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Speaker 1: Hello, this is COI Time podcast series on markets and

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Speaker 1: economies from DBS Group Research. I'm Tambek, chief economist, welcoming

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Speaker 1: you to our 150th episode. Today we're excited to have

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Speaker 1: with us Pirush Gupta. He was with us 100 episodes ago,

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Speaker 1: and now he is with us again during his last

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Speaker 1: week as CEO of DBS and what a 15 year

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Speaker 1: run it has been. Push Gupta, welcome back to Cui Time.

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Speaker 1: We're

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Speaker 2: happy to join you again, as you can see.

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Speaker 2: Uh, I'm a little differently dressed this time. time more

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Speaker 2: because I have 5 more days of devious life left.

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Speaker 1: Like I said, what a run it has been. Great

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Speaker 1: to have you and I look forward to having you

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Speaker 1: in the future as well, which will be my parting

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Speaker 1: word to you later on as well. Uh, I'd like

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Speaker 1: to break our conversation into two parts. First, to take

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Speaker 1: stock of how banks have done since the GFC 0809

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Speaker 1: financial crisis and the aftermath of that, and then to

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Speaker 1: get a sense of your thinking about where banks are going.

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Speaker 1: So let's start by looking back. Uh, major global banks

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Speaker 1: today are definitely more capitalized than they were 15 years ago,

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Speaker 1: and they're definitely much more digital. How else are they different?

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Speaker 2: Well, I think the consequence of the GFC, the most

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Speaker 2: profound impact was the huge increase in capital, uh, across

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Speaker 2: the system. I think there was a change in the

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Speaker 2: liquidity rules, so I think it's safe to say the

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Speaker 2: banking system, uh, specifically is a little bit more safe

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Speaker 2: than it used to be 15 years ago, uh, but

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Speaker 2: I think part, um.

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Speaker 2: Uh

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Speaker 2: So I want to say that weather's good. I think

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Speaker 2: there were a lot of attendant challenges that came along

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Speaker 2: with the transition to safety.

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Speaker 2: The first, I think we took enormously long to build

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Speaker 2: these safety pillars, and frankly, even today, 15 years later,

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Speaker 2: the work is not done because the regulators keep tweaking.

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Speaker 2: Um, they call it different names. Some people call it

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Speaker 2: Basel 3.5, some call it Basel 4, some call it

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Speaker 2: the Basel Endgame, some call it the Swiss Finish, but

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Speaker 2: in every jurisdiction, regulators are still going back and revisiting

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Speaker 2: what they did. In some cases trying to lighten the rules,

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Speaker 2: some cases trying to, uh, add to the rules, and

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Speaker 2: it just seems to me that 15 years is a

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Speaker 2: long time to try and get to where you need to, um,

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Speaker 2: so I think we took too long and that um.

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Speaker 2: Passage of time created a degree of uncertainty in the system.

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Speaker 2: The second thing is we didn't solve everything. Liquidity in

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Speaker 2: particular created some consequential challenges as well. Um, holdings of treasuries,

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Speaker 2: for example, you know, the banks started running shy of

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Speaker 2: doing some of that, so they started creating these saw

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Speaker 2: effects in the treasury markets. We saw through the US

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Speaker 2: regional bank crisis that many of the smaller banks did

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Speaker 2: not actually embrace some of the liquidity rules completely.

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Speaker 2: So not only did we take a long time getting

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Speaker 2: to where we are, it wasn't completely consummate as well,

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Speaker 2: and we left some gaps in the process.

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Speaker 2: I think we could have done better as an industry. I'm.

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Speaker 2: Reminded of the Asian financial crisis, so post '98, the

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Speaker 2: Asian regulators and the Asian system also responded to the

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Speaker 2: crisis in pretty much the same way. They added up

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Speaker 2: capital requirements, they rethought some of the liquidity requirements. They

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Speaker 2: became a lot more intrusive in their supervision, but they

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Speaker 2: did it in a few years. They did it with

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Speaker 2: a lot less song, dance and drama.

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Speaker 2: And by now the Asian banks have proven over the

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Speaker 2: subsequent 20 years that they became relatively strong uh uh

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Speaker 2: in that period of time. So now when I say

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Speaker 2: that this is a challenge, what is the implication of

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Speaker 2: that been and that is bearing on how our banks different.

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Speaker 2: The implication of that has been that the banks in

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Speaker 2: general have won a battle which is around capital liquidity

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Speaker 2: and solving for the old crisis.

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Speaker 2: But I do think the banking system has not done

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Speaker 2: as well as it could have in terms of the war,

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Speaker 2: which is thinking about the shape and nature of banking

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Speaker 2: in the future.

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Speaker 2: Um, today, most banks have embraced digital, but the reality

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Speaker 2: is that as late as 2016, 2017, I used to

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Speaker 2: reflect on the fact that there are only a couple

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Speaker 2: of banks in the world who are as focused as

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Speaker 2: DBS was on the digitization agenda. Uh, in fact, when

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Speaker 2: I talked about it at many global forums, it was

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Speaker 2: so interesting that banks were still bothered about Basel. Nobody

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Speaker 2: was talking technology or digital.

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Speaker 2: So banks are not as advanced in the digital agenda

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Speaker 2: as they should have been.

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Speaker 2: Um, a lot of banks have great apps, but if

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Speaker 2: you look at the underlying architecture of technology, uh, have

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Speaker 2: banks shifted to, um, microservices, API based, cloud native technology?

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Speaker 2: Very few have even now, and that says something that

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Speaker 2: banks are still not as far advanced as they should be.

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Speaker 2: Um, in some ways I was actually quite surprised in

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Speaker 2: the last few months. The one country which has really

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Speaker 2: made huge, uh, leaps in that regard is China, right? Uh,

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Speaker 2: we realized that through the COVID period when, you know,

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Speaker 2: nobody is watching, the Chinese leapfrogged in terms of their

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Speaker 2: transition to the new technology architecture, and I find today

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Speaker 2: that some of them have made even more progress than

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Speaker 2: DBS has. But when we compare ourselves with many of

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Speaker 2: the Western banks, I think we're still 57 years ahead.

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Speaker 2: So long way to say safer banks, but might not

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Speaker 2: have made as much progress on technology and digitization as

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Speaker 2: you would have expected them to or would have liked

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Speaker 2: them to.

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Speaker 1: Right on that point that you referenced the '97, 98 crisis,

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Speaker 1: it was a cataclysmic crisis. There was a lot of

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Speaker 1: political dislocation and there was a lot of scarring. It

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Speaker 1: took many countries years to come out of the crisis,

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Speaker 1: but the banks were not considered villains in that crisis.

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Speaker 1: In the 809 crisis.

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Speaker 1: The banks were considered villains. I, I recall reading articles

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Speaker 1: about that, you know, that there should be so much

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Speaker 1: regulatory oversight on banks that their profitability should be minimal.

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Speaker 1: They should be turned into utilities. But looking at the

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Speaker 1: bank's performance, say the last half a decade, they've done

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Speaker 1: very well with the interest rate cycle and so on.

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Speaker 1: So that, that portrayal of banks being the villain, being

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Speaker 1: the problem, not the solution around 809, was that overstated?

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Speaker 2: I think it was. So I think partly, well, it

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Speaker 2: was self-inflicted damage.

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Speaker 2: So you've got to figure forget two things that I

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Speaker 2: think the industry did wrong in particularly the 80s and 90s,

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Speaker 2: the build up to 2000. 1 was compensation became egregious

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Speaker 2: and it started attracting a lot of attention when traders,

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Speaker 2: investment bankers, individuals were getting paid $10.20 dollars, $30.40 million dollars.

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Speaker 2: That attracts a lot of attention and calls the basic

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Speaker 2: question to account. I mean, are you really worth it?

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Speaker 2: So that is one thing of our own making.

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Speaker 2: And if you look at the industry, this big step

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Speaker 2: up in competition only happened in the 90s and 2000s,

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Speaker 2: so it was a focused period of time.

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Speaker 2: The second thing we did wrong is we lost sight

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Speaker 2: of the purpose of a bank, which is the fundamental

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Speaker 2: of doing real things for real people. So to an extent,

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Speaker 2: some of our product selection and some of the things

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Speaker 2: that the industry was doing uh started looking like it

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Speaker 2: was self-serving as opposed to actually having a hand in

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Speaker 2: furthering the interests of the real economy or individual citizens.

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Speaker 2: So I think some of it was, um, you know, um,

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Speaker 2: coming as a consequence.

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Speaker 2: You contrast with Asia and even though the Asian banks

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Speaker 2: got hammered in '98, by that Asia has worked as

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Speaker 2: Asia Inc. The banks play a more constructive role along

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Speaker 2: with the rest of society and therefore you never saw

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Speaker 2: the same degree of angst about banks and banking.

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Speaker 2: So I mean, the point is too, the reason why

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Speaker 2: there was so much political outrage and therefore so much

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Speaker 2: regulatory overhead was because of that. People thought that the

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Speaker 2: banks and bankers were the villains of the piece.

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Speaker 2: Uh, in some ways, even now, 15 years on, there

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Speaker 2: pockets of the universe where this has not disappeared. There's

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Speaker 2: some places where it has, but in some places you

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Speaker 2: can still see this and the underlying nature of the

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Speaker 2: dialogue and the nature of regulation, so it hasn't entirely gone.

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Speaker 1: The other thing that I would have expected over the

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Speaker 1: last 15 years with better analytics and better credit research

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Speaker 1: that banks would be expanding their sort of volume of

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Speaker 1: creditors or borrowers and that we will see the unbanked,

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Speaker 1: whether it is in the corporate space, the space, or

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Speaker 1: the retail space.

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Speaker 1: Would be, you know, captured by banks because they have

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Speaker 1: better data and better knowledge, but it seems like that

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Speaker 1: space has been ceded to non-bank finance companies. So what's

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Speaker 1: your sense of the banking, the unbanked dynamic over the

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Speaker 1: last 15

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Speaker 1: years?

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Speaker 2: Well, first of all, when I said the banks have

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Speaker 2: not done as much on technology and digital, uh, I

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Speaker 2: have to add they have not done as much on

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Speaker 2: data and um AI either.

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Speaker 2: I mean they have, don't get me wrong, banks are

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Speaker 2: fundamentally different, but they've not done as much as they

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Speaker 2: could and should have. I remember banks had a head

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Speaker 2: start in the 80s and 90s, the biggest users of

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Speaker 2: data were the banks in the credit card systems. And

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Speaker 2: so by, you know, 2010, 2020 to figure that banks

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Speaker 2: don't have the right data, don't have the right data lakes,

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Speaker 2: don't have the right data protocols, uh that's telling. But

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Speaker 2: so part of the answer isn't that the banks just

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Speaker 2: did not do as much as they could have.

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Speaker 2: But the second part of the answer is I don't

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Speaker 2: think it's across the board. It depends on the region

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Speaker 2: of the world. I will tell you that in India,

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Speaker 2: the largest outreach to the unbank has been the State

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Speaker 2: Bank of India. The Prime Minister Jandar Najar now with

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Speaker 2: 300 million new accounts is all State Bank of India,

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Speaker 2: and they do it all digitally on a mobile phone,

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Speaker 2: and the unsecured lending on Euro is all on a

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Speaker 2: mobile phone. Uh, in Indonesia, the largest amount of unbanked

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Speaker 2: outreach growth is BRI.

