 you get finished on time well thank you very much for me for inviting me to this presentation in front of this illustrious round of Zurich alumni I can say that because I'm not a Zurich alumni I'm actually an alumni of further east from St. Galen with my political science or politically country studies there back in the day but it's that's ages ever since I've been very keen and very interested in the whole topic of innovation I think you could call me an innovation nerd and I've been observing always having the latest gadgets and whatnot and I've been permanently frustrated by the lack of innovation in the financial services industry so there's always this tension between what technology does what sciences do and what finance does not so it's really quite satisfying and positive now that the financial services industry finally seems to be catching up on what is actually happening in the world out there but the question is is it just technology that's being relevant that is having an impact on the innovation of finance and that's the topic that we are going to explore tonight and I am actually hopefully as keen to learn more about this topic as you are because I would like to get you to participate and ask questions interactively because what I'm doing here is presenting some ideas and observations that I've captured over the last two decades observing this industry and I would like to basically have you as a sounding board for these ideas that I'm going to present to you so let's get started oh an error of course please try again later so the evidently the video is not going to show this is actually a brief video introduction about the CFA society which would be running for about two minutes about what we are doing who we are etc I'll try to do that very briefly in my words here the CFA designation is has been very successful in Switzerland because it's got some 3 000 members now ever since it's been introduced back in 1996 and the enormous growth rate obviously the the mission of CFA Switzerland is actually to be as this organization is an alumni organization of all the CFA charter holders making sure that members have opportunities to continue their education to build networking events as well and to represent the values of the CFA designation which has a pretty firm code of ethics and standards of professional conduct towards the stakeholders in the industry so our our slogan is professionalism and finance professionalism and ethics for the finance plots so that's that's basically what briefly sums up what CFA Switzerland is all about but that's not the only reason why I'm actually here there's two more relevant associations and I think the first one the Swiss finance and technology association is the reason why I'm actually really invited here I am on the board of the Swiss finance and technology association which is which is a network this network country wide network of about 600 people who are interested in the developments of finance and technology in Switzerland so the mission of that association is to foster the ecosystem that network that is interested in that in that topic in Switzerland we're also doing advocacy i commenting to to regulatory proposals etc that cover that topic so for instance this upcoming intake public comment period public comment letter there and the second one is xbrl ch does anyone know here what xbrl stands for ever heard of it no shaking hands it's okay xbrl stands for extensible business reporting language it's a data format that is mandatory in the US for instance that is going to be mandatory in new in by 2020 but all listed companies need to report mandatorily their financial numbers in that in that format in Switzerland nobody's heard of it so that's that's interesting all right so this is basically tonight's presentation I am going to briefly touch on what happened so far you can't read that and then I will discuss what contemporary finance is about so base of contemporary intake and then find the briefly discuss the genuine juncture that I believe our economies are actually currently at and this is represented by what the fintech discussion really is about so let me get into the details and we're actually starting in Paris France 1765 so a little while back that is when a certain tea we only know the first letter of his first name is he seems to have been the first restaurateur in France bringing together basically all the different kinds of dishes that nowadays we're used to having in a restaurant prior to that when you wanted to eat out you had to go to one shop buy your mutton to the other shop get your soup to the third shop get your salad then forth your sauce mr bouranger here has actually brought everything together bundled it put the nice place hopefully I presume a nice place around it and created a restaurant a new customer experience to his clients and for that obviously he was sued by the guilt of society and the charcuterie and because they felt that that their business model is actually being endangered by this revolutionary move of bundling food into one client experience where a person can just go there and buy their menu in one place outrageous right so that's basically what they did so a couple of hundred years back but they lost with the loss of values so basically the clients then started to get that opportunity of really going to one place and and have the possibility buy to buy the experience of the menu and you may wonder why I have Jamie Diamond here the chairman of JP Morgan that's because he recently said that he's afraid that FinTech is going to eat their lunch so basically that's that's the the whole nervousness in the financial services industry that there's outsiders coming into the business model of the financial services industry is that justified we shall see what you see here is actually the FinTech opportunity and that is also retitled of a seminal paper by Philippon of last year the FinTech opportunity here is represented very nicely in that chart spanning back to the 1880s and what's