Fintech Insider Podcast by 11:FS
00:06:10 · Pranav Sood, Ross Gallagher
[00:06:10] S2: Sorry, I was gonna say, think in ordinary circumstances, SMBs live on the edge. I think every year roughly 50,000 go bust just because of late payments. I think I saw a number that said around 50 of small businesses are cash flow positive every month in a normal year. And having a shock like this impacts them in so many ways. The revenue hit, the productivity hit, the costs Val was talking about as well, sick leave, parental leave, all these things that you don't factor in. And going back to the actual story, I think it's fantastic to see the banks taking some action. But I think Val's point is really the salient one which is it needs to happen fast because rate cuts and all the stuff that you do at the economy wide level, it takes time to filter down and I think that's not really what small businesses have got right now and so [00:06:55] S0: Well, I think my worry on that is that, you know, what we've seen in terms of the rate cut and the types of measures that we've just described, I don't necessarily think that they're going to have the impact in terms of shaping behavior in the short term because people are panicked, it goes back to Sarah's original point around anxiety, and people are going to act into that. I think what we're probably doing now is sort of laying the the groundwork, at least with the base rate cut, building a bit of resilience into the economy so that once the virus has peaked, it can bounce back about a little bit quicker.
00:07:25 · Sarah Kocianski
[00:07:25] S1: I just I mean, be honest with you, I just I just don't think it's enough. I mean, it's bad enough if you're an SMB, you know, unless you're making toilet roll, in which case, I suspect you're fine. Or hand sanitizer. Or hand sanitizer. But if particularly if you are in, you know, hospitality or travel industries, imagine you're running a small cafe or a restaurant, we end up with a situation like, you know, God forbid, like Italy and everything has to close. I'm I'm just not sure it'll be enough. And and the bigger point, I think is, yes, my concern is for people and for small businesses. But with the markets the way they are, where are the banks finding this money? How are they going to be able to, you know, what impact is it going to have on the banks in the long term in the fact that, know, Lloyd's is stumped up, what is it, billion? NatWest has got 5,000,000,000. Yes. Some of that money is coming from the government, but the bank's capital reserves have been rinsed over the last week. So I wonder that's not it's not the concern for right now. The concern for right now is individual people. But with the looming fears of like crashes and Black Mondays in 2008 in the back of my head, I wonder how sustainable it is for the banks and how resilient they can be.
00:08:27 · Valentina Kristensen, Ross Gallagher, Sarah Kocianski
[00:08:27] S3: Well, I think that's that's a really good point. But, you know, the reality is with the markets going in the direction they are. I mean, FTSE one hundred fell another 10% when I just looked to my phone. So, you know, that means the people then are much more likely to save the money and put it in with the bank rather than investing it where there's obviously potential to get more returns than you'd be getting if you left it in a bank, which might be paying, you know, pretty low interest rates. But that's that be the place [00:08:52] S0: interest rates. [00:08:52] S3: Yeah. Record low interest rates. Exactly. You know, but, that's why you should pick up on with Open North because, you know, really good competitive rates. But, know, then I think that's that's where people will go. They'll... And that's that will be the way that, the banks will be able to get this this money. [00:09:05] S1: Yeah. I see. I don't think that's enough. I think that because so much of the bank's capital is not, you know, is is not deposits. I mean, a large proportion of it is, but the the rest of it is is invested, you know, that that is where it is. And, you know, if you look at the other things they've got, like, outstanding loans, yeah, of course, they're giving people a break and, of course, they should be. But at what point are they gonna have to call those back in and what impact is that gonna have? You know, I think it's a broader point actually like about this the coronavirus effect on you know as the opening line, was Ross ravaging the global economy?
00:09:05 · Sarah Kocianski, Ross Gallagher, Valentina Kristensen
[00:09:05] S1: Yeah. I see. I don't think that's enough. I think that because so much of the bank's capital is not, you know, is is not deposits. I mean, a large proportion of it is, but the the rest of it is is invested, you know, that that is where it is. And, you know, if you look at the other things they've got, like, outstanding loans, yeah, of course, they're giving people a break and, of course, they should be. But at what point are they gonna have to call those back in and what impact is that gonna have? You know, I think it's a broader point actually like about this the coronavirus effect on you know as the opening line, was Ross ravaging the global economy? [00:09:36] S0: No and markets have been rattled right? And again look it goes back again I think to the core points Sarah that you made in earlier on about anxiety. I think it's that anxiety is there, markets do not like uncertainty. There's a lot of questions around coronavirus that we just don't know the answers to and I think we're seeing the impacts in terms of the the impact on the market. And and and and to be honest, to me, just looking at this, it is all of the hallmarks of a very severe, economic shock. [00:10:05] S1: Can I just say that that anxiety is why we're also concerned about the pubs? Because that's that's the only way out of this, guys, is just ahead of the pub. [00:10:11] S3: Yeah. That's that's exactly my point. [00:10:13] S0: So And congregate. [00:10:14] S3: That's why they were, like,
00:10:14 · Valentina Kristensen, Ross Gallagher
[00:10:14] S3: That's why they were, like, [00:10:15] S0: great Yeah. Free to Alright. I'm gonna move us on. Our next story comes from Fintech Futures and concerns Standard Chartered naming their new Hong Kong virtual bank. So the multinational bank has partnered with two national telcos and a travel agency to launch MOX. The new challenger will offer numberless bank cards that store customer information in app, which is very on trend. Mox is currently in beta testing and is expected to launch later this year. And Standard Chartered were one of the first banks to get a virtual banking license from the Hong Kong Monetary Authority, HKMA. And since then, five other banks have been approved. So I think that for me is the headline of this one. It's the the power and the the potential impact of a sort of open and proactive regulator.
00:11:06 · Sarah Kocianski, Ross Gallagher
[00:11:06] S1: Yeah. I mean, they've got... I think they've got eight licenses that have been up for grabs in the first wave. It's really interesting to see watch the HKMA because like many regulators around the world that have their systems based on The UK regulation, so I'd hate to use the word colony, but if you look at the regulators around the world that do have a very similar operating process and system to The UK, is Hong Kong, it's Singapore, it's Australia. So they tend to have a similar way of working. And HKMA has done that, you know, fantastic thing of looking what everybody else is doing, gone that's worked, that's worked. No. Let's not do that. Yeah. And and and and brought that, you know, and and brought that to reality. I think, you know, the fact that they've they've gone quite large and they've gone with eight to start with because we look at Australia, they've got a new licensing regime, but they've only got, you know, three or four that have actually managed to go through the process in the last two years. Really interesting as well to see the way that they're they're testing this as well. So the banks go into a sandbox, you know, to test things out before they go live. So the other bank that's currently in the sandbox is China's z... ZaBank, zed a bank, XiaBank, whatever you fancy. [00:12:13] S0: It's it's one of the three, right?