in Europe or India for that matter. But you 0:14:54.070 --> 0:14:54.159 can 0:14:54.169 --> 0:14:54.299 use 0:14:54.309 --> 0:14:55.380 Robin Hood in the US to do 0:14:55.390 --> 0:14:59.559 that. Exactly right. But then who suffers. So technically the retailers, 0:14:59.619 --> 0:15:01.770 retailers feels that he is not paying 0:15:02.750 --> 0:15:06.570 because the cost of transaction is free. But there is 0:15:06.580 --> 0:15:08.979 on the other side, there is a mark up based 0:15:08.989 --> 0:15:11.450 on the market making from the hedge funds from that perspective. 0:15:11.679 --> 0:15:14.539 So I'm not saying there is nothing, there is nothing 0:15:14.549 --> 0:15:18.789 illegal about it. That's the United States law and each 0:15:18.799 --> 0:15:21.409 of those entities are subscribing to the law of that land. 0:15:22.429 --> 0:15:24.729 I'm nobody to say whether the law is right or not. 0:15:24.869 --> 0:15:27.059 But what that does is a lot of people who 0:15:27.070 --> 0:15:30.070 do not have enough financial literacy, who do not have 0:15:30.080 --> 0:15:33.330 financial awareness and who have a lot of these Tik 0:15:33.340 --> 0:15:37.390 Tok and Instagram influencers, right? So the problem of 0:15:37.679 --> 0:15:41.510 the financial uncontrolled access and awareness is you have a 0:15:41.520 --> 0:15:47.799 lot of non doctors prescribing medicines of financial freedom and 0:15:47.809 --> 0:15:54.929 fire movement and different ideas and different telegram groups and 0:15:54.940 --> 0:15:59.599 courses and everything who probably may not have the bad intentions, 0:15:59.609 --> 0:16:00.900 but they may not have the 0:16:01.419 --> 0:16:05.369 enough knowledge and awareness to do it. So one sided 0:16:05.650 --> 0:16:10.869 ease of access with uh I would say non non 0:16:11.690 --> 0:16:16.330 non sensitized information from that perspective and there is no 0:16:16.340 --> 0:16:18.890 governance around it. So if you're doing medical advice, there 0:16:18.900 --> 0:16:23.799 are regulations around it, but I have not seen much enforcement. 0:16:23.809 --> 0:16:26.320 There's some enforcement have started to happen in India now. 0:16:26.890 --> 0:16:29.119 But there's a lot more gap which needs to be 0:16:29.130 --> 0:16:34.229 happened for governing and whether it's Tik Tok youtube reads Instagram. 0:16:34.239 --> 0:16:39.359 It's all same family of those influencers telling people do this, 0:16:39.369 --> 0:16:42.280 this and platforms saying I'll make it happen. 0:16:43.609 --> 0:16:48.929 So the traditional definition of accreted investor sophisticated CK done 0:16:48.940 --> 0:16:53.270 1520 years ago may not fully be relevant for the 0:16:53.280 --> 0:16:54.780 Instagram tiktok generation, 0:16:54.830 --> 0:16:58.109 right? Actually, so that will lead me to a discussion 0:16:58.119 --> 0:17:01.090 on so called democratization of wealth management. But I'll come 0:17:01.099 --> 0:17:03.150 to that a little later. I want to talk about 0:17:03.159 --> 0:17:05.390 one thing before that because you and I had a 0:17:05.400 --> 0:17:07.510 long discussion about not just 0:17:08.250 --> 0:17:11.930 payments but also digital currencies. And we talked about ERM 0:17:12.050 --> 0:17:14.219 B at that time and it seemed like erb was 0:17:14.229 --> 0:17:16.409 going somewhere at that time and we talked about the 0:17:16.420 --> 0:17:19.540 digital wallets that the Chinese mobile phone companies have and 0:17:19.550 --> 0:17:23.619 how even somebody sick in Africa could do payments and 0:17:23.630 --> 0:17:27.060 settlement with some Chinese e commerce provider that hasn't really 0:17:27.069 --> 0:17:28.150 gone very well. Has it, 0:17:28.430 --> 0:17:29.050 it has 0:17:29.300 --> 0:17:34.660 it is just not called table coins. Technically, Central bank 0:17:34.670 --> 0:17:36.859 is the one issuing the currency. It is running on 0:17:36.869 --> 0:17:38.089 a proprietary rail, 0:17:38.560 --> 0:17:42.560 the underlying custody of the whatever is the fiat currency 0:17:42.569 --> 0:17:45.869 is with a financial institution governed by the central bank. 0:17:46.119 --> 0:17:50.030 What was that? What was called the National CBD C? 0:17:50.239 --> 0:17:53.270 The central bank, digital currency is now stable coins. 