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Speaker 2: And they still continue to be the largest footfall and

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Speaker 2: footprint and they're adding customers at scale in China. The

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Speaker 2: policy banks, including Agature Bank of China, etc. are still

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Speaker 2: doing a lot of this. So in many countries, the state, the, the,

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Speaker 2: the banking, the the treasure banking sector is indeed leaning in. Now,

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Speaker 2: to the extent that, you know, they're not doing as

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Speaker 2: much and they haven't done, uh, new stuff like in

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Speaker 2: Alibaba did or some of the new Fintechs did.

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Speaker 2: Uh, that links back to my first comment. Some of

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Speaker 2: the fintechs were more advanced about use of data and

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Speaker 2: about use of ecosystems where they were able to garner

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Speaker 2: some of that data. My views in the future, it

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Speaker 2: doesn't matter whether you're a traditional bank or you're a FinTech.

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Speaker 2: It really matters how much progress you've made in terms

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Speaker 2: of thinking about data and analytics, how you rethought your

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Speaker 2: credit underwriting process, how you rethought your portfolio management process,

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Speaker 2: and then you could be an e-commerce company, a telco

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Speaker 2: or Fintech or a bank. If you cracked that puzzle

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Speaker 2: and you know how to be where the customers are,

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Speaker 2: you will win many of these games.

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Speaker 1: Uh, putting aside the data issue, um, just from a

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Speaker 1: risk management perspective, despite all these buzzles, various iterations, and

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Speaker 1: so on, we still have a regional banking crisis which

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Speaker 1: seems like a very one on one type crisis, you know,

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Speaker 1: duration risk and this bank get caught. Um, does that

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Speaker 1: mean that we haven't really made that much progress on

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Speaker 1: risk

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Speaker 1: management?

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Speaker 2: Well, first of all, the banks which went through the

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Speaker 2: regional crisis were not subject to the Basel rules, so

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Speaker 2: you've got to understand that.

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Speaker 2: Uh, because the Fed gave them a pass, they weren't

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Speaker 2: doing all the things the big banks were. So I

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Speaker 2: do believe that all the banks that have gone through

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Speaker 2: the Basel regime are fundamentally safer and better managed than

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Speaker 2: in the past, and you see less of that, uh,

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Speaker 2: but the question, will there still be risk in banks?

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Speaker 2: Of course they will. The nature of banking is that

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Speaker 2: you intermediate time and you intermediate risk, and I don't

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Speaker 2: think that's going to change, uh.

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Speaker 2: Would you believe that only banks have the risk, the

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Speaker 2: other fintechs and other people who are intermediating finance will

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Speaker 2: never have risk. I refuse to believe that either. So

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Speaker 2: if you look at the history of the last 5 years,

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Speaker 2: you could argue that the regional banks or Credit Suisse

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Speaker 2: was one set of problems, but I could equally name

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Speaker 2: to you half a dozen new fintech companies, token companies,

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Speaker 2: tech companies, you know, etc. etc. who also had different

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Speaker 2: kinds of problems.

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Speaker 2: Uh, so the challenge is quite fundamentally this that when

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Speaker 2: you have provided the capital use the capital, somebody sitting

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Speaker 2: in the middle, intermediating intermediating risk and time, no matter

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Speaker 2: how smart you are and no matter how forward looking

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Speaker 2: you are, you will wind up from time to time

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Speaker 2: stubbing your toes. To me, the analogy is, you know,

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Speaker 2: any country, even though you say you have a great

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Speaker 2: police force and you have a great legal system and judiciary,

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Speaker 2: you name me one country that doesn't have crime.

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Speaker 2: This is like trying to argue that if you do

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Speaker 2: your job really well, there should be no crime in

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Speaker 2: the country, and that can never be.

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Speaker 1: Sure, um, I'm sort of conscious of, you know, the

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Speaker 1: whole duration risk question even in 2025, 2026 with all

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Speaker 1: the noise around the US, but we'll, we'll keep it

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Speaker 1: to the past and the future as opposed to the

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Speaker 1: conjuncture because I want good shelf life out of this podcast.

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Speaker 1: But one question on the dialogue between regulators and banks.

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Speaker 1: Do they listen? And is it a two-way communication?

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Speaker 2: Again, you know, there's no one size fits all answer,

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Speaker 2: it's a function of where you are.

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Speaker 2: Um, um, taking a third step at the same thing,

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Speaker 2: I think in the West, um, the US as well,

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Speaker 2: but certainly all over Europe, UK, etc. the dialogue between

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Speaker 2: the banking system and the regulators was more broken for

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Speaker 2: an extended period of time. There was a going in

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Speaker 2: belief that banks needed to be uh carefully and closely managed,

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Speaker 2: and a high degree of suspicion about banks' motivations and capabilities, both.

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Speaker 2: I never saw that in Asia.

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Speaker 2: Um, right from, you know, the 9 when I first

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Speaker 2: took on my job, by and large Asian regulators have

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Speaker 2: been constructive in dialogue. They've been forward looking. They've tried

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Speaker 2: to keep a developmental hat along with their regulatory hat,

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Speaker 2: and even in Asia, obviously, you know, it changes a

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Speaker 2: little bit in degree depending on which country you're in.

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Speaker 2: But broadly speaking, you've not had the same degree of

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Speaker 2: antagonistic engagement as you've had in several countries in the West.

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Speaker 2: Now even in the West I think the dialogue is

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Speaker 2: beginning to change a little bit in the last few

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Speaker 2: years um as uh more and more regulators are beginning

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Speaker 2: to see the world is progressing in a direction of

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Speaker 2: a tokenized economy, new ways of making payments, etc. and

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Speaker 2: they realize they have to engage the private sector more

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Speaker 2: constructively and so it's beginning to happen, uh, but again

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Speaker 2: I said that it's not entirely changed yet.

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Speaker 1: Are you surprised or you think it's par for the course,

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Speaker 1: the kind of credit losses we have seen on the

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Speaker 1: portfolio banks from exposure to China? I mean, China has

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Speaker 1: slowed quite dramatically in the past half a decade. Would

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Speaker 1: you have expected even bigger repercussion, or do you think

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Speaker 1: what has happened is pretty par for the course?

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Speaker 2: Well, given the, my first I got to figure out

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Speaker 2: two things about China. One is China slowed, but it's

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Speaker 2: still growing at 45%. I do not see a steep recession.

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Speaker 2: You're not seeing a complete falling off the cliff. So

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Speaker 2: most countries in the world at 4 5% growth rates,

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Speaker 2: you see some pain, but you know it's not a

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Speaker 2: huge amount of pain. So you've got to start with that.

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Speaker 2: China is in a relative sense slower, but in an

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Speaker 2: absolute sense it's still growing, um, decently.

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Speaker 2: Uh, the second thing about um the China situation is that, um,

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Speaker 2: a large part of the credit in the system, um,

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Speaker 2: is still benefited by some form of state support and therefore,

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Speaker 2: whereas in the US system, by and large, you know,

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Speaker 2: all the rocks show up as soon as the tide

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Speaker 2: starts receding in the China system all the rocks don't

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Speaker 2: show up immediately.

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Speaker 2: So it could well be that you know some things

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Speaker 2: are turned out 1015, 20 years in any other environment

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Speaker 2: you would, you know, call them credit losses but uh in,

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Speaker 2: in more supportive environments you can just term out of

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Speaker 2: credit so maybe there's some of that um going on

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Speaker 2: as well. um, however, even if you account for all that, um,

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Speaker 2: the fact is that the total credit losses in China

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Speaker 2: have been lower than one would expect.

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Speaker 2: Even if you take the real estate sector, where you

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Speaker 2: should expect to see the biggest damage, there has been some.

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Speaker 2: Um, but not so much in the bank books. There's

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Speaker 2: been some in the bank books. A lot of it

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Speaker 2: is in the financial markets, the bond space, bondholders, etc.

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Speaker 2: So one, this speaks to the fact that the banking

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Speaker 2: system has changed a bit. So banks are holding less

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Speaker 2: of the risky assets. The financial markets are holding uh

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Speaker 2: more of the risky assets, and so there's been a

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Speaker 2: fundamental shift in the nature of the banking system, um,

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Speaker 2: as well. I should have mentioned that when you asked

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Speaker 2: about how the banks changed. See, in truth I sometimes

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Speaker 2: reflect that.

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Speaker 2: It's not that financial sector risk um has disappeared, uh

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Speaker 2: but the risk in the formal regulated banking sector is

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Speaker 2: lower because it's been squeezed out and so some of,

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Speaker 2: some of the risk is just shifted out. uh, why

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Speaker 2: is private credit such a big market today? right? It's

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Speaker 2: a big market because banks are refusing to put on

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Speaker 2: that kind of credit.30 years ago, banks would have been

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Speaker 2: doing structuring and putting on the credit, the banks don't.

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Speaker 2: Uh, project finance. So large nature of the financing has

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Speaker 2: become prohibitive for banks to do and they get squeezed

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Speaker 2: out to the non-bank world, right? And therefore, when the

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Speaker 2: losses are, are seen also, it's also proportionate. You see

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Speaker 2: less of it in the banking sector.

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Speaker 2: And perhaps more of it in the nonbank world.

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Speaker 1: Let me expand on that issue because I'm really curious

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Speaker 1: about that. So what's your sense? Are we pushing risk

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Speaker 1: to the private side, which is by definition a little

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Speaker 1: more opaque than the banking system balance sheet, and is

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Speaker 1: that something that you're uncomfortable with?

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Speaker 2: Well, I do think there's no question, of course we

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Speaker 2: push this out to the private side.

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Speaker 2: You look at the relative size of the private pockets,

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Speaker 2: both private equity and private debt today. It's extraordinary. So

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Speaker 2: you look at the total intermediary capital and see how

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Speaker 2: much they move from public markets and the former regulated

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Speaker 2: banking sector to the other side. It's huge, and which

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Speaker 2: can only mean that there's more activity, action, and nature

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Speaker 2: of risk happening over there as well.

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Speaker 2: Um,

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Speaker 2: Am I uncomfortable with it? See, the argument that some

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Speaker 2: would make, you know, Macro and a reporter makes it

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Speaker 2: very compellingly that people who fund those private side sectors

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Speaker 2: do it with their eyes open and therefore there's better

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Speaker 2: duration match. People come in recognizing that they're going to

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Speaker 2: be in there for 678 years. So when private credit,

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Speaker 2: private equity puts money for 678 years, it is match funded, right.

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Speaker 2: Whereas in the regulated sector, the household savers come in

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Speaker 2: with short term expectations. They put money into savings accounts

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Speaker 2: and therefore need to withdraw money in a in a hurry.

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Speaker 2: And therefore, when the bank takes on the same nature

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Speaker 2: of the 678 years, this is putting on duration gap.

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Speaker 2: I think I have some sympathy for that argument that

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Speaker 2: when people are going into a fund with their eyes

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Speaker 2: open saying it's a 6 year fund or a 7

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Speaker 2: year fund or a 7 + 1 + 1, by

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Speaker 2: nature you've shifted the risk to the investor depositor.