represented here is the unit cost of financial intermediation don't ask me all the the the technical details of how this is calculated in a financial services provision but again it's a reputational issue Philippon has a very high reputation among the guilt of economists so basically he drew up this representation of this of the unit cost over those decades and what's pretty remarkable is that the unit cost has been pretty stable over all these decades and despite of all the despite of all the intensifying and horrible if you listen to financial services competition out there which technically should be driving unit cost down obviously that's also what is obviously happening in other industries so unit costs if there's no change in quality and this is even quality adjusted should be coming there so what's happening or why is this not happening here let's have a look at what the real world or what in the real world might be happening this here is a 1971 Huawei Beetle and I'm representing this here because we have a very nice comparison by the CEO or former CEO of Intel if the 1971 Beetle had had the same technical progress like an Intel processor of 1971 it would go it would burn I don't know what you say there it's probably milliliters per 100 kilometer of fuel would run at 480,000 423,000 kilometers per hour and cost five cents so that's that's pretty impressive in terms of the the the advantage or the progress that's been made in these just like 40 years right and we're nowhere near seeing anything even compared remotely comparable to that so but what happened so far let's have a look at the innovation of the financial services industry so far or finance more broadly speaking and obviously this is very broad brush yeah sure is it a clear comparison production as a car and service to compare do you have any data other services how the costs have changed that's actually a good point no I haven't it would probably make sense to look at other services as well question is whether well obviously whether the quality actually is changing and the leverages is changing but I think the the scalability of financial services would actually allow for for these different for for more price competition to be effective or to be more effective in for instance if you look at the typical example of the hairdresser there's only one head that you can cut the hair off at one time I suppose a good point thank you so first innovation that's going back in the great times of history or the the the really first innovation has been lost in history and that is basically money I don't need to remind this round here of the basic functions of money those are these free and by the way let me just comment on the whole negative interest rate thing discussion where where some economists actually say that they see this as the or negative interest rates they see this as critical to maintain the nature of money but I think what I never see mentioned in that context is that actually the store of value is being compromised in that situation that's that seems to be taken out of that discussion but what what I actually like is that that the quote here by again the founder actually of Jamie Morton and this presentation is not sponsored by Jamie Morton John Peerpoint saying that gold is money or money is gold and everything else is credit we'll actually touch on that later on obviously nowadays in the days of fiat money you need to replace gold with fiat or anything but the fact is there is one something that is created probably out of thin air and then the banking system adds on to it and that is credit that is being created we'll touch on that later so if you ask the typical economist on the street if there is such a person what is financial innovation and they will very quickly come up with the quote from Paul Volcker former fed chairman who said that that the only financial innovation that he can think of that's worth its salt over the last generation was the ATM the hole in the wall and and obviously there's been a lot of nervousness when that thing was introduced back in the 1970s about what impact that would have on the financial services industry all the jobs that would be lost thanks to having that I found another very interesting piece of research about the actual impact that this has had and what you see here is actually the jobs the tellers the bank teller jobs over the since the introduction of the ATM and the ATMs installed that is quite actually surprising isn't it you can actually see here that that the not while the the number of ATMs has obviously gone up very severely the the jobs the job this introduction that has been expected did not really happen and why is that because the quality of the ATM jobs of the teller jobs has changed very significantly whereas people in the old days were really just busy counting out the bank notes and handing over to people nowadays they are expected to or their their job actually is to well to use the politically correct term is to advise customers orderly to use the real term is to sell product to customers and that's that is their job nowadays and that's why the the touch points with clients have changed very much in quality so where when you now have when you now go to the hole in the wall you get your cash out and that's the touch point that is very utilitarian very functional but if you seek out a bank bank staff or if you have a contact point with somebody at a bank then you have probably a more complex issue that you would like to discuss maybe not but definitely the bank person will try to involve you in a discussion about these bank services and try to add value hopefully to that that's basically the that's that's the change in quality that has been happening and maybe that's going back also to your question that you've been asking there about the unit cost so and then another one a little bit shorter in history mentioned that money is back in ancient history this is actually the joint stock company here thanks to Wikipedia I found the transfer