Stephen: This is your host Stephen Sargeant, another episode of Around The Coin, and we're talking to a futurist, not Brett King, but a friend of Brett King, Emmanuel Daniel, who runs The Asian Banker. Been in banking, started this organization almost 30 years ago, but he talks about the inflection points, What the future of personalization of finance is going to look like.

And what happens with banks, crypto exchanges, fintechs. This is a great conversation. We talk about what the banks need to do. We talk about the super app infiltration in places like Asia. We cover everything down the gambit. And for our futurist episodes, we don't even talk that much about AI, but we do bring it in, in situations where it's going to have the biggest impact.

This is a true futurist, a really great conversation for anyone that's in payments, tech, especially in the crypto, but more importantly, our traditional banker friends that listen to these episodes as well. Hope you like it.

Stephen: This is your host, Stephen Sargeant, the Around The Coin podcast. And we get to talk to almost

another futurist. We talked to Brett King, you know,

one of my first episodes running the podcast, and now we get to speak to Emmanuel Daniel, who's based out of the Asian region when it comes to all the exciting projects you're working on.

Emmanuel, tell us a little bit about yourself and I'm going to jump in. I'm very curious about your background and what you're building in this ecosystem.

Emmanuel: Stephen, it's funny that you mentioned Brett King because I'm, Brett and I are the best of friends and I've known Brett from long before he was a futurist when he was something else. You know, running training and in Singapore, in Hong Kong, and then in, in Dubai. So he's the, he's the, and in fact, I would say this all the time, which is he completed the first of his, you know, banking, the Banking 2.0 book in my house in Singapore. And, and I have the second copy of the book because, you know, his first copy went to his wife and his second copy was to me. And so I have the, the, the honor and privilege of being his his dearest friend. And that was like 10 years before I wrote my book you know, and I always knew that I was going to write something on the future of finance but it took a long time to get my act together.

So I'm the founder of something called the Asian Banker. I started that in 1996. And through that as a platform, I mean, it's part publishing, part research, part consulting and then, and then the events side comes in, you know, the traditional publishing trade type of thing. But what it did is it gave me a front seat view of a lot of the developments taking place, you know, in across the Asia Pacific region.

So when you think Asia, you're thinking at least 18 countries you know, which are liberal and, and, and progressing very quickly. And then we grew into Africa and the Middle East, so I have an office in Dubai, in Beijing and and like that you know, just building the proposition globally. And the funny thing about being from Asia is that whenever an American bank CEO wants to come out and meet with people in Asia, they, the first person they come out to say hello to is me.

So when I published my book, for example the, the, the forward to the book was written by none other than Barney Frank, who, who co authored the frank act and, and Barney is a, is a dearest friend of mine you know, I go and hang out with him in Maine where he now lives and then you ask like, Ooh, how is it that someone out of Asia, you know, gets to plug, plug into what's going on in the U.S.? And the reason is that. If you're a U.S. Journalist or someone trying to meet, you know, Dick Kovacevic or even Jamie Dimon you gotta take a number and wait. But if you're from Asia these people want to meet you, you know, so, so I, I have actually met with you know, Jamie Dimon and, and so on.

So, so I can name drop if I want and that's the process by which I become eventually global. So that's where we are today.

Stephen: That's amazing. Now, was there a group of you like Brett and other people that were sitting around talking one day, talking about the market and where it's going, and then you evolved to Futurist, always understanding the different technologies? And, you know, the evolution of the industry. Like was there like a group meetup of people that come and kind of like, hey, like what do you think about this?

And you know, AI's coming and we're like, is that what happens there or is it just naturally you're in the banking system and it feels like Asia's sometimes ahead of North America and even western culture altogether. So by ,by comparison, are you just a futurist? 'cause you're in the Asia versus in the U.S.

Emmanuel: I think between Brett and don't know anyone else. Oh, the other person is Chris Skinner, who also used to live in Singapore, and he was a salesperson with Unisys or something, one of the older IT companies. And then he became a futurist went back to the UK and all that, and then now he lives in Poland.

Also a dear friend, right? So, it wasn't so much about Asia as it is about individuals. Brett after he, he tried several things, including training, which he, he was running a pretty good training business in, in in Dubai. He took a year out and he went back to Australia, sat, sat at home and, and worked on that first book of his.

So it was us individually You know, coming into our own, and then we find that you know, we are different variations of each other in a way. You know, so Chris has his own way of looking at things, and Brett, his, Brett's message is, you know, a lot to do with automation and the fact that That, that traditional bank brunch doesn't work anymore.

