Welcome back to our course on FinTech Disruptive Innovations: Implications for Society In our session today we're going to be looking at diversity of impact and the topic for this session is big versus small Much of the focus on FinTech is on large countries is on European nations with large economies, US, Japan, China In our last session, East versus West we've primarily talked about big countries But FinTech has interesting implications as well, for small countries Because technology crosses borders very easily and so smaller economies may benefit more from FinTech in some ways, than larger economies Now, we do see the larger markets being a lot of money and worth a lot and some huge nations like China being huge leaders and lots of investments, lots of opportunities But we also see some leaders in large markets looking and saying "We may be able to do more for smaller countries." Now, there's an interesting implication of the financial crisis for smaller markets In some smaller countries they're losing banking services Some small countries have virtually found that their banks are closing their requirements for anti-money laundering, for KYC is making it too difficult to do banking with Europe or US too difficult to be part of the global banking infrastructure too difficult to comply with all of these rules and regulations and they are in a small market So, there are literally very small banks having to comply with requirements put in place for giants Even within a country like the US or within Europe we will find small banks finding themselves under increasing pressure of these increasing regulations trying to protect against the financial meltdown We said in the financial crisis some of these banks were too big to fail Well, today they're even bigger So, too big to fail is even bigger and much too big to fail, today So, we want to solve that problem we are trying to have larger capital requirements larger safety nets, and larger protections in place But while we're doing that we're making it harder and harder to be a community bank or a small bank So, that's a challenge. So, where does FinTech play into this? Well, one of the beauties of FinTech is one of the other courses we talk about is RegTech in this series on FinTech RegTech is an effort to use technology or in part RegTech is an effort to use technology to enable banks small and large, to more efficiently comply with regulations Some people in FinTech say that RegTech is the new FinTech What they mean by that is that RegTech is new opportunity for new startups for new businesses to come in and create a new market space They're becoming cooperative with large and small banks who are funding their efforts to help them reduce cost of regulatory compliance What about small countries? Not just small banks because small banks are under some serious pressure of the cost of compliance with regulations and challenges Well, FinTech is a savior for both small companies small banks, and small countries because it opens up financial markets, technology is global it moves, the applications can move you can develop a new bank and a virtual bank and an online bank, or global bank much cheaper than you can a physical traditional branch banking infrastructure and capability So, it becomes easier to reach out to other markets easier to do things on a smaller scale easier for a small institution to exist and compete So, that opens up opportunities for small players small institutions, small countries, small economies FinTech becomes a global leveling playing field Our attention, of course is focused on the big markets, where the big money is But in aggregate, a lot of smaller markets can be worth a lot So, it's worth, if you're startup if you're a new business it's worth thinking about countries that may not be on the radar of the giants Leverage technology maybe partner with large giants in other countries like Alibaba, or Citibank or Deutsche Bank, partner with a large financial institution and look for opportunities in Eastern Europe Africa, throughout Asia many different market opportunities exist for deploying technology which is largely fixed costs largely developed into smaller economies smaller institutions, smaller applications To some extent, we also have big versus small in customers and we see some of that as well is that FinTech really is inherently about small customer not about the big banks not about the big clients the big corporations, it's a levelizer between the big institutional investors and the small players, who weren't well-served So, we see FinTech being something that reaches out to small creates new opportunities for small countries, small companies and small customers of financial institutions, small corporations and individuals with FinTech applications making great services available to common people So, we see big versus small FinTech is the hero of the small it's the hero of the underserved it's the hero of underserved markets, under served customers underserved banks, underserved institutions, borrowers It creates much more of a global community of opportunity with crowd financing, with crypto currencies It means we no longer need the central banks as much we no longer need that great big institutions we need banking, but we may not need the giant banks that are too big to fail We may be able to create smaller institutions which can be small enough to succeed So, it's an interesting and intriguing mix that FinTech favors much more innovation nimbleness, and smallness versus the giants Now, what are the giants doing? Had a discussion recently with Standard Charter Bank major bank in Asia major bank in Hong Kong about what do they see as the future? They're applying for a virtual bank license now and they are likely to be approved in Hong Kong In that license, they said "We're going to set up a bank that will be a different name, a different institution, owned by Standard Charter. It will be maximum 100 employees. There will be no branches, you will not go anywhere to talk to anyone, everything will be done on your phone," and this is a very different outlook Why? Because they see small as a giant opportunity to innovate to experiment, to learn to serve a different type of customer to serve with a different attitude, a different approach FinTech favors the small So, if you are a giant you may want to think more about incubators more about intrapreneurs, more about partnering more about investing in small opportunities because small is beautiful when it comes to FinTech. Thank you