letter a settlement document as it were of a transfer of of some stock by Bishop Peter of Las Vegas who reacquires an eighth of a mountain that basically belonged to a mine and that is basically the separation that is represented here between property rights and management which is the key innovation of the joint stock company also the limited liability of shareholders so really the distinction between the entrepreneur or basically the entrepreneur obviously is the impersonation of all the risk and the activity and the management and eventually also the capital and nowadays or with the introduction of the joint stock company you actually can differentiate you can differentiate between the the financing and the actual management of of that entrepreneurialism that's something that's that's obviously been extremely successful over the last couple of centuries what's even been more successful or more rapidly successful is actually one very special case of this joint stock company and this is the investment vehicles collective collective investment vehicles here represented by a couple of charts from boston consulting representing the recent developments of that industry as a whole here you can see that it's it's an extremely profitable industry with net profit margins stable net profit margins or operating profit margins as share of net revenue in the 30 to 40 percent which over time again is is a very high profit margin obviously and here you can see how the product offering is expected to be developing over the next couple of years moving certainly from from the what's called the active management which is particularly where my members are very much involved in towards a more passive industry perspective but then again you have on the right hand side with with a very high net revenue margin and pretty significant growth and there's more private markets so way maybe from from the liquid markets which is really developing in that perspective so the investment management industry the asset management industry as a very special case of the joint stock company has been growing explosively over those last well three four decades actually and last but not least we have mr buffett here representing risk transfer mechanisms or also known as the derivatives and i know you can actually argue about what the functions of the derivatives are whether that's really the the only one or the most important one even but he thinks or actually said that back in 2002 i think that derivatives are weapons of financial mass destruction or financial weapons of mass destruction i think back in 2011 he bought some pretty significant weapons of mass destruction so i'm not sure whether you would still stick to that but here some very important innovations have been made with for instance credit default swaps again where you can differentiate between the risk that you have in the bond position and the actual default risk of that position you can ensure against that same thing in interest rates swaps options etc but in front of this audience i don't think i need to go any much further in that regard so that's basically just been an introduction into what happened so far when it comes to innovation in finance wondering what you guys think is have i overlooked a major piece of innovation in finance here the con concept oh we'll get to that i would say that is not finance that's actually technological innovation but the concept behind has a huge impact on the context like i say we will get to that i'm just i'm looking for i'm trying to think of a real hardcore finance innovation concept yes securitization a reputation of a okay well well yeah sure i mean you could say that maybe that joint stock etc is a bit of that it's a representation of the assets and trade up make them tradable in a way so yeah central clearing central clearing it's a solution to a problem that arise arose because of the derivatives and the question is whether it's going to be stable now the discussion about central clearing is is only beginning to bubble up in my mind as far as i can see yeah but i would say the entire idea of having a stock exchange or a place where you can exchange your rights of one thing i would say is if you just own the ride but the others can i trade it can i sell it if i want yeah so the amsterdam coffee houses basically transferring that the price creation development the development of price mechanisms and making them transparent eventually trying to distill information from these price developments that's actually a good point i think that's really not covered anywhere here as a as a function in that sense all the fish is in the industry it's great food processing no physical settlement anymore no cash i think it's delivery well a lot of that again is probably really just using technology in in finance so i wouldn't say it's really a finance innovation per se as opposed to for instance the the mechanism of the discovering prices and valuation in that sense okay so there's only one thing that i miss that's banks they were once an innovation too and i agree since then not banks once they started doing their job that that's something that i was missing collecting collecting money well i would say i would then argue i would then refer you back to this mister here basically the the rest is credit when you actually have when you start collecting money from your clients and then create credit that would be at least implied in there not trying to defend anything but that's probably then more than one innovation really i mean banks as someone that just stores your money away as i don't know probably centuries ago and someone that can create money out of thin air that's a different concept that you can just create credit yeah but back diversification don't forget that back then it wasn't really it wasn't really regulated in that sense so you had different banking cultures and basically what some really were just focusing on that others were creating credit went past after a while so all right let's continue