So that's his that is, that's his mantra. And I, by the time I matured I'm a lot into the convergence of traditional banking with crypto. And, and that's one of the reasons why I'm very happy to be on your podcast because I do see that convergence coming together. So I think we, we are just individuals and, and then, you know, we talk to each other a lot and, and with the dearest of friends because.

We've known each other for so long and, you know, and, and then, and then we do exchange notes sometimes, but I think each of us bring a different value that's unique to ourselves.

Stephen: I love it. Do you feel that Futurist kind of got a bad, not a bad, like a stigma to it? Cause I think, you know, when we look back a couple of years ago, a lot of the people that were into NFTs and when the, when the market went down, they turned into Futurists because now they're into AI. It seems like, you know, you have these you know, stakeholders, they've been kind of using that term.

Because they're jumping to every shiny new technology to say that they're early and that they're expert. Have you felt that? Or is that

Emmanuel: Yeah. Even you are spot on on that one. There are a number of people out there who who are not futurists, but we're actually reactionaries. They, they react to the latest, you know, breakthrough, and then, and then start to put in their own little you know, spin on it. And, the funny thing is that as they grow older, they also become cynical about the, the, the, you know, the evolution that's that's coming, you know, like, playing into their face.

Now, so I had to spend some time I became a futurist over a period of time, and it's almost like changing religion. In order to be, before you even think about talking about the future of finance you need to ask yourself, what does being a futurist mean? And you need to start by curing yourself of the present.

You know, you, you cannot be a futurist if you are commenting on today's headlines, today's newspaper headlines. And you cannot be a futurist if all you're doing, trying to do is solve tomorrow's problems. You have to have a much longer timeline in terms of what you're looking at, and you have to have a far more rigorous idea of what transformational or, you know, the inflection points what they should look like.

You know, in terms of news and information today, There are a number of very good people who follow trends in FinTech, and they feed us with lots of information on who's doing what today, tomorrow, and there's a lot of activities. But like you and I, Stephen, we just had this comment before we started, which is that activity for its own sake is just more of the same, more of the same.

And then you start, you start to see You know, stepping back and saying, hey where is this leading what are the inflection points that we need to be looking at you know, when can we call a transformation a real transformation that is a break from the way in which it's not incremental change.

And then on top of that, like I've been running this banking research publishing business for since 1996. You know, every year is something about the future. If you run a conference, it'll be the future of banking tomorrow. And then the next year is the future of banking tomorrow. So that's not future, that's incremental change.

And that's even more about productivity than than a break in you know, the way in which society is configured and all of that. And, and the other thing is that when we take a longer timeline you know, things look different 10 years on, as opposed to next year and the year after, you know, so, so if you look at what we were looking at in 2007 and what we looked at in 2020, there are two different sets of things, issues.

In 2007, the cloud didn't exist. The iPhone was just born. You know, Bitcoin just started. You know, and, and yet, in 2007, we thought that the banking industry was going to blow up because it was more the you know, more the, the U.S. Banking crisis at that time, 2008 which was you know, the, the, the New York Wall Street blow up you know, on the capital market side.

You know, so, so then 10 years later, the capital market doesn't count for anything. Like, like, people even forgot there was a banking crisis you know, in 2008. But all the things that we weren't thinking about, like the cloud and, and, you know, the inception of AI and data processing became huge defining characteristics of the, you know, banking industry by 2015, 2016.

So in the same way, when we look at when we, when we put our finger on what we need to look at today to, to, to figure out what is, what is going to be consequential 10 years from now. Then you start sieving out you know, what's incremental change, and then putting your finger on, you know, what's transformational. So, like, lots of..

Stephen: I want to interrupt you. Can I ask you, you know, when you talk about, you know, looking back at 2007, 2008, What problem were you trying to solve in 1996 when you're like, Hey, I'm standing up the Asian banker, this is, you know, like, what was there a gap where it's like, Hey, no one's coming together and sharing thoughts or everyone's for themselves or, you know, all these people within these organizations are working in silos and we're not having, you know, more holistic conversations. What was something that really kind of triggered you to be like, Hey, we need to come together and have something where we can educate, maybe research and train the industry.

Emmanuel: In 2008 sorry, in 2008 1996, I had, in 1996, I had the whole field to myself. I was Mr. Asia you know, and, and, and on the, and given the fact that I went cross border, I took a plane, went to the next country, the next country, the next country, go to Thailand, go to Vietnam, go to Hong Kong, go to Beijing, go to Korea and each of these countries Have people that thought that they were all transforming the industry all on their own.

