Fintech Insider Podcast by 11:FS
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?
00:12:13 · Ross Gallagher, Sarah Kocianski, Valentina Kristensen
[00:12:13] S0: It's it's one of the three, right? [00:12:14] S1: It's one of the three. So I I I like that process as well. I think, you know, HKMA is... Has learned from from other markets. Its use of Sandbox has worked elsewhere. Brilliant. Interesting point about whatever that bank is, day bank, and they had 2,000 people express interest before it even went into the Sandbox. So I think these banks are are are gonna do well in that market. [00:12:32] S3: Well, also what's interesting is seven of the eight pending licenses that you mentioned are backed by Alibaba, Tencent, Xiaomi, and Bank of China. So, you know, again, really, really interesting. It just shows you... I mean, there's Alibaba's kind of been in in... And Tencent as well have been in fintech for for a while, whether it's through, you know, Alipay, WeChat, etcetera. So I mean, it's, it's great to see that that, you know, they're obviously using their their their scale to now try and take advantage of this of this change with the with the new digital banking licenses. Obviously, you've had a couple of players like Revolut and Tandem express interest in going to Hong Kong. I mean, Tandem said in November last year that it would roll out an early adopter program before the end of last year. I don't know if that happened.
00:13:17 · Sarah Kocianski
[00:13:17] S1: I don't believe so because I think Tandem has other things going on at the moment if you look at its recent fundraising round and its purchase of a lender. But just to your point there, Val, I completely agree. One of the really interesting things about Hong Kong and the Hong Kong virtual bank market as well is exactly as you say, how many of them are JVs. So that's not something we've already seen somewhere else. And that says two things to me. One, that the incumbents are aware and then need to, you know, up their game. They're not just gonna let these new guys come in and and and take it away from them. And two, that that this kind of like ecosystem is becoming bigger and bigger and more and more sprawling and more and more players are getting involved. You know, why wouldn't telcos be involved in neobanks? It does kind of make sense when you look at some of the technologies involved. So I think that's kind of almost the unique thing about Hong Kong. I'm really intrigued to see how it plays out.