basically let's have a look at contemporary fintech so what what all this let me say the word the the hype actually is all about and i do have a strong feeling that much of the whole discussion is really approaching a feverish point of of happiness here in that context so what's happening there's obviously a huge proliferation of business models so there's different types of business models front left and center but they have really just been focusing on speed and on price oh there's nothing nothing bad with with speed and price obviously that's the business models by the way just this web if you look at that which is from a from a report that's been published by the by iosco yesterday it's the global fintech landscape which they categorize broad categories of payments insurance planning that is personal finance and that sort of thing lending crowdfunding the blockchain this link trading and investments data and analytics and security i think that's a fairly comprehensive mapping that they've done here what's been quite impressive and i really recommend that report is they've shown that the development of that web here of that of that clung over the last decade and in the beginning there was like nothing a couple of threads now there's this very very intricately developed corporate here of these business models but like i said there's nothing against price and speed because that's the foundations of the fundamental elements that you can really build your corporate strategy on and here i love to quote cheff bezos the founder of amazon we said basically this is in the context of is often being asked how is the world going to look like in 10 years time what's going to change in 10 years time what he's actually saying is we should really not focus on what is going to change in 10 years time so really what's going to stay the same in 10 years time because if you want to really develop a business model that is that is worth itself then it should survive 10 years and that's basically the stuff that he's been focusing amazon on he's basically been looking at the situation where what do clients want actually from from a platform like amazon it's basically low price and it's very fast delivery and here is a it's explaining is it's unimaginable that people say they love amazon if only they will charge a little bit more or deliver a little bit slower that's truly unimaginable if not mine so let's now have a closer look at what that categorization that we've seen before is actually shaping up to be in a more more analytical mindset and i'd like to have a simple mind i'd like to add that thing in its in its drawers and categories a little bit and and these are these are the classical in-way functions of financial services so you have you have your payments functions obviously you have your credit function credit creation credit distribution and you have securities issuing safekeeping trading that whole part of the industry the advisory when when it comes to the different arms where you actually earn commissions on that the clearing and settlement which is a whole soft part of the industry and then you can actually think of how does and these are the three main forces that i see as being effective in this whole fintech this definition how do these three main forces really influence the these silos in in the industry and i think that uh there are very many of these of these business models the nodes of those business models are being are being hyped up right now because most of them are active that we've seen before are actually developing in that segment here's the Gardner hype cycle that i'm sure everybody is familiar with where you actually have the technology trigger when something is really coming up and being started to discover being discovered and being developed being invested in that then you go to a peak of inflated expectations which i would argue we're probably quite close to which then will crash down to earth but it's not going to disappear there's going to be a trough of disillusionment and then it will come back up again slope of environment plateau of productivity and there is going to be a long-term impact of things but the whole history of the dot-com bubble is a is the excellent group of sensation of what's been happening nowadays we couldn't imagine a world without the internet anymore amazon again if you've seen what happened yesterday when the amazon web services broke down i think amazon could probably be seen as too big to fail almost if amazon's stopped working or the web services of amazon stopped working we would really have very big problems for at least a while so like i said if you think about if you think of or if you look at the business models the the nodes that we've seen in that in that little web before think of how they are influenced by these by these free forces in their respective silos then just ask yourself where where all these business models with regards to that to that hype cycle but let me first explain what i mean by the different terms here obviously digitalization is is the first the first force and i'd like to think of here in terms of the music industry because the music industry is a wonderful example for what's been happening here you you actually obviously you have the live experience where your musician is actually creating music which is totally analog and it's perishable it goes away the minute it's being created that's a that's a very particular experience then it's being recorded traditionally analog and it's being distributed on recordings that way which which are physical and that's that's the traditional vinyl recording that you've had then it started the first wave of digitalizations with when when analog recordings were transferred into cds compact discs with digital information on them and ultimately the actual product was the pure digital content was pulled away so to speak from the digitalization from that bamboo of the of the compact disc so there's a whole huge range of that of that value creation chain that