Like they didn't know there was someone similar like them in another country. And, and they welcomed me because I was the only guy you know, that was pieing the whole story together. In fact, it was 2001 when I first had a regional awards program and I held my breath and then I said, everybody turn up in Singapore for this awards.

And I held my breath and everyone turned up from each of the countries. They took, they went to the airport and took a flight to come to Singapore to attend my conference. You know, and, and that was the first time that bankers from you know, all the different countries started to come together. So, I think that in that period, because information was not readily available, and the publishing industry wasn't as, you know, developed as it is now, whatever information people got, they were very happy.

In fact, the same thing applies in the U.S., like, you've got lots of, you know, state level, you know, community banks that for the longest time thought that they were the only ones doing what they were doing. Right. And they thought they were even transformational, not realizing that, you know, there are other you know, community banks doing the same thing, or, or the standards were actually much higher than they thought.

So, so that was the, the initial phase at that time. In 2007 I think by that time the industry had matured a lot, there was a lot of information but sieving out what is transformational from what is incremental was was not in there yet. In fact, when banks talked about innovation in 2007, they were talking data processing.

They just come from data warehousing you know, to, to being able to process real time data. And even if they were able to process real time data, the technology still insisted that they batch process real time data. In other words, you don't actually get to see real time data till tomorrow because you got to batch process it at the back end, you know.

And then the batch processing also meant that you have a downtime at the end of the day. So there's no such thing as 24/7. You know, and, and then they were moving from ATMs to call centers in 2007. You know, and, and they thought that was transformational today. They, when they moved from call centers to chat bots, they thought that was transformational.

And then when they put AI into the chat bots, they thought that was transformational. But when you look at when you look at all that in a timeline, actually it was incremental. It wasn't transformational and it didn't change anything about the industry. The institutions still maintain the primary relationship and, and actually the, the, the ballgame of the business was cost management, which was to do the same things at a cheaper and cheaper..

Stephen: That seems like that's been the bank's mandate for a long time.

Emmanuel: Yeah. know, so, so then, but what I'm, what I spend my time now is asking myself, you What happens when the whole intermediation business disintegrates, and where individual transacting with each other does not need a financial institution between them? You know, so that's those are the kind of issues that I'm thinking about.

And there they are very difficult issues because From what I've seen, the intermediation business hasn't gone away. You know, in fact, it's being reinforced by regulators who insist on, on, you know, passing transformation and, and game changing type technologies back to the traditional institutions.

And so the traditional institutions still think that they can ace this game. But the, the, the carpet is being pulled from under their feet. So, so that's what we need to keep our eye on. And that's what, that's why the work that you do on crypto is very interesting. I'm looking at, at which point does the, do the rules of crypto start to creep into traditional banking.

And actually that's where we are right now.

Stephen: And I was going to, that's a, you know, great segue to the Asian banker. What are your, some of your thoughts around how crypto is not even infiltrating. Now, you know, it's funny, you know, crypto exchanges look like more like banks and banks are trying to look more like crypto exchanges now what are your thoughts on, you know, where we are especially someone that's been, you know, talking about innovation, speaking to some of the industry leaders for the last 30 years.

Are we kind of, you know, you know, Michael Groninger, who's you know, one of the co founders of Chainalysis says, you know, one day every company is going to be a crypto company. What are your thoughts along those lines?  

Emmanuel: And I say that in my book. So what I say in my book is that the magic wasn't that Bitcoin went up to 65, 000. The magic is that any one of us can create our own crypto. You know, the whole idea is that we can all create our own tokens. It's a question of whether our friends and family would want to accept the valuation that we give to the token.

And we have the example of Sam Bankman Fried, who came up with his own token, gave it a value of 180 something dollars, and the market accepted it. And, and then he went out and leveraged his token. You know, the things that Sam Bankman Fried did, anyone can do, so that's where we are, right? Right. Now, then the, the, the interesting thing about the rules of crypto, bankers have been pushing back on it and thinking, Ah, no, crypto is not about us.

And then what you see happening in traditional banking is that slowly, because they became digital, that's why Silicon Valley Bank took, you know, happened, which is when you're digital, a bank run is digital. So, you know, you can have a tweet from Peter Thiel on a Tuesday, on a Wednesday you lose 10 billion, on a Thursday you lose more, and then on a Friday you close shop.

You know, and there was never a queue out of your branch. Now when you think about what crypto is, crypto is instantly 24/7. It creates its own liquidity pools. It, it, it is highly not leveraged. It is, you know, it is at power value and it's got applications on that. And, and banking is finding that it's walking into that into that ecosystem itself.