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Speaker 2: Now, having said that, I think that on paper the

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Speaker 2: investors deemed to understand that risk. In reality, I found

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Speaker 2: that most investors, when, um, you know, things get bad,

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Speaker 2: turn around and say we don't know, and they wind

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Speaker 2: up standing in front of the same doors whether there's

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Speaker 2: the regulator or the politician or the bank saying hey

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Speaker 2: we did not know we were misled and we need

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Speaker 2: somebody to make us go right.

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Speaker 2: So this happened with Lehman mini bonds in the '09 crisis.

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Speaker 2: It happened to a large extent in China with the

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Speaker 2: P2P lending crisis. So I've seen this repeatedly that people

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Speaker 2: think that the risk is better understood, but actually it's

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Speaker 2: never better understood. And therefore by squeezing the discount and

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Speaker 2: leaving it there, I do think that the fair amount

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Speaker 2: of residual risk, which is not adequately thought through or

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Speaker 2: accounted for.

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Speaker 1: So I find it interesting that we always worry about,

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Speaker 1: you know, depositor funds and the need to insure depositors.

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Speaker 1: That has systemic implications, but a large asset price decline

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Speaker 1: also has systemic implications. But somehow we don't worry that

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Speaker 1: much about, you know, controlling that risk, but we always

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Speaker 1: worry about the deposit side of the business.

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Speaker 2: That's my point. I mean the assumption is that the

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Speaker 2: large asset pools are held by rich people who know

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Speaker 2: what they're doing, so you know everywhere. In reality, it

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Speaker 2: doesn't always work that way.

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Speaker 1: Well, they're the ones with, I guess, bigger purse strings

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Speaker 1: to actually lobby even more so than the average depositor. Um,

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Speaker 1: let's look forward. Uh, already this has been at play

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Speaker 1: for more than a decade, but it'll be a big

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Speaker 1: issue going forward, traditional banks versus pure play digital banks.

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Speaker 1: What are your thoughts?

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Speaker 2: So I alluded to this just not time or I

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Speaker 2: think that's um artificial bifurcation. I think the real bifurcation

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Speaker 2: is that, you know, providers who get digital and get

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Speaker 2: data and those who don't, and those could be anybody.

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Speaker 2: It could be a traditional bank, it could be an

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Speaker 2: e-commerce company, or it could be a pure play digital

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Speaker 2: bank part of a system.

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Speaker 2: Uh, I like to believe that DBS has done fairly well,

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Speaker 2: you know, we've been able to digitize, we use data well, uh,

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Speaker 2: you know, 18% ROE doesn't come from nowhere. So a

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Speaker 2: lot of it comes, I think we hold our own

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Speaker 2: against any pure play, uh, digital bank today, um, but

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Speaker 2: you know, it's not across the board. So I think

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Speaker 2: the thing to look for is those people who can

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Speaker 2: embrace digital and those who can't.

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Speaker 2: One of the advantages that traditional banks have is, um,

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Speaker 2: obviously a lot an install customer base and a lot

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Speaker 2: of inertia in our industry. Um, the switch away from

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Speaker 2: our industry market share moves gly, and they take a long,

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Speaker 2: long period of time, much longer than, uh, brick and

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Speaker 2: mortar e-commerce versus e-commerce.

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Speaker 2: And I think that's a lot to do with people's

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Speaker 2: attitude to money and the sense of security that they need,

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Speaker 2: which comes from a physical brick and mortar presence that

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Speaker 2: they can see.

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Speaker 2: So even though the banking sector started getting unbundled and

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Speaker 2: digital started happening about 2010, so it's been 15 years,

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Speaker 2: if you look at the market shares of any new

434
00:22:53,540 --> 00:22:58,030
Speaker 2: banks anywhere in the world, they're less than 1%, 1, 2%, right?

435
00:22:58,420 --> 00:23:01,188
Speaker 2: So after 15 years, you hardly see market share shifts,

436
00:23:01,540 --> 00:23:04,180
Speaker 2: including in country where you say the traditional banks have

437
00:23:04,180 --> 00:23:06,699
Speaker 2: lost it, they're not doing very much. You look at

438
00:23:06,699 --> 00:23:09,979
Speaker 2: the UK with some of the first new banks were

439
00:23:09,979 --> 00:23:12,000
Speaker 2: there like Starling, Monzo, A.

440
00:23:12,680 --> 00:23:14,179
Speaker 2: And then you could argue that a lot of the

441
00:23:14,180 --> 00:23:16,739
Speaker 2: high street banks were on the back foot, but you

442
00:23:16,739 --> 00:23:19,939
Speaker 2: fast forward 1015 years, you know, the high street banks

443
00:23:19,939 --> 00:23:23,770
Speaker 2: are still high street banks. So the, the old banks

444
00:23:23,770 --> 00:23:27,540
Speaker 2: have benefited by an installed customer base and tremendous degree

445
00:23:27,540 --> 00:23:29,419
Speaker 2: of inertia, uh, in the system.

446
00:23:30,349 --> 00:23:35,540
Speaker 2: Uh, new banks, um, interestingly, the big advantage is obviously

447
00:23:35,540 --> 00:23:37,900
Speaker 2: a low cost structure, right? They can focus on what

448
00:23:37,900 --> 00:23:40,660
Speaker 2: you want to do, but by now the disadvantage because

449
00:23:40,660 --> 00:23:44,140
Speaker 2: they tend to be relatively narrow in the product offering.

450
00:23:45,469 --> 00:23:48,660
Speaker 2: The very few new banks which are full purpose, large

451
00:23:48,660 --> 00:23:51,180
Speaker 2: scale full purpose, most tend to be either in the

452
00:23:51,180 --> 00:23:53,569
Speaker 2: wealth space or in the lending space or in a

453
00:23:53,569 --> 00:23:56,500
Speaker 2: microcosm of the system, and that's one of the reasons

454
00:23:56,500 --> 00:23:59,448
Speaker 2: why they find it hard to get incremental share very quickly.

455
00:23:59,699 --> 00:24:01,900
Speaker 2: People like to be able to go to a full

456
00:24:01,900 --> 00:24:02,939
Speaker 2: service offering.

457
00:24:03,839 --> 00:24:06,560
Speaker 2: Uh, the other thing I found that new banks, traditionally,

458
00:24:06,579 --> 00:24:08,839
Speaker 2: my view was that the cost of customer acquisition would

459
00:24:08,839 --> 00:24:12,958
Speaker 2: be much lower because they acquire customers digitally. Uh, in reality,

460
00:24:13,000 --> 00:24:16,639
Speaker 2: I found that there's not that much difference between uh

461
00:24:16,640 --> 00:24:18,390
Speaker 2: traditional acquisition model.

462
00:24:19,239 --> 00:24:22,199
Speaker 2: Maybe a couple of percentage points, but after you wind

463
00:24:22,199 --> 00:24:27,040
Speaker 2: up building your technology systems, your marketing, uh, systems, and

464
00:24:27,040 --> 00:24:32,020
Speaker 2: start paying Facebook, Google or YouTube for the uh uh

465
00:24:32,020 --> 00:24:34,629
Speaker 2: marketing dollar and then you multiply it by the click

466
00:24:34,630 --> 00:24:37,959
Speaker 2: through rate, it's not that advantages. There is some but

467
00:24:37,959 --> 00:24:38,520
Speaker 2: not huge.

468
00:24:39,469 --> 00:24:44,189
Speaker 2: So, um, the best performing new banks to me are

469
00:24:44,189 --> 00:24:48,060
Speaker 2: the ones who have the capacity to leverage some other

470
00:24:48,060 --> 00:24:51,430
Speaker 2: ecosystem because if you already have hundreds of millions of

471
00:24:51,430 --> 00:24:55,149
Speaker 2: customers coming to you through another ecosystem, then the marginal

472
00:24:55,150 --> 00:24:59,188
Speaker 2: cost of converting the customer to a banking relationship is lower,

473
00:24:59,369 --> 00:25:00,069
Speaker 2: that's for sure.

474
00:25:00,599 --> 00:25:04,679
Speaker 2: But there are not that many companies which have a

475
00:25:04,680 --> 00:25:07,880
Speaker 2: large and robust ecosystem which they can then market banking

476
00:25:07,880 --> 00:25:09,709
Speaker 2: services on the back of.

477
00:25:11,319 --> 00:25:14,020
Speaker 2: So long way to answer your question. I think new

478
00:25:14,020 --> 00:25:16,579
Speaker 2: banks do have some advantages, but I think the advantages

479
00:25:16,579 --> 00:25:20,660
Speaker 2: are often overstated, and um I think as long as

480
00:25:20,660 --> 00:25:25,140
Speaker 2: the traditional banks are able to embrace both digital technology

481
00:25:25,140 --> 00:25:28,500
Speaker 2: and data in a meaningful way, by and large I

482
00:25:28,500 --> 00:25:29,688
Speaker 2: think they will hold their own.

483
00:25:30,020 --> 00:25:30,260
Speaker 1: Let me

484
00:25:30,260 --> 00:25:32,619
Speaker 1: hold on to a subset of that discussion which is

485
00:25:32,619 --> 00:25:34,899
Speaker 1: the wealth angle. You just touched upon it briefly.

486
00:25:35,310 --> 00:25:39,280
Speaker 1: Um, even in Singapore, we now have these, uh, startups

487
00:25:39,280 --> 00:25:43,160
Speaker 1: which offer pretty impressive breadth of wealth offerings aimed at

488
00:25:43,160 --> 00:25:45,560
Speaker 1: not necessarily the ultra high net worth individual, but definitely,

489
00:25:45,719 --> 00:25:48,948
Speaker 1: you know, let's say less than $10 million wealth, uh,

490
00:25:48,959 --> 00:25:51,438
Speaker 1: customers and so on. Is that a big threat to

491
00:25:51,439 --> 00:25:52,589
Speaker 1: a bank like DBS,

492
00:25:53,439 --> 00:25:53,919
Speaker 2: you know.

493
00:25:55,079 --> 00:25:57,750
Speaker 2: See, look at all of the operators in Singapore. They

494
00:25:57,750 --> 00:26:02,130
Speaker 2: all have 1 or $2 billion in AUM, right? DBS

495
00:26:02,130 --> 00:26:05,880
Speaker 2: has $400 billion in AUM. Every year EUMs are increasing

496
00:26:05,880 --> 00:26:09,180
Speaker 2: by $50 billion. The AUMs are increasing by a billion

497
00:26:09,180 --> 00:26:13,000
Speaker 2: dollars if you're lucky, $50 billion. And so it speaks

498
00:26:13,000 --> 00:26:15,640
Speaker 2: to the fact that if you have scale, if you

499
00:26:15,640 --> 00:26:18,800
Speaker 2: have credible offerings, the trust element counts for a lot.

500
00:26:18,880 --> 00:26:21,159
Speaker 2: The fact that you have presence counts for a lot.

501
00:26:21,829 --> 00:26:23,729
Speaker 2: Um, if you look at the biggest growth in the

502
00:26:23,729 --> 00:26:25,689
Speaker 2: wealth industry in the last 10 years across the board,

503
00:26:25,810 --> 00:26:28,010
Speaker 2: not just the high rate, but into this thing, is

504
00:26:28,010 --> 00:26:30,329
Speaker 2: the traditional banks which have mobbed up most of it.