is involved in music which is really influenced by this digitalization now how does that what's the impact of that on financial services you could actually say that uh well money is actually already digital if you like unless you have your banknote or or you're dealing with cash or anything and therefore financial services are fully digitalized but i don't think that's really true because the the actual service is is is actually not not the number that you have on your bank account or that you're dealing with in your bank account it's basically the the for instance the transactions when you when you buy a cell security it's again it's the contract that you're entering when you actually get a mortgage all these types of things are service businesses which are nowhere near digitized at all across the different value chains there then the second force here is unbound bundling or unbundling so basically just changing the the the different ways in which parts of services are being pulled together or disintegrated again very nice example is the compact disk where you actually had to buy a bundle of individual songs or music pieces and maybe you just wanted to have one of them you still were forced to actually buy the whole bundle of the songs in there but when you actually have the possibility of just getting one piece of of that bundle then you'll just go for that you'll pay obviously much less for the digital content much more practical and you can basically ditch the whole physical part of things so that's the power of unbundling which i've also mentioned the outset with that restaurant image remember back 1765 i think the the impact of technology nowadays is such that that we have many more possibilities to change the bundles that all kinds of services are being delivered to customers and that has enormous influences because it typically was was just a historically grown way of doing business which is now being changed and the the the ultimate example of that is actually you've talked about banks as as an innovation i think nowadays banks are probably or the way i think of banks is just that they're one huge balance sheet which basically brings together all different kinds of or represents all different kinds of financial services bundled in a way but you could actually think of unbundling most of those functions outside of the very traditional banking function which is obviously a not really sure what the English term for that is the that classical part of the banking function could pull that part of that apart and then then make that accessible to more boutique or more more targeted kinds of business models as well in an industrialized way of doing financial services and that brings me to the third force which is actually part of the unbundling because once you actually pull service offerings apart then obviously you can actually also use different parties to participate in this in this in in the transactions involved in this unbundled services so it's again it's not just this intermediation but it's also intermediation so it's the changes basically of of the intermediary either introducing new intermediaries think of robo advisors inserting themselves between between execution platforms or execution banks and the end client stuff like that but all these functions that we have so far that we have seen so far that we have discussed so far really are stuck in a web of functional silos and those are the functional silos that that we've just seen previously these bits here if you look at banking operations in their organization they are very much siloed and their specialists in each of those silos and they just deliver what their silos are meant to deliver so that that siloization is it's really a critical part of of the business models that fintech is now operating that's something that in my mind hinders really their growth and here's a here's a quick strategy into play so what what does the fintech development that we're that we're that we've seen over the last five to ten years maybe what impact does that have on corporate strategy either of the big institutions or also of the small ones and there's again three forces the rule of three I've recently learned you should always use in presentations because you shouldn't use more than three points becomes multiple complex so basically you have again two elements here which are which are counteracting each other size and agility so huge organizations do obviously have benefits of scale and everything that's the way banks large financial services operations actually drew but also probably function of regulation they've lost much of their agility or they are nowhere near as agile as small organizations small boutiques can be that is basically the the the recipe for for that concept that I did mercy developing in financial services and fintech discussion of of frenemies friendly enemies or co-optition that's cooperation and competition so really very confusing situation where some players are actually competing with say banks or large large operators and still they see that by themselves they really don't have the stamina to go through because maybe they don't have the capital base or their clients don't react fast enough so that they actually have to find a way of cooperation with their competition and that makes life strategically speaking very tricky very difficult that's what I mentioned with with client inertia that's particularly true in b2c business to to to client space not so much in the b2b space where when you have professionals on both sides they're much more focused on the actual service delivery and and lastly one thing who remembers role coasts good i think coast is actually going to come back into this honor nowadays with basically if i can just just paraphrase a little bit the coast theorem is the company size is basically determined by the cost differential transaction cost differential inside and outside of the company is that half does that work in a way and and if transaction costs outside are