As a bank you know, so the, the, the, the Silicon Valley Bank crisis in, in 2022. It's still evolving. And banks figure out that now, now they have to have the same robustness of a crypto exchange. You know, they, even for their standard deposit you know, bank account, which their deposit liabilities business.

So the, the rules are now seeping in, and so the banking industry is looking over the shoulder of the, the, the crypto industry and saying. Okay how can, how do we operate like a crypto exchange or a crypto platform without being a crypto player, right? And the..

Stephen: I want to interrupt you, what do you think, do you think it will be easier for crypto exchanges to add banking capabilities? We see Kraken and others, you know, filing to get charters, or is it easier for a bank to add in, you know, crypto functionality and the ability to purchase NFTs or things like that?

What do you think? I'm curious of your thoughts on that, like which one would be able to kind of eat up the market share of the other faster do you think?

Emmanuel: The big game changer on that is when when bank deposits become tokenized. When bank deposits become, and they are on the verge of becoming tokenized because the Bank for International Settlements has, has even put out the roadmap, 2025 January is when banks. You know, can recognize tokenized assets on your balance sheet, right?

So, so the roadmap is in place now. And also, the BIS is influencing the banking systems around the world to give up the idea of a retail CBDC, Central Bank Digital Currency, and CBDCs have already been rejected in the U.S. You know, Congress is clear about the fact that they will not tolerate a CBDC proposal from the U.S. Retail CBDC proposal from either the Federal Reserve Bank or the Treasury. But what the Bank for International Settlement is saying now is that central banks should just focus on wholesale CBDC, but tokenize their deposit base. Now, when that happens, the nature of competition for banking changes.

It's no longer the interest rate that you provide on your deposit. It's actually the functionality that you provide on your deposits. Now, when you tokenize your deposits, what can your customers do with your deposits? Are your deposits are your tokenized deposits you know, inter transferable, it's you know, are they, are they interoperable?

You know, are they do they have functionalities that, that are user friendly? You know, things like that. Now that's when you need, we will answer this question, which is will banks be good at it or will the, the current token as platforms, you know, like, crypto.com and, and all that whether they are native to tokenized assets?

The answer right now is that it's half and halfs only because the crypto platforms haven't added the functionality element on their platforms yet. So they, they're as passive as the traditional banks and traditional banks are getting into the game. So, you know, they are both sides come up to the starting line when the functionality element is added to crypto or to di digitize, to, to digitize assets digital assets in general.

We've learned a lot from. You know, from NFTs. You know, the funny thing about NFTs is that it's big in the mind of a lot of crypto people. But actually, as an industry, it's pretty small. You know, it's actually tiny. But it is potentially a benchmark industry. In other words, when you put a token out, How is it valued?

What gives it the valuation? You know, and how do you add functionality to it? We have a lot to learn from how the NFT industry has evolved to where it is right now. You know, and then when deposits are tokenized it just changes behavior totally and I actually make the prediction that it is not inconceivable that tokenized deposits in the banking front will prepare the general public to become so comfortable with tokenized assets that they will actually move away from the banking industry because now they are very happy and you know, they're very comfortable with the whole digital asset space.

That's when it becomes an open field where you know, it's a, it's a new game with new rules and, and it's open for new platforms to, to do, to become the dominant you know, the, the dominant player in that industry. Now..

Stephen: I'm gonna interrupt you. Do you think banks are in trouble? Like, I'm just thinking of my sons. I have a 2 and a 4 year old. Like, they're on Roblox. That's how they're paying for things. We never, as parents, we never take them into the bank. I remember my parents used to take us to the bank and they did do the pot, they have that little tube and they'd send, you know, little balloons in there for the kids.

But like my kids don't experience that. So do you, like, I know Brett and you know, your friend, Brett's like, Hey, banks are in trouble. Do you think banks are in trouble? Like the pace they innovate. It's a little bit scary to think that the next generation is never going to walk into a bank.

Emmanuel: The regulators will protect the banks as far as they can. And actually that's where, that's exactly the point I was coming to, which is that, If banks tokenize their deposits the unintended consequence of that will, that will be, that they will, will be actually educating their customers to become token natives.

And once they become token natives, that's when a, a new set of institutions will, will become the dominant players in that. You know, and, and we've seen already. What happens on the platform industry as it evolved from desktop to mobile and then now we're moving to device independent and each phase has a different set of institutions to them which are native to it.

You know, and, and, and to answer your question, yes when we finally have tokenized deposits. We will have new players who will be native to tokenize these deposits in a way that banks aren't today.

Stephen: What are you seeing in Asia when it comes to like social media apps? I know in Dubai, I think it's Kareem, when I went out