505
00:26:30,849 --> 00:26:34,619
Speaker 2: So yes, you know, the endaas and stash away, etc.

506
00:26:35,050 --> 00:26:38,669
Speaker 2: they're credible, they're good offerings, but the ability to scale

507
00:26:39,010 --> 00:26:41,250
Speaker 2: is still, um, um, limited.

508
00:26:42,119 --> 00:26:42,129
Speaker 2: OK,

509
00:26:43,270 --> 00:26:45,030
Speaker 1: I'll keep that in mind. I sometimes look at some

510
00:26:45,030 --> 00:26:47,609
Speaker 1: of these shiny new apps that they offer. Pretty impressive.

511
00:26:48,390 --> 00:26:50,229
Speaker 2: Don't get me wrong. I'm not saying they're bad. They're

512
00:26:50,229 --> 00:26:54,819
Speaker 2: good apps. They're credible. All I'm saying is that, you know,

513
00:26:54,989 --> 00:26:57,780
Speaker 2: if you had to bet to me 10 years from now,

514
00:26:58,069 --> 00:27:00,349
Speaker 2: will one of them be bigger than DBS? I think

515
00:27:00,349 --> 00:27:03,510
Speaker 2: that's a hard call because there's just too much inertia

516
00:27:03,510 --> 00:27:06,919
Speaker 2: in our system. If the traditional banks do nothing at all, right,

517
00:27:06,989 --> 00:27:10,030
Speaker 2: and so you're still in the 1980s banking world.

518
00:27:10,420 --> 00:27:12,900
Speaker 2: Then yes, I think the market shifts will be faster,

519
00:27:13,260 --> 00:27:16,219
Speaker 2: but most banks are doing enough, certainly in Singapore, most

520
00:27:16,219 --> 00:27:18,750
Speaker 2: banks are doing enough to be able to hold their own.

521
00:27:19,099 --> 00:27:19,218
Speaker 2: I

522
00:27:19,219 --> 00:27:19,300
Speaker 1: guess

523
00:27:19,300 --> 00:27:24,209
Speaker 1: that's the key. Um, to switch the topic to digital assets.

524
00:27:24,520 --> 00:27:26,659
Speaker 1: There's a lot going on on the token side, the

525
00:27:26,660 --> 00:27:30,810
Speaker 1: crypto asset side, and then all these CBDC as well. So,

526
00:27:31,400 --> 00:27:33,780
Speaker 1: your thought on that, and one specific question in that

527
00:27:33,780 --> 00:27:36,500
Speaker 1: regard is the future of stable coins and is that

528
00:27:36,500 --> 00:27:39,379
Speaker 1: a threat to bank deposits? So both of those issues.

529
00:27:40,040 --> 00:27:42,280
Speaker 2: So as a general rule, I think you will see

530
00:27:42,280 --> 00:27:44,449
Speaker 2: more tokenization of assets.

531
00:27:45,469 --> 00:27:48,900
Speaker 2: Um, it has always been that the value of money

532
00:27:49,189 --> 00:27:51,869
Speaker 2: tends to follow technology, you know, we started off with

533
00:27:51,869 --> 00:27:55,140
Speaker 2: cowry shells, then we moved to metal, gold and silver.

534
00:27:55,550 --> 00:27:58,270
Speaker 2: Then after the printing press, we moved to bills and

535
00:27:58,270 --> 00:28:01,750
Speaker 2: then currency notes. And then in the 20th century when

536
00:28:01,750 --> 00:28:04,979
Speaker 2: plastic became good, we moved to credit cards and plastic.

537
00:28:05,430 --> 00:28:08,069
Speaker 2: So it is logical to assume that in the world

538
00:28:08,069 --> 00:28:10,430
Speaker 2: most people will look for new forms of value and

539
00:28:10,430 --> 00:28:13,419
Speaker 2: changing value and already in the last 10 years, certainly

540
00:28:13,420 --> 00:28:14,500
Speaker 2: in our part of the world.

541
00:28:14,890 --> 00:28:17,599
Speaker 2: Everybody pays on a mobile phone and everybody pays by

542
00:28:17,599 --> 00:28:20,770
Speaker 2: QR code, right? And so obviously you've seen that evolution.

543
00:28:21,569 --> 00:28:24,540
Speaker 2: I think there are 2 or 3 other reasons why

544
00:28:24,949 --> 00:28:29,010
Speaker 2: a tokenized world where tokenized assets or tokenized money will

545
00:28:29,010 --> 00:28:34,239
Speaker 2: be prevalent. Um, one is that the minute you tokenize,

546
00:28:34,569 --> 00:28:39,479
Speaker 2: you can fractionalize, so you can go down to 0.0001

547
00:28:39,479 --> 00:28:42,170
Speaker 2: of anything, which means you can distribute more widely. A

548
00:28:42,170 --> 00:28:45,530
Speaker 2: lot more people can participate, so fratalization is quite important.

549
00:28:46,290 --> 00:28:51,780
Speaker 2: The second thing with the tokenization is that you can program.

550
00:28:52,489 --> 00:28:55,869
Speaker 2: So today, if I give you some money, $10 I

551
00:28:55,869 --> 00:28:59,030
Speaker 2: give you the money, but in a tokenized value this thing,

552
00:28:59,069 --> 00:29:02,420
Speaker 2: I can program saying you will get this $10 provided

553
00:29:02,420 --> 00:29:03,989
Speaker 2: 123456 things happen.

554
00:29:04,540 --> 00:29:08,819
Speaker 2: So today conditionality moves separately from value. You can actually

555
00:29:08,819 --> 00:29:12,579
Speaker 2: layer in conditionality into value that has immense, immense potential

556
00:29:12,579 --> 00:29:15,500
Speaker 2: and power, right? When you can layer conditionality into value,

557
00:29:15,540 --> 00:29:18,300
Speaker 2: then you're not looking at two streams, an information stream

558
00:29:18,300 --> 00:29:21,339
Speaker 2: and a value stream. You marry the information stream and

559
00:29:21,339 --> 00:29:23,859
Speaker 2: the value steam, and then you put conditionality on top

560
00:29:23,859 --> 00:29:27,060
Speaker 2: of that. A third thing tokenization does is lets you

561
00:29:27,060 --> 00:29:30,380
Speaker 2: do atomic settlement in real time 24/7 atomic settlement.

562
00:29:30,839 --> 00:29:34,760
Speaker 2: Whether it's PVP DVP, you know, uh, and exchange trade

563
00:29:34,760 --> 00:29:37,000
Speaker 2: versus uh foreign currency trade, it can all be done

564
00:29:37,000 --> 00:29:40,500
Speaker 2: in real time. So there's a lot of value that

565
00:29:40,500 --> 00:29:44,040
Speaker 2: technology brings that can take out inefficiency in the current

566
00:29:44,040 --> 00:29:47,729
Speaker 2: clearing settlement system processes. So my general view is that

567
00:29:47,729 --> 00:29:51,000
Speaker 2: tokenize money and tokenize value, in fact, tokenize every kind

568
00:29:51,000 --> 00:29:52,680
Speaker 2: of asset form will happen.

569
00:29:53,530 --> 00:29:58,619
Speaker 2: It happened over time. Now that's different from um.

570
00:29:59,520 --> 00:30:01,640
Speaker 2: Money in the sense of will it will it replace

571
00:30:01,640 --> 00:30:04,050
Speaker 2: fiat currency right so I do think it's a token,

572
00:30:04,719 --> 00:30:08,920
Speaker 2: but I do think that eventually certainly in our construct

573
00:30:08,920 --> 00:30:13,280
Speaker 2: for the next few years, um, money will still be

574
00:30:13,280 --> 00:30:14,839
Speaker 2: feared in the sense it'll be state backed.

575
00:30:15,670 --> 00:30:18,510
Speaker 2: I think private money and the world has experimented with

576
00:30:18,510 --> 00:30:20,390
Speaker 2: private money in the past. In fact, it, you know,

577
00:30:20,430 --> 00:30:22,060
Speaker 2: in the 19th century, there are a lot of issues

578
00:30:22,060 --> 00:30:25,109
Speaker 2: of private money. It has all of the weaknesses that

579
00:30:25,109 --> 00:30:28,869
Speaker 2: we've seen historically with private money, um, that's compounded by

580
00:30:28,869 --> 00:30:32,780
Speaker 2: the fact that today the Westphalians and the nation state

581
00:30:33,109 --> 00:30:35,630
Speaker 2: means that if you're running a government, you want to

582
00:30:35,630 --> 00:30:38,189
Speaker 2: control monetary supply, you want to control monetary policy. Why

583
00:30:38,189 --> 00:30:41,530
Speaker 2: would you let abdicate the control of the monetary system

584
00:30:41,530 --> 00:30:42,709
Speaker 2: to some private player, right?

585
00:30:43,260 --> 00:30:46,989
Speaker 2: So one, the inherent weaknesses in private money. Second, nation

586
00:30:46,989 --> 00:30:50,170
Speaker 2: states won't let private money succeed because it undermines the

587
00:30:50,170 --> 00:30:53,180
Speaker 2: capacity to function as a government, as a nation state.

588
00:30:53,630 --> 00:30:56,660
Speaker 2: So I don't think you'll see private money, you know,

589
00:30:57,229 --> 00:31:00,229
Speaker 2: privately issued money, um, and so it could be a

590
00:31:00,229 --> 00:31:03,469
Speaker 2: store of value, but as a medium of exchange and

591
00:31:03,469 --> 00:31:06,540
Speaker 2: a unit of account, I don't see that happening, uh,

592
00:31:06,550 --> 00:31:07,310
Speaker 2: anytime soon.

593
00:31:08,689 --> 00:31:11,369
Speaker 2: What store of exchange, store of value, yes, of course.

594
00:31:11,699 --> 00:31:14,050
Speaker 2: There is about $12 trillion of gold in the world.

595
00:31:14,339 --> 00:31:17,550
Speaker 2: There's some 4 or $5 trillion of Bitcoin or crypto

596
00:31:17,550 --> 00:31:20,380
Speaker 2: coin in the world. Already's 40% of the total value

597
00:31:20,380 --> 00:31:23,339
Speaker 2: of gold. So the minute you have that stock of

598
00:31:23,339 --> 00:31:26,219
Speaker 2: demand and supply, there's a market. And the minute there's

599
00:31:26,219 --> 00:31:28,380
Speaker 2: a market, people will use it to store value. So

600
00:31:28,380 --> 00:31:30,900
Speaker 2: I do think it will continue to be in that form.

601
00:31:32,030 --> 00:31:34,319
Speaker 2: Um, going back to this, so if I say private

602
00:31:34,319 --> 00:31:37,238
Speaker 2: money won't exist, but tokenize will exist, what does that mean?

603
00:31:37,319 --> 00:31:40,199
Speaker 2: That means I do think you will get tokenized money

604
00:31:40,199 --> 00:31:45,040
Speaker 2: but linked to the current feared banking system, and that

605
00:31:45,040 --> 00:31:48,329
Speaker 2: by and large can happen through tokenized deposits or central

606
00:31:48,329 --> 00:31:49,400
Speaker 2: bank digital currencies.