falling and i would venture to say that they're falling dramatically or have fallen dramatically and continue to fall dramatically then that has an impact needs to have an impact on the size of the firm as well so in in that sense in the sense of that coast theorem you you could actually expect that financial services will spawn many more small firms with much more specialized offerings that that will try to disintermediate and unbundle the traditional manufacturing balance sheet of the bank that's that's my that's my my main my major expectation actually of the impact of the fintech discussion in in on financial services and that's the big fear actually that's the fear that the financial services industry is having and here i've copied the slide from a recent apple presentation which is showing the the ranking of apple's watch sales as you know it's it's been introduced not too long ago the apple watch and it's now on rank two after Rolex before fossil omega Cartier citizen etc in terms of sales which is obviously something that frightens the living daylight of the watch industry because an outsider who's never done anything with watches just can start a product and like that get to rank two is that going to happen with financial services and that's what i'm actually will put positive to you that's what i think is actually going to happen here we are at the real juncture by the way my time is up so i'll have to hurry up a little bit where i believe that the at the genuine juncture now which will allow us to recode the operating system of the economy at large and i would venture to say that all the pieces all the concepts all the technologies to actually do that are currently available so this is not vaporware or anything these are these are existing concepts that can be put into place that can be determined and decided upon it's it's basically an engineering task what i see here but it's it's got huge demands on on policymakers on on politics as well so this is not really a fintech proposition or a business model proposition it's just as much a regulatory issue that i'll be talking about and we'll see why we have a little birds here there's for this time i'm breaking the rule of three i'm propositioning four elements first one is property rights property rights especially with big assets are usually represented by legal title so for instance when you have a house that legal title to the house is only validly represented by the root book whatever that is in in english so you have a you have a directory of grant property also when you have cars etc you have that your your car permit which is the representation of that car i'm actually claiming that we will see a much more intricate registry of property rights developing and this is never blockchain is coming into its honor probably based on some some kind of a blockchain protocol which will allow all types of registries for property rights of all different kinds so when i talk about real estate or covered that's just one part another completely different part is for instance the right to the information that your fitbit your your fitness device creates which is hugely interesting for many operators that for instance your health insurance etc it'd be willing i'm sure to pay quite a lot of money for for this kind of information but to actually have a structure in place that will allow to to define and transact all these property rights that's that's what's required in that way so property rights second is contracts by the way the only problem only the blockchain and contracts is is one of the is the top is topic is really a hot topic of discussion right now the other three aren't so contracts i'm very happy to actually say that this is a this is a development by a suric guy it was planets maybe somebody knows him here he's written the book on standardized contracts i think and that is this unified financial analysis look it up a very very worthwhile your attention they've developed a taxonomy of 32 very simple contract types that are modular and standardized so you have input factors and output factors of those contract types one example for a contract type is an annuity contract or or a spa heft contract and you can combine those in code those contract types to build as complex contracts as you like and these types of contracts are obviously code it's as simple as that you can code these and you can build these things together and again share them by whichever way you like or you determine is useful third piece valuation and this is where the xbrel part comes in because the essential part of valuation is you need to have financial information and preferably standardized financial information that's what what these kinds of data formats do they make available not proprietary formats like thompson rogers or bloomberg etc within their proprietary models but these are just the the valuation or the financial reporting data that are being created by reporting entities left right and center and then made available in the cloud to whoever wants to use them and last but not least money and that is where i believe the real clincher is going to be for financial services and i'm really i really wonder why this is not being more broadly discussed but you may have seen that for instance the the swedish riggs bank is looking at creating their own version of cryptocurrency the bank of england is looking at it i'm sure the national bank is also working on that i think as soon as you actually give access to digital money to non banks the whole game of financial services is up for financial service providers because that's when the apples in the google send the alibabas can actually come in play at the same level without having that intermediary of the banking system they can actually get direct access to central bank money without having to be licensed or without having that banking license there and they're not creating any particular systemic risk because of that because the reason for systemic risk if i can totally butcher the complexity