0:17:53.550 --> 0:17:55.750 I think the difference is that they can choose to 0:17:55.760 --> 0:17:58.119 issue or not issue, which is a central bank decision. 0:17:58.130 --> 0:18:01.890 Whereas a stable coin, a private sector entity can carry 0:18:01.900 --> 0:18:02.310 that out. 0:18:02.540 --> 0:18:05.390 But the actual underlying fiat is still sitting with the bank, right? 0:18:05.800 --> 0:18:09.910 The funny joke was that one of the US Stablecoins 0:18:09.920 --> 0:18:13.979 suddenly came up, says announcing publicly I can't verify it's 0:18:13.989 --> 0:18:15.900 true that they are one of the top 10 US 0:18:15.910 --> 0:18:17.159 treasury holders now 0:18:18.780 --> 0:18:21.469 because they parked all the money in US treasuries. And 0:18:21.479 --> 0:18:24.270 over the last 34 years, they became profitable because the 0:18:24.280 --> 0:18:27.129 treasuries are making so much money just by holding on 0:18:27.140 --> 0:18:29.750 to them, they could make so much. But now what 0:18:29.760 --> 0:18:33.119 has done is it has again, there's enough democratization there 0:18:33.410 --> 0:18:35.899 because now there are companies stripe just acquired when the 0:18:35.910 --> 0:18:39.629 companies whose core infrastructure, core job is to help you 0:18:39.640 --> 0:18:41.880 build and run a stablecoin infrastructure 0:18:42.589 --> 0:18:44.890 and you can run it in multiple currencies and stuff 0:18:44.900 --> 0:18:47.349 from that perspective. And as long as the money is 0:18:47.359 --> 0:18:51.089 1 to 1 collateralized auditable in that bank, it's a 0:18:51.099 --> 0:18:53.198 much simpler way to run that from that perspective. 0:18:53.900 --> 0:18:56.680 So are you saying that on digital currency, the private 0:18:56.689 --> 0:18:58.709 sector sort of leap frog the public sector and the 0:18:58.719 --> 0:19:02.349 public sector sort of fallen behind? And you can if 0:19:02.359 --> 0:19:04.659 you want to want to un match to a domestic currency, 0:19:04.670 --> 0:19:07.069 a stable coin provides a solution as good. Anything that 0:19:07.079 --> 0:19:07.920 the central bank can offer. 0:19:07.930 --> 0:19:10.478 The question is central banks are not averse to that. 0:19:10.839 --> 0:19:14.688 Central bank's objective was to reduce the middleman fees, to 0:19:14.750 --> 0:19:21.729 reduce the American Eggo police fees on merchant transactions from 0:19:21.739 --> 0:19:25.139 that like that's in one use case, right? They want transparency. 0:19:25.319 --> 0:19:29.219 So anything which is digital and trackable is transparent. 0:19:29.540 --> 0:19:33.859 They wanted less oligopoly, they wanted less fees for intermediaries. 0:19:34.020 --> 0:19:37.099 All of that, those objectives are all getting achieved from 0:19:37.109 --> 0:19:39.688 that perspective. So there is nothing wrong about it. So 0:19:39.699 --> 0:19:42.469 regulators can still central banks can still do it. Nobody 0:19:42.479 --> 0:19:46.229 is stopping them. But if for example, people build specific 0:19:46.239 --> 0:19:48.069 use cases. So for example, if you want to build 0:19:48.079 --> 0:19:48.969 a stable coin 0:19:49.250 --> 0:19:51.839 e commerce use case, the government will not wake up 0:19:51.849 --> 0:19:54.389 in the morning. Let me let me allow you to 0:19:54.400 --> 0:19:57.579 buy toast and allow you to buy food and shoes 0:19:57.589 --> 0:19:59.660 on e commerce website because you need to build a 0:19:59.670 --> 0:20:04.079 lot of use case. How does the authorization work hold work, 0:20:04.089 --> 0:20:07.669 refund work? That's a lot of infrastructure around that, right? 0:20:07.739 --> 0:20:10.250 And when for example, it's multi party transaction and you 0:20:10.260 --> 0:20:10.619 do 0:20:11.180 --> 0:20:13.709 apart as fees and other part needs to go and 0:20:13.719 --> 0:20:17.438 you want to have make a checker flows. So there 0:20:17.449 --> 0:20:19.839 are a lot of this work flows which needs to 0:20:19.849 --> 0:20:22.500 be built along and it's great that the private sector 0:20:22.510 --> 0:20:25.099 is building it and private sector is happy to build it. 0:20:25.109 --> 0:20:28.420 Even on the central bank, digital currency, central bank, digital 0:20:28.430 --> 0:20:31.879