607
00:31:50,170 --> 00:31:54,079
Speaker 2: I think central bank digital currencies will occur, but mostly

608
00:31:54,079 --> 00:31:57,119
Speaker 2: in the wholesale space because there's a real problem to solve,

609
00:31:57,520 --> 00:32:00,560
Speaker 2: which is what the multi currencies have the same dollar,

610
00:32:00,640 --> 00:32:02,920
Speaker 2: the sterling, the US dollar, we never got around to

611
00:32:02,920 --> 00:32:07,079
Speaker 2: a single global currency. If you can use a central

612
00:32:07,079 --> 00:32:10,599
Speaker 2: bank digital currency and an exchange process to get around

613
00:32:10,599 --> 00:32:13,359
Speaker 2: this multi currency thing, you can get all the benefits

614
00:32:13,359 --> 00:32:16,640
Speaker 2: I talked about instant settlement, more money with this thing.

615
00:32:16,719 --> 00:32:18,520
Speaker 2: So I do think there's a problem to solve, and

616
00:32:18,520 --> 00:32:19,319
Speaker 2: you will see that.

617
00:32:20,530 --> 00:32:23,609
Speaker 2: There are several experiments going on right now, but eventually

618
00:32:23,609 --> 00:32:26,369
Speaker 2: I think you'll see some kind of wholesale CBDC with

619
00:32:26,369 --> 00:32:28,239
Speaker 2: a clearing house which will work.

620
00:32:29,369 --> 00:32:33,400
Speaker 2: In the retail CBDC, I'm less certain because to me

621
00:32:33,400 --> 00:32:37,119
Speaker 2: the detailed CBDC, if you have a very good efficient

622
00:32:37,670 --> 00:32:40,910
Speaker 2: payment system in the country, instant payment, QR code based

623
00:32:40,910 --> 00:32:42,910
Speaker 2: like our pay now, pay you can pay at point

624
00:32:42,910 --> 00:32:45,910
Speaker 2: of sale, it's not clear to me what problem the

625
00:32:45,910 --> 00:32:47,550
Speaker 2: retail CBDC is really solving.

626
00:32:48,369 --> 00:32:53,488
Speaker 2: Um, and actually it winds up creating incremental challenges because

627
00:32:53,489 --> 00:32:55,729
Speaker 2: the minute you go to retail CBDC then you have

628
00:32:55,729 --> 00:32:58,699
Speaker 2: two choices. Does the central bank issue the retail CBDC

629
00:32:59,089 --> 00:33:01,369
Speaker 2: and open up accounts for all the citizens in the

630
00:33:01,369 --> 00:33:03,770
Speaker 2: country with the central bank. Now if you do that,

631
00:33:03,849 --> 00:33:07,800
Speaker 2: you undermine your current banking system. Uh, more than that,

632
00:33:07,890 --> 00:33:10,329
Speaker 2: you take on the onus for credit creation, and no

633
00:33:10,329 --> 00:33:12,699
Speaker 2: central bank wants to take on the onus for credit creation.

634
00:33:12,770 --> 00:33:15,130
Speaker 2: So there's some challenges with the retail CBDC.

635
00:33:15,599 --> 00:33:18,510
Speaker 2: You could do an intermediate CDC. You don't go directly

636
00:33:18,510 --> 00:33:21,750
Speaker 2: to the consumer. You go through the banking system, but

637
00:33:21,750 --> 00:33:23,880
Speaker 2: then that's like a tokenized deposit, you figure.

638
00:33:24,729 --> 00:33:27,280
Speaker 2: So my own view is that I think the prevalent

639
00:33:27,280 --> 00:33:30,359
Speaker 2: form of tokenization will be tokenized deposits. So you have

640
00:33:30,359 --> 00:33:32,439
Speaker 2: a deposit, but you tokenize it, then you get all

641
00:33:32,439 --> 00:33:37,829
Speaker 2: the benefits of programmability, atomic settlement, etc. etc. without actually

642
00:33:37,829 --> 00:33:41,479
Speaker 2: bastardizing the current fiat currency system. I think that's where

643
00:33:41,479 --> 00:33:42,040
Speaker 2: you get to.

644
00:33:42,900 --> 00:33:44,469
Speaker 2: You are especially about stablecoins.

645
00:33:45,119 --> 00:33:49,930
Speaker 2: The thing with stablecoins is that um they actually don't

646
00:33:49,930 --> 00:33:54,410
Speaker 2: function to serve anything that a tokenized deposit does except

647
00:33:54,410 --> 00:33:57,209
Speaker 2: one thing, they can be privately issued outside of the

648
00:33:57,209 --> 00:34:01,410
Speaker 2: regulated banking system. So somebody that a coin base, etc.

649
00:34:01,569 --> 00:34:04,010
Speaker 2: can say, OK, I'm creating a reserve against a bunch

650
00:34:04,010 --> 00:34:07,839
Speaker 2: of assets. I'm going to issue a stable coin against it.

651
00:34:08,169 --> 00:34:09,929
Speaker 2: Now that flies in the face of my first thing.

652
00:34:10,010 --> 00:34:12,370
Speaker 2: Why would nation states let you do that easily.

653
00:34:12,850 --> 00:34:14,939
Speaker 2: And therefore, if you look at BI has published a

654
00:34:14,939 --> 00:34:19,290
Speaker 2: paper recently, I remember, comparing a tokenized deposit in a stablecoin,

655
00:34:19,620 --> 00:34:22,379
Speaker 2: and obviously argued that the tokenized deposit is a much

656
00:34:22,379 --> 00:34:25,209
Speaker 2: better way to approach all the benefits you want as

657
00:34:25,209 --> 00:34:27,100
Speaker 2: opposed to stablecoin which is privately issued.

658
00:34:28,050 --> 00:34:30,850
Speaker 2: Also, the fact that stablecoins, some of the stablecoins, you know,

659
00:34:30,989 --> 00:34:33,600
Speaker 2: as you saw, which were linked not to a reserve,

660
00:34:33,810 --> 00:34:37,399
Speaker 2: but linked to an algorithmic balancing, uh, ran into trouble.

661
00:34:37,689 --> 00:34:39,330
Speaker 2: So that obviously took some of the sheen of the

662
00:34:39,330 --> 00:34:41,129
Speaker 2: algorithmic rebalanced stablecoins.

663
00:34:41,969 --> 00:34:46,149
Speaker 2: Um, when it comes to stablecoin back reserve, they will exist, uh,

664
00:34:46,209 --> 00:34:48,219
Speaker 2: but then you get to the question of how, how

665
00:34:48,219 --> 00:34:50,209
Speaker 2: often do you audit the reserve? How often do you

666
00:34:50,209 --> 00:34:52,810
Speaker 2: make sure the reserve exists and operated away? How do

667
00:34:52,810 --> 00:34:55,600
Speaker 2: you make sure that all the other controls are there?

668
00:34:56,409 --> 00:34:59,780
Speaker 2: So for my money, I would argue that as long

669
00:34:59,780 --> 00:35:05,290
Speaker 2: as again the traditional banking system leans into tokenizing deposits

670
00:35:05,290 --> 00:35:10,000
Speaker 2: and availing of the benefits of the digital uh asset universe.

671
00:35:10,379 --> 00:35:13,370
Speaker 2: I think that will be the game to back. If

672
00:35:13,370 --> 00:35:16,050
Speaker 2: the banks don't do that and you know and they

673
00:35:16,050 --> 00:35:18,489
Speaker 2: leave a big vacuum, then yes, private players will come

674
00:35:18,489 --> 00:35:21,888
Speaker 2: in and try to disintermediate that inefficiency through other forms

675
00:35:21,889 --> 00:35:21,969
Speaker 2: of

676
00:35:21,969 --> 00:35:26,209
Speaker 1: stablecoins, right? Your views are very much aligned with Augustin Carstens,

677
00:35:26,250 --> 00:35:29,250
Speaker 1: the former general manager of BIS. I remember him writing

678
00:35:29,250 --> 00:35:32,169
Speaker 1: this essay that even the Dutch East India Company for 50,

679
00:35:32,179 --> 00:35:35,340
Speaker 1: 60 years maintained very successfully a copper-backed stablecoin.

680
00:35:35,620 --> 00:35:39,388
Speaker 1: But after a while, because it's privately issued incentives get

681
00:35:39,389 --> 00:35:41,149
Speaker 1: misaligned and you want to issue a little more with

682
00:35:41,149 --> 00:35:43,629
Speaker 1: a little less copper and erode the value and then

683
00:35:43,629 --> 00:35:47,080
Speaker 1: the trust collapses, whereas if you have state backing that

684
00:35:47,350 --> 00:35:49,500
Speaker 1: theoretically at least, you know, not necessarily on the table.

685
00:35:49,989 --> 00:35:52,790
Speaker 2: Now again, the caveat to all this, all states are

686
00:35:52,790 --> 00:35:55,310
Speaker 2: not the same. Sure, right, and so of course you

687
00:35:55,310 --> 00:35:57,750
Speaker 2: would argue that where you have states where the state

688
00:35:57,750 --> 00:35:59,549
Speaker 2: is not doing a good job but doesn't have the

689
00:35:59,550 --> 00:36:00,540
Speaker 2: trust of the people.

690
00:36:00,879 --> 00:36:03,739
Speaker 2: The currency is getting devalued, inflation is sky high. Of

691
00:36:03,739 --> 00:36:06,860
Speaker 2: course that creates a huge opening for an alternate provider

692
00:36:06,860 --> 00:36:10,020
Speaker 2: who gives you greater trust, greater efficiency. So you could

693
00:36:10,020 --> 00:36:12,659
Speaker 2: see situations of this sort, but I'm talking about in

694
00:36:12,659 --> 00:36:14,679
Speaker 2: general if you assume that you have a well functioning

695
00:36:14,679 --> 00:36:17,899
Speaker 2: government and which is supported by the people.

696
00:36:18,290 --> 00:36:20,070
Speaker 2: I think it's hard to displace that.

697
00:36:20,729 --> 00:36:22,500
Speaker 1: Can I ask you a supplemental question on the issue

698
00:36:22,500 --> 00:36:27,139
Speaker 1: of uh technology making banking seamless and transactions seamless. Should

699
00:36:27,139 --> 00:36:30,500
Speaker 1: there be some friction in banking? Back in the days

700
00:36:30,500 --> 00:36:32,780
Speaker 1: when there was bank runs, you would give a bank holiday,

701
00:36:32,939 --> 00:36:34,179
Speaker 1: let people just calm down.

702
00:36:35,540 --> 00:36:39,929
Speaker 1: RTGS and 24/7 settlement, does that add to volatility or

703
00:36:39,929 --> 00:36:42,049
Speaker 1: does it actually create a greater good?

704
00:36:42,250 --> 00:36:45,449
Speaker 2: I think they're asking a more philosophical question. Should people

705
00:36:45,449 --> 00:36:48,850
Speaker 2: continue progressing or should we put friction across different parts

706
00:36:48,850 --> 00:36:51,500
Speaker 2: of the value chain, right? And it's a good question.