of it is really credit creation if you take that part out of the picture then you just have your regular counterparty risk and that's much more easily handled so i think those are the four the four key pieces that are that will make the difference in the fintech development going forward and they are not really fintech they're very much economic in nature legal in nature political in nature they will make a huge difference uh in what the financial services is going to do and here i'm quoting uh with the Nobel prize uh gary robert cello how to finance as a science as a practice the source of economic innovation promote freedom prosperity equality and economic security that's what the what the job to be done uh is uh for the financial services industry effectively and i think with the use of of of technology it will also allow allow us to have much more transparent and symmetric information about what is happening in financial services so um and that's my last slide i believe that the race is actually on uh there's a lot of movements in many different jurisdictions uh going on to start implementing these building blocks into their jurisdictions for instance Dubai uh there's a lot of movement happening there uh when it comes to government business on the blockchain Singapore is is very very active in that space uh and i think our focus on just fintech regulation sandbox etc is much too narrow uh in terms of what is the real impact going to be on the on the systemic changes that that will be happening out of this out of this piece developments that's it i'm way overdue sorry about that but yeah any questions sure let me break the ice with the questions um what we see so far in the fintech sector is a lot of companies they enter uh some kind of business some kind of industry that is fairly high margin now and they act as discounters and hope to capture market share this way do you think we'll ever see something other than discounters in these sectors something more akin to a luxury goods provider somebody that actually is not just trying to be the cheapest possible but actually that offers some sort of value that people are willing to pay for more than the marginal cost i'm sure of it that that's gonna happen but but what's first gotta happen i think is that the you could argue that the outsized profitability of the financial services model will have to be destroyed first before you can start rebuild that value at creation so that's i think that's a function that's a question of time where you can differentiate the different types of offerings so basically now in order to to go to fintech we are more in the tech zone so yeah efficiency and price and speed yeah and in order to to redesign the whole system in the end would that be the way it's going i'm not sure i get a question in order to rethink the whole system the whole process because fintech would be an innovation not only just with technology and something like that would be one of the way to first go in in that digitalization area and then going there at some point it would be then possible to rethink the whole the whole system economy how we yeah the the thing is there's obviously many private operators now moving in that space and trying to change the way they do business but currently within their silos i i don't see much that is cutting across silos and especially i see there that there is a strong impact of regulation on the way those silos are structured and that's why that's why i i i think the the real the big impact is only going to come when when regulators and basically the policymakers begin to understand that this is a much wider move that where we actually have to look at how do you manage property rights how do you manage contracts how can you get efficiencies out of the money access for instance these are the overarching pillars that that our economy is resting on and these will be changed actually then actually we'll have the silos that will that will start to fizzle out at the fringes but if all different functions now disembark into their own regions do we even have the right people to still advise a client i mean now you can look around inside your bank and you find an expert for everything but how do you deal with the growing complexity of silos good point excellent point probably not uh but there's nothing as changeable as people in uh when when a bank says uh the human resources is our capital that's not true the capital walks out of the door every evening right the thing is uh people are changing and they learn that's that's basically what what we do as as for instance is when you look at the cfa curriculum that's changing all the time and we're currently looking at at building in the impacts that these the these business models are having on financial service creation on the formulation of of your of your investment policy statement etc how you do that so i think that that's not so much my concern actually because uh people are uh are very dynamic in terms of uh how they change their qualifications what interests me is who is if there is going to be a fintech revolution who's going to drive it okay there are basically three possibilities um the incumbents the banks themselves the big technology companies google facebook apple amazon are new players what we have seen so far is uh we have new players coming into the market and not really names excuse me name names please um true wealth let's look at true wealth they came into the they came into business with a with really good technology i'm a client but i think i think i think everybody that has looked at at what they offer has to agree that what they do is really good dude are they successful not at all so what they're lacking is trust they don't have to trust if you have to open an account with soxobank to become a client this time no no no they do that for you that's a difference the very end it's a soxobank account behind and i don't trust them it's going to change two months the point is point i was trying to make this i was