707
00:36:51,530 --> 00:36:54,610
Speaker 2: It's not a nice question. I think a large part

708
00:36:54,610 --> 00:36:57,049
Speaker 2: of what we're doing with technology, we're hurtling down this

709
00:36:57,050 --> 00:37:00,929
Speaker 2: path without having thought through the other, you know, attendant

710
00:37:00,929 --> 00:37:03,529
Speaker 2: and consequential challenges that you get with it.

711
00:37:04,120 --> 00:37:08,750
Speaker 2: Um, one simple example, we made payments instant and what

712
00:37:08,750 --> 00:37:10,629
Speaker 2: happens with that is that you know you do something,

713
00:37:10,709 --> 00:37:13,830
Speaker 2: the money leaves the bank instantly, and if 10 minutes later,

714
00:37:13,870 --> 00:37:15,989
Speaker 2: 20 minutes later you had a second thought, you had

715
00:37:15,989 --> 00:37:19,229
Speaker 2: an afterthought, you suddenly figure maybe you got scammed. There's

716
00:37:19,229 --> 00:37:23,709
Speaker 2: no stopping it's all gone. It's like free flow, but

717
00:37:23,709 --> 00:37:25,870
Speaker 2: when you look at the reverse and say, OK, so

718
00:37:25,870 --> 00:37:26,928
Speaker 2: should we therefore.

719
00:37:27,360 --> 00:37:29,540
Speaker 2: Uh, building so much friction to them that you don't

720
00:37:29,540 --> 00:37:32,429
Speaker 2: get the efficiency and speed. People don't like that either.

721
00:37:32,639 --> 00:37:36,678
Speaker 2: There's a lot of value from instant, right? So it's

722
00:37:36,679 --> 00:37:38,919
Speaker 2: a hard question to answer, you know, where do you

723
00:37:38,919 --> 00:37:41,399
Speaker 2: draw the line? What we're trying to do these days is.

724
00:37:41,899 --> 00:37:46,770
Speaker 2: Um, let most transactions proceed frictionless, but use AI and

725
00:37:46,770 --> 00:37:49,570
Speaker 2: data to pop up the ones which look like there

726
00:37:49,570 --> 00:37:51,610
Speaker 2: might be a challenge, and then see if we can

727
00:37:51,610 --> 00:37:55,250
Speaker 2: put some friction only in those. How successful we'll be

728
00:37:55,250 --> 00:37:58,000
Speaker 2: with that, uh, demarcation is anybody's guess.

729
00:37:58,879 --> 00:38:01,290
Speaker 1: Because related to this is the question of cybersecurity. Uh,

730
00:38:01,370 --> 00:38:03,850
Speaker 1: I had Goutam Kirti on my podcast a few months ago.

731
00:38:03,969 --> 00:38:07,100
Speaker 1: He scared the bejesus out of me detailing the kinds of,

732
00:38:07,169 --> 00:38:09,889
Speaker 1: you know, attacks that institutions like DBS get on a

733
00:38:09,889 --> 00:38:11,770
Speaker 1: daily or minute by minute basis.

734
00:38:12,260 --> 00:38:16,540
Speaker 1: So your sense of the whole move toward digital and

735
00:38:16,540 --> 00:38:19,259
Speaker 1: seamless banking and the trade-off with cybersecurity.

736
00:38:19,949 --> 00:38:22,280
Speaker 2: Well, you know, for the time being, I think.

737
00:38:22,969 --> 00:38:26,689
Speaker 2: Cybersecurity is OK, right, and so as you said, we

738
00:38:26,689 --> 00:38:29,948
Speaker 2: get hundreds of attacks every day, but we do, um,

739
00:38:29,969 --> 00:38:32,489
Speaker 2: number one, our peripheral defenses are quite sound. We have

740
00:38:32,489 --> 00:38:37,569
Speaker 2: multi layers like an onion ring of peripheralral defenses, and, um,

741
00:38:37,850 --> 00:38:39,979
Speaker 2: you know, we, we, we've been able to keep people out.

742
00:38:40,050 --> 00:38:42,569
Speaker 2: We do our pen testing regularly. We have third parties

743
00:38:42,570 --> 00:38:44,850
Speaker 2: trying to hack us and attack us deliberately and people

744
00:38:44,850 --> 00:38:47,169
Speaker 2: can't get in. So and by and large I think

745
00:38:47,169 --> 00:38:49,489
Speaker 2: that's true for a lot of the financial system.

746
00:38:49,850 --> 00:38:53,550
Speaker 2: I'm not sure equally to all other infrastructure providers, though

747
00:38:53,550 --> 00:38:57,879
Speaker 2: informed governments like Singapore have actually designated various other critical

748
00:38:57,879 --> 00:39:01,449
Speaker 2: infrastructure providers and pushed them to get the same level

749
00:39:01,449 --> 00:39:02,560
Speaker 2: of safety safeguards.

750
00:39:03,479 --> 00:39:05,759
Speaker 2: Uh, but on top of peripheral defense, the other thing

751
00:39:05,760 --> 00:39:10,279
Speaker 2: that we've done is relied a lot on, um, building

752
00:39:10,280 --> 00:39:12,800
Speaker 2: up strength within, you know, we call it inside is

753
00:39:12,800 --> 00:39:15,639
Speaker 2: the outside. You assume somebody is inside because sooner or

754
00:39:15,639 --> 00:39:18,149
Speaker 2: later we leave a window unguarded and somebody will get in.

755
00:39:18,520 --> 00:39:20,479
Speaker 2: So how do you protect if somebody's inside?

756
00:39:20,860 --> 00:39:24,259
Speaker 2: And there are techniques for that as well. Microsegmentation is one.

757
00:39:24,379 --> 00:39:26,419
Speaker 2: So if you come in, you only hit a particular segment,

758
00:39:26,459 --> 00:39:30,259
Speaker 2: you can't go everywhere else. Uh anomaly detection is another.

759
00:39:30,340 --> 00:39:33,540
Speaker 2: We use a whole bunch of algorithms and AI to detect, hey,

760
00:39:33,659 --> 00:39:36,290
Speaker 2: something's happening which is not consistent with what you would expect,

761
00:39:36,459 --> 00:39:39,939
Speaker 2: so you can quarantine and shut down very, very quickly.

762
00:39:40,739 --> 00:39:44,600
Speaker 2: Um, but the truth, time is, you know, the bad

763
00:39:44,600 --> 00:39:48,189
Speaker 2: guys have the same technology too sometimes smarter than you,

764
00:39:48,520 --> 00:39:51,560
Speaker 2: and they continue to proceed at a rapid pace. And

765
00:39:51,560 --> 00:39:54,399
Speaker 2: so you're constantly hoping that you can keep up with them,

766
00:39:54,439 --> 00:39:57,600
Speaker 2: if not stay ahead of them. One of my current

767
00:39:57,600 --> 00:40:00,830
Speaker 2: big nightmares is obviously quantum. And so with the amount

768
00:40:00,830 --> 00:40:04,080
Speaker 2: of um technology power available with quantum and the ability

769
00:40:04,080 --> 00:40:08,719
Speaker 2: to crunch through everything and unravel everybody's keys instantly.

770
00:40:09,060 --> 00:40:13,870
Speaker 2: Uh, that's a nightmare, uh, possibility. Our hope is that

771
00:40:13,870 --> 00:40:16,469
Speaker 2: quantum will guard against quantum, right? And so we're trying

772
00:40:16,469 --> 00:40:20,790
Speaker 2: to work on that as well, uh, but, uh, you know, it, it,

773
00:40:20,840 --> 00:40:23,310
Speaker 2: it could be challenging. One of the things is you

774
00:40:23,310 --> 00:40:25,149
Speaker 2: know in Singapore that we did in the last year

775
00:40:25,149 --> 00:40:28,709
Speaker 2: or two as an industry is this whole thing called

776
00:40:28,709 --> 00:40:32,029
Speaker 2: money lock or, um, you know, we call a DBS vault.

777
00:40:32,500 --> 00:40:35,729
Speaker 2: So even though all your accounts, etc. are digitally available,

778
00:40:36,060 --> 00:40:38,580
Speaker 2: we encourage you to take some of it and park

779
00:40:38,580 --> 00:40:40,879
Speaker 2: it in a section of the account where digital is not,

780
00:40:40,939 --> 00:40:43,179
Speaker 2: does not work. So at least you have a corpus

781
00:40:43,179 --> 00:40:46,908
Speaker 2: of savings which, you know, cannot be digitally impacted. I

782
00:40:47,179 --> 00:40:49,459
Speaker 2: chafed at the bit when we started that. I said

783
00:40:49,459 --> 00:40:52,020
Speaker 2: this is really going backward. You create a digital capability

784
00:40:52,020 --> 00:40:54,340
Speaker 2: and then you say, OK, I'm putting this aside so

785
00:40:54,340 --> 00:40:58,459
Speaker 2: it cannot be digitally, uh, touched. But I began to

786
00:40:58,459 --> 00:41:01,049
Speaker 2: think the same question is, you know, sometimes friction necessary.

787
00:41:01,550 --> 00:41:04,569
Speaker 2: I think because the changes that are happening are so

788
00:41:04,570 --> 00:41:09,070
Speaker 2: acute and nobody knows where it could go, it's not

789
00:41:09,070 --> 00:41:11,909
Speaker 2: illogical to say let's produce fiction in the sky and

790
00:41:11,909 --> 00:41:14,899
Speaker 2: lock some money away and not make it digitally available.

791
00:41:15,439 --> 00:41:17,860
Speaker 1: My wife always says that the jewelry that she has

792
00:41:17,860 --> 00:41:21,520
Speaker 1: is immune from cyberattack, actual theft, yes, but not cyberattack.

793
00:41:22,120 --> 00:41:25,389
Speaker 1: Um, I've left your favorite topic for the very end.

794
00:41:25,600 --> 00:41:29,760
Speaker 1: So looking ahead at banking and the potential of artificial

795
00:41:29,760 --> 00:41:32,629
Speaker 1: intelligence and particularly the advent of the large language models,

796
00:41:32,760 --> 00:41:34,270
Speaker 1: how do you see that changing banking?

797
00:41:35,239 --> 00:41:38,340
Speaker 2: Well, you know, in the short term, the changes are immense, right?

798
00:41:38,379 --> 00:41:40,790
Speaker 2: And you think, by the way, it's not just banking,

799
00:41:40,919 --> 00:41:43,959
Speaker 2: you think about any white collar jobs or what do

800
00:41:43,959 --> 00:41:47,479
Speaker 2: white collar jobs entail? We read stuff, then we sort

801
00:41:47,479 --> 00:41:49,989
Speaker 2: of synthesize them in our brains and put them together.

802
00:41:50,439 --> 00:41:53,158
Speaker 2: Then we produce some output to either send an email

803
00:41:53,159 --> 00:41:55,399
Speaker 2: out or you do a PowerPoint presentation or you do

804
00:41:55,399 --> 00:41:56,479
Speaker 2: a pitch book to someone.