asked for an example new players that's yeah that's what we've seen so far so i personally think if it's really going to be interesting it's really going to be interesting if it's it's not the banks are new players but the gaffer guys google amazon facebook and apple guys who are going to try it's totally agree and uh why would they not why would they not so my expectation is is is that that the fintech revolution if it's going to come it's going to come from that side what do you think they're they're waiting for the central bank access that's what i think and they they will get regulations from the EU for example which will which will disintermediate more and will which will make the market entrance for new players a lot easier i mean just think of apple pay apple pay is is a very nice interface i'm a fan of apple pay it's a fantastic problem it's a very nice interface to your credit card nothing else but the apple can very easily and immediately pull out a credit card as soon as they have direct access to the payment system and they will do that in a flash they could yeah they could do it now yeah i will relate to this question i think do you think that there can be finance players that are not fintechs lack the engineering and technological basis that fintechs now in maybe 10 years i mean because all the financial services are digital and what what are you thinking about that you're you're independent wealth manager everyone who wants to compete in this market wants offer services needs to have engineering needs to have the technology and the guys who know the technology to be actually able to provide the service to okay the big i get you i get your question not right now but not too it's not too far away because there's an increasing number of providers of run-of-the-mill white label services only yesterday i saw a headline of a what's a bank called a guy that there was a bank founded in in long which doesn't cater to to retail clients they just cater as a as a as a clearing platform to fintech service providers etc i think there's going to be a development of an ecosystem of provide service providers which cater very specific services to other service providers which which are clients of those think of the helpful cloud computing idea basically not too far not too long ago you actually had to maintain your own server farms to operate for instance a web shop or a huge website or anything to operate that on nowadays you can actually buy computing powers it's not too far away that you can buy computing power excess computing power on it on an exchange and that's just a commodity computing power connected computing power and i'm sure that the same thing will be happening for very dedicated and specialized financial services like accounting account opening etc but that's not fair to reckon you saw because no no it's commodity it's commodity and these these services are going to be highly commoditized totally cut price in terms of in terms of competition because there's huge there's huge competitive forces at play there are all about scalability again and i mentioned amazon web services that's basically the kind of scaling that is like you've had another question yeah i just wanted to add on on matias what he said you have also as well a group facebook that's neighbors now transmitting some money from using basically the messenger app but then thinking and going from there don't you think that such providers i mean they are so big that they can only go as far as basic financing services instead you need a small structure to to to be more focused in a way i mean they have a huge base a huge a huge community and for them it's interesting only because they can they can serve a lot of yeah but since you mentioned facebook i'm not i'm not a fan but but the the what's special with facebook is that they will cater to to with their own services to the community that they believe they can serve based on which is a huge base but obviously they they're opening up their api's to third parties for more complex more specialized services so you can actually develop a very intricate again ecosystem system of service providers based on these platforms if they're opening those up and they have every interest to do that again apple pay 15 basis points right it's more a comment from my side also just my my own opinion given that so much digitalization will happen and in conversation with other people i sometimes hear yeah but where's the personal touch where's the human interaction and also here we've had this a little bit i think if people are willing to pay for that somebody's going to offer it i don't think people are looking for the personal touch when they're looking for a financial transaction i mean yet there's no personal touch and getting cash out of the whole thing the world right so that's that's purely utilitarian i mean more like it's just habits for something like wealth management or something maybe it's not the first touch maybe it's the experience habit yeah exactly i mean in your interest slides you said that innovation is about changing experience and make it better make it better for the customers whatever and that's one aspect i miss a little bit in your concluding remarks i think that the alarm technology or technology allows to change this experience and to make it more fancier more whatever and i think that is the main aspect as well it should be mentioned i absolutely agree with you but what i'm discussing here is infrastructure i see and the client experience is something completely different that's basically the service provider where there will be a huge competitive landscape each one will provide their own user interface their own surface basically and they will compete with others with that because that is the major differentiator the the underlying services provided they're they're largely commoditized that's why it doesn't really touch on it but it's hugely important okay if it's okay for everyone shall we continue the discussion downstairs at the opera