805
00:41:57,090 --> 00:41:59,570
Speaker 2: Um, and then maybe you'll act if you're sitting there, you,

806
00:41:59,689 --> 00:42:02,610
Speaker 2: you know, maybe pass some transacting entries or you still

807
00:42:02,610 --> 00:42:04,169
Speaker 2: got to send a follow up to somebody you have

808
00:42:04,169 --> 00:42:05,169
Speaker 2: to call somebody, right?

809
00:42:06,189 --> 00:42:09,739
Speaker 2: Today's um GEI with the LLMs in the back of it.

810
00:42:09,909 --> 00:42:13,659
Speaker 2: uh forget domain specific ALM broad LM, they do all four.

811
00:42:13,770 --> 00:42:16,870
Speaker 2: They read, they read better than we read, they synthesize,

812
00:42:16,909 --> 00:42:19,989
Speaker 2: they can produce a 4 page summary like this of

813
00:42:19,989 --> 00:42:23,889
Speaker 2: everything they do synthesize it. They produce output, visual output,

814
00:42:23,949 --> 00:42:25,510
Speaker 2: audio output, pitch books.

815
00:42:26,320 --> 00:42:29,280
Speaker 2: And with agentech, they do your actions. They will pass

816
00:42:29,280 --> 00:42:31,419
Speaker 2: your entries for you. They will send a follow up email,

817
00:42:31,500 --> 00:42:34,620
Speaker 2: they change for whatever. So if you think about the

818
00:42:34,620 --> 00:42:37,500
Speaker 2: nature of uh GEI, it does everything a white collar

819
00:42:37,500 --> 00:42:40,979
Speaker 2: person does in banking, 70% of our jobs are of

820
00:42:40,979 --> 00:42:44,459
Speaker 2: this nature. So you'll find that increasingly the computer can

821
00:42:44,459 --> 00:42:47,969
Speaker 2: do a lot of this more efficiently, better and more effectively,

822
00:42:48,300 --> 00:42:50,860
Speaker 2: and so there's one big change. The second big change

823
00:42:50,860 --> 00:42:53,370
Speaker 2: we've already seen, which is the capacity to predict.

824
00:42:53,739 --> 00:42:57,138
Speaker 2: Right. And so exactly as Netflix and Amazon, we predict

825
00:42:57,139 --> 00:42:59,100
Speaker 2: what will the customer want to do, what, what can

826
00:42:59,100 --> 00:43:01,739
Speaker 2: we tell the customer to a large extent it's very

827
00:43:01,739 --> 00:43:04,300
Speaker 2: helpful because you can give the customer a much better

828
00:43:04,300 --> 00:43:07,739
Speaker 2: level of experience and service because at, uh, you're not

829
00:43:07,739 --> 00:43:10,139
Speaker 2: dealing with the customer the segment of one and you

830
00:43:10,139 --> 00:43:12,620
Speaker 2: know the customer intimately. You don't, but AI knows the

831
00:43:12,620 --> 00:43:16,649
Speaker 2: customer intimately and can therefore, whether it's new products or

832
00:43:16,649 --> 00:43:19,489
Speaker 2: just service, do a much better job than you could before.

833
00:43:19,919 --> 00:43:23,009
Speaker 2: So I think the way banking will be done will change,

834
00:43:23,260 --> 00:43:28,888
Speaker 2: efficiency will increase, your um um the customer experience will change,

835
00:43:29,020 --> 00:43:31,860
Speaker 2: the customer outcomes will change, um, all of this, and

836
00:43:31,860 --> 00:43:33,739
Speaker 2: this will happen in the, in front of our eyes

837
00:43:33,739 --> 00:43:34,810
Speaker 2: in the next 3 to 5 years.

838
00:43:35,629 --> 00:43:38,949
Speaker 2: The big question is, do you get a step beyond that?

839
00:43:39,939 --> 00:43:44,189
Speaker 2: So at um um recent um an offsite meeting we had,

840
00:43:44,320 --> 00:43:48,158
Speaker 2: we had the COV Bank and he said they're speculating

841
00:43:48,159 --> 00:43:51,679
Speaker 2: about a purely AI driven and design bank where the

842
00:43:51,679 --> 00:43:55,080
Speaker 2: customer designs the bank. You don't even need a bank, right?

843
00:43:55,239 --> 00:43:57,479
Speaker 2: So you have the AI moves and the the customer

844
00:43:57,479 --> 00:43:59,919
Speaker 2: can pull it together. The customer creates his own AI

845
00:43:59,919 --> 00:44:02,719
Speaker 2: bank and each customer creates the 9 billion people have

846
00:44:02,719 --> 00:44:06,360
Speaker 2: 9 billion banks all created by themselves using AI tools

847
00:44:06,639 --> 00:44:08,540
Speaker 2: who can do all of the things I talked about

848
00:44:08,540 --> 00:44:09,319
Speaker 2: but for the customer.

849
00:44:09,770 --> 00:44:13,250
Speaker 2: Right, can do the management so it's a customer agent

850
00:44:13,250 --> 00:44:15,290
Speaker 2: which is working in the world of finance directly for

851
00:44:15,290 --> 00:44:18,610
Speaker 2: a customer. Now I haven't thought enough about how this

852
00:44:18,610 --> 00:44:21,699
Speaker 2: will function, but I can see the underlying philosophy. If

853
00:44:21,699 --> 00:44:24,330
Speaker 2: you can get to where I'm talking about, could you

854
00:44:24,330 --> 00:44:27,080
Speaker 2: take it to the next level? I think it's not impossible.

855
00:44:28,139 --> 00:44:32,449
Speaker 1: And from a risk management perspective, are we thinking sufficiently

856
00:44:32,449 --> 00:44:36,010
Speaker 1: about the disruptive impact of AI, whether it is cybersecurity

857
00:44:36,010 --> 00:44:40,709
Speaker 1: related or just overall trading related or bank behavior related?

858
00:44:41,370 --> 00:44:44,570
Speaker 2: I think to an extent everybody is, for example, we

859
00:44:44,570 --> 00:44:47,969
Speaker 2: have a whole bunch of people focusing on the tech challenges,

860
00:44:48,030 --> 00:44:51,649
Speaker 2: you know, hallucination, wrong information, AI is a life of

861
00:44:51,649 --> 00:44:55,570
Speaker 2: its own, and we have whole committees and model reviews, etc.

862
00:44:55,669 --> 00:44:56,129
Speaker 2: to do that.

863
00:44:56,639 --> 00:45:00,100
Speaker 2: But in truth, I would also say that we don't

864
00:45:00,100 --> 00:45:02,500
Speaker 2: know what AI can do. We frankly don't even know

865
00:45:02,500 --> 00:45:05,209
Speaker 2: how the models always work, but more important, we don't

866
00:45:05,209 --> 00:45:07,729
Speaker 2: know to what extent AI can go. Does AI get

867
00:45:07,729 --> 00:45:10,110
Speaker 2: to a stage where it's almost sentient and therefore it

868
00:45:10,110 --> 00:45:13,129
Speaker 2: is now doing things you hadn't thought about, not impossible.

869
00:45:13,580 --> 00:45:16,649
Speaker 2: So are there a risk that will come along the pike?

870
00:45:16,659 --> 00:45:18,100
Speaker 2: I think there might be. And so we've got to

871
00:45:18,100 --> 00:45:20,590
Speaker 2: be quite thoughtful and cautious about, you know, how do

872
00:45:20,590 --> 00:45:23,540
Speaker 2: you put things to work. One thing you take GEI

873
00:45:23,540 --> 00:45:26,300
Speaker 2: over 18 months we've used a lot of GEI and DBS.

874
00:45:26,820 --> 00:45:30,479
Speaker 2: And until this month we basically said we won't go

875
00:45:30,479 --> 00:45:32,639
Speaker 2: direct to consumer, so we will put a man in

876
00:45:32,639 --> 00:45:35,520
Speaker 2: the middle, a human in the loop just because I'm

877
00:45:35,520 --> 00:45:38,399
Speaker 2: not sure what else is going on over there. But

878
00:45:38,399 --> 00:45:41,120
Speaker 2: eventually you get a greater degree of confidence and say, OK,

879
00:45:41,199 --> 00:45:44,239
Speaker 2: let's try this. Let's do a low risk and you

880
00:45:44,239 --> 00:45:47,080
Speaker 2: start building from there. Um, we will have to do

881
00:45:47,080 --> 00:45:50,678
Speaker 2: trial and error and make sure you do the low

882
00:45:50,679 --> 00:45:53,790
Speaker 2: risk things and not bet the farm as you go forward.

883
00:45:54,750 --> 00:45:57,139
Speaker 2: In addition to the risk in the banking system itself,

884
00:45:57,270 --> 00:45:59,270
Speaker 2: you know, the model is they do model it right

885
00:45:59,270 --> 00:46:01,699
Speaker 2: and so on that even human beings can make a difference.

886
00:46:02,110 --> 00:46:05,189
Speaker 2: But the bigger challenges to me are the social challenges, right?

887
00:46:05,270 --> 00:46:07,149
Speaker 2: And so I talked about a new way of working.

888
00:46:07,189 --> 00:46:09,899
Speaker 2: I talked about, you know, a new nature of work,

889
00:46:10,239 --> 00:46:12,709
Speaker 2: but what does that mean for society? What does that

890
00:46:12,709 --> 00:46:15,709
Speaker 2: mean for the workforce? What does it mean for labor markets?

891
00:46:15,909 --> 00:46:19,250
Speaker 2: What does that mean for, you know, uh, the old equation,

892
00:46:19,350 --> 00:46:21,629
Speaker 2: the capital and labor, this thing, productivity.

893
00:46:22,149 --> 00:46:25,260
Speaker 2: I don't really thought about any of those things and

894
00:46:25,260 --> 00:46:27,370
Speaker 2: when you push the argument people say, OK, we all

895
00:46:27,370 --> 00:46:30,449
Speaker 2: work 3 days a week and rely on UBI universal

896
00:46:30,449 --> 00:46:34,419
Speaker 2: basic income, but I don't know whether people have thought through,

897
00:46:34,570 --> 00:46:36,409
Speaker 2: you know, how this works and what it means if

898
00:46:36,409 --> 00:46:38,850
Speaker 2: you're just sitting and working 3 days a week. So

899
00:46:38,850 --> 00:46:40,959
Speaker 2: I think there are a lot of uncertainties out there,

900
00:46:41,530 --> 00:46:44,209
Speaker 2: and this has been one of my big challenges in

901
00:46:44,209 --> 00:46:46,449
Speaker 2: the last couple of years as CEO. How do you

902
00:46:46,449 --> 00:46:49,810
Speaker 2: calibrate and get that balance right? One part of me.

903
00:46:50,459 --> 00:46:53,819
Speaker 2: Responds to the Chuck Prince uh statement and the music

904
00:46:53,820 --> 00:46:56,100
Speaker 2: on you got to get on the dance floor, and

905
00:46:56,100 --> 00:46:58,500
Speaker 2: I think as CEO I would have been remiss if

906
00:46:58,500 --> 00:47:02,689
Speaker 2: I had not led DBS into embracing data, AI, GEI,

907
00:47:02,699 --> 00:47:05,219
Speaker 2: new ways of working we'd have got left behind and

908
00:47:05,219 --> 00:47:07,620
Speaker 2: we owe it to our shareholders and our customers to

909
00:47:07,620 --> 00:47:08,489
Speaker 2: do well by them.

910
00:47:09,300 --> 00:47:12,229
Speaker 2: But at the same time I've been acutely conscious of

911
00:47:12,229 --> 00:47:15,100
Speaker 2: all these big issues the ethical problems, the moral problems,

912
00:47:15,179 --> 00:47:19,149
Speaker 2: the humanistic problems, the risk problems. So while we've been

913
00:47:19,149 --> 00:47:22,659
Speaker 2: embracing this, we've been trying to make sure that we

914
00:47:22,659 --> 00:47:26,729
Speaker 2: get the balance right through our oversight committees through, you know,

915
00:47:26,899 --> 00:47:29,659
Speaker 2: one step at a time, um, say, OK, we don't

916
00:47:29,659 --> 00:47:31,419
Speaker 2: have to be first to market for this, we can

917
00:47:31,419 --> 00:47:34,020
Speaker 2: be 3rd to market because we just need to understand

918
00:47:34,020 --> 00:47:34,780
Speaker 2: what is going on.

919
00:47:35,520 --> 00:47:37,590
Speaker 2: I'm hoping we have the balance right so far I

920
00:47:37,590 --> 00:47:41,040
Speaker 2: think we have, but we've got to continue to make

921
00:47:41,040 --> 00:47:42,299
Speaker 2: sure it's a balanced approach.

922
00:47:42,500 --> 00:47:44,310
Speaker 1: OK, since you mentioned the banks for, maybe I'm going

923
00:47:44,310 --> 00:47:47,100
Speaker 1: to ask you one more question. Pius have the banks,

924
00:47:47,229 --> 00:47:50,949
Speaker 1: which seemed very enthusiastic with respect to carbon pricing and

925
00:47:50,949 --> 00:47:53,669
Speaker 1: helping their clients to go through the journey, have they

926
00:47:53,669 --> 00:47:56,149
Speaker 1: really managed to move the needle on green transition? Well,

927
00:47:56,280 --> 00:47:56,409
Speaker 1: you know,

928
00:47:56,510 --> 00:48:00,790
Speaker 2: I think it's not a reasonable question. What I've always maintained.

929
00:48:01,110 --> 00:48:03,060
Speaker 2: That to put the monkey on the back of the

930
00:48:03,060 --> 00:48:07,459
Speaker 2: banks saying they will make the green transition happen is

931
00:48:07,459 --> 00:48:11,899
Speaker 2: kind of short sighted. There's a macroeconomy, an industrialized economy

932
00:48:11,899 --> 00:48:14,899
Speaker 2: that we've all collectively built up over 150 years, very

933
00:48:14,899 --> 00:48:19,189
Speaker 2: carbon carbon intensive economy, but that is industry after industry.

934
00:48:19,540 --> 00:48:22,290
Speaker 2: So the notion that the bank would sit here and say, OK,

935
00:48:22,540 --> 00:48:25,020
Speaker 2: I will now change this by deciding whether I give

936
00:48:25,020 --> 00:48:26,459
Speaker 2: you money or don't give you money.

937
00:48:26,820 --> 00:48:30,169
Speaker 2: Is a little bit um short sighted. I mean it's

938
00:48:30,169 --> 00:48:33,449
Speaker 2: it's unreasonable. Who's the I say who's the bank to

939
00:48:33,449 --> 00:48:36,919
Speaker 2: play God? If an elected government of the country says

940
00:48:36,919 --> 00:48:40,049
Speaker 2: I still continue to need fossil fuel energy for my

941
00:48:40,050 --> 00:48:43,810
Speaker 2: people because the people who elected me still need electricity, power,

942
00:48:43,850 --> 00:48:47,479
Speaker 2: and the GDP is only $2000. Who's the bank sitting

943
00:48:47,479 --> 00:48:49,129
Speaker 2: outside to say, hey, you know what, I know better

944
00:48:49,129 --> 00:48:52,010
Speaker 2: than you. I don't think your people deserve energy and

945
00:48:52,010 --> 00:48:53,919
Speaker 2: so I'm going to turn off the tap on this

946
00:48:54,250 --> 00:48:56,649
Speaker 2: and you figure out how to get renewable energy, right?

947
00:48:57,209 --> 00:48:59,689
Speaker 2: So it's not straightforward to say the banks should do it.

948
00:49:00,379 --> 00:49:03,250
Speaker 2: Have the banks been able to help with the process?

949
00:49:03,659 --> 00:49:06,580
Speaker 2: I think they have, but the whole transition itself has

950
00:49:06,580 --> 00:49:08,909
Speaker 2: been slow. So, you know, yes, the banks have, you know,

951
00:49:09,020 --> 00:49:12,580
Speaker 2: we've got $80 to $90 billion in sustainability link loans.

952
00:49:12,739 --> 00:49:15,300
Speaker 2: Do those loans make a difference at the margin, yes,

953
00:49:15,340 --> 00:49:17,500
Speaker 2: I give somebody cheaper money if they're doing green stuff.

954
00:49:17,580 --> 00:49:20,540
Speaker 2: It's more expensive money. And so hopefully that incent the

955
00:49:20,540 --> 00:49:21,979
Speaker 2: right behavior to do more.

956
00:49:22,139 --> 00:49:25,009
Speaker 2: Activities to do less brown activities and so on. We're

957
00:49:25,010 --> 00:49:27,810
Speaker 2: giving people money for transition as we move from brown

958
00:49:27,810 --> 00:49:30,379
Speaker 2: to green, we'll give you more money. We'll create more programs.

959
00:49:30,489 --> 00:49:32,929
Speaker 2: So I think we are being facilitated. We're trying to

960
00:49:32,929 --> 00:49:35,600
Speaker 2: make sure that we help people go from one end

961
00:49:35,600 --> 00:49:38,280
Speaker 2: to the other, but can we be the principal driver

962
00:49:38,280 --> 00:49:40,719
Speaker 2: of the change? I don't think that's realistic.

963
00:49:41,489 --> 00:49:43,600
Speaker 1: Finally, what makes you hopeful?

964
00:49:44,919 --> 00:49:48,069
Speaker 2: Or humanity, and if you think about the 5000 years

965
00:49:48,070 --> 00:49:52,158
Speaker 2: of known human history, uh, whether it's geopolitics or whether

966
00:49:52,159 --> 00:49:54,709
Speaker 2: it's innovation and tech change, this is not the first

967
00:49:54,709 --> 00:49:58,759
Speaker 2: time we've, uh, come to this. People say that geopolitics

968
00:49:58,760 --> 00:50:03,120
Speaker 2: is unprecedented even in my lifetime, forget the, you know, the, the,

969
00:50:03,139 --> 00:50:05,000
Speaker 2: the 20th century.

970
00:50:05,459 --> 00:50:08,560
Speaker 2: I can name half a dozen times when geopolitics was

971
00:50:08,560 --> 00:50:11,469
Speaker 2: more fractious than it is now, and if you go

972
00:50:11,469 --> 00:50:14,080
Speaker 2: back to the 19th century, I mean, people are constantly

973
00:50:14,080 --> 00:50:16,399
Speaker 2: warring with each other all the time, so this has

974
00:50:16,399 --> 00:50:18,800
Speaker 2: not been the worst. And if you look at the

975
00:50:18,800 --> 00:50:22,110
Speaker 2: pace of change in the 1880 to 2000 period, uh,

976
00:50:22,120 --> 00:50:26,889
Speaker 2: to the 1900 period with that went to electricity, power, steam, transport,

977
00:50:27,169 --> 00:50:30,879
Speaker 2: globalizing world came together, and the world saw some massive,

978
00:50:30,919 --> 00:50:32,919
Speaker 2: massive changes at that point in time as well.

979
00:50:33,260 --> 00:50:35,739
Speaker 2: So even from an innovation standpoint, where there's a lot

980
00:50:35,739 --> 00:50:39,530
Speaker 2: of innovation happening now, we have seen that before and

981
00:50:39,699 --> 00:50:42,259
Speaker 2: I am heartened and hopeful about the fact that we

982
00:50:42,260 --> 00:50:45,860
Speaker 2: as humanity have been ingenious enough and creative enough to

983
00:50:45,860 --> 00:50:48,299
Speaker 2: see our way through these issues and by and large

984
00:50:48,300 --> 00:50:50,780
Speaker 2: the world is in a better place today from a

985
00:50:50,780 --> 00:50:54,969
Speaker 2: uh uh um quality of life standpoint, uh, if you,

986
00:50:55,060 --> 00:50:59,739
Speaker 2: you know, um uh um park the environmental challenges for

987
00:50:59,739 --> 00:51:00,100
Speaker 2: a minute.

988
00:51:00,379 --> 00:51:03,699
Speaker 2: You know, healthcare conditions are better, life spans are longer,

989
00:51:03,989 --> 00:51:07,709
Speaker 2: you know, infant mortality is lower, educations are higher, poverty

990
00:51:07,709 --> 00:51:10,860
Speaker 2: is lower, and now the world has progressed, uh, well.

991
00:51:11,270 --> 00:51:13,709
Speaker 2: If we can see a way to addressing some of

992
00:51:13,709 --> 00:51:18,479
Speaker 2: the big planetary challenges climate and biodiversity for sure, um,

993
00:51:18,550 --> 00:51:22,388
Speaker 2: I think we're still, um, in a good place in

994
00:51:22,389 --> 00:51:24,459
Speaker 2: terms of where mankind needs to go.

995
00:51:25,379 --> 00:51:27,500
Speaker 1: Well, on that note, Piush, thank you very much for

996
00:51:27,500 --> 00:51:29,500
Speaker 1: your time and insights. I'm not gonna say goodbye to

997
00:51:29,500 --> 00:51:31,060
Speaker 1: you because I look forward to having you back on

998
00:51:31,060 --> 00:51:31,979
Speaker 1: coffee time. All right,

999
00:51:32,060 --> 00:51:33,959
Speaker 2: maybe the 200th episode we'll go again.

1000
00:51:34,449 --> 00:51:35,100
Speaker 1: So very good. Thank

1001
00:51:35,100 --> 00:51:36,540
Speaker 2: you very much. Take care. Thank you.

1002
00:51:38,159 --> 00:51:40,638
Speaker 1: Thanks to our listeners and viewers as well. Copy Time

1003
00:51:40,639 --> 00:51:43,709
Speaker 1: was produced by Ken Delbridge at Spy Studios. Violet Lee

1004
00:51:43,709 --> 00:51:47,239
Speaker 1: and Daisy Sherma provided additional assistance. It is for information

1005
00:51:47,239 --> 00:51:52,279
Speaker 1: only and does not represent any trade recommendations. All 150

1006
00:51:52,280 --> 00:51:55,158
Speaker 1: episodes of the podcast are available on YouTube and on

1007
00:51:55,159 --> 00:51:59,678
Speaker 1: all major podcast platforms, including Apple, Google, and Spotify. As

1008
00:51:59,679 --> 00:52:02,879
Speaker 1: for our research publications, webinars, and live streams, you can

1009
00:52:02,879 --> 00:52:06,280
Speaker 1: find them all by Googling DBS Research Library. Have a

1010
00:52:06,280 --> 00:52:06,760
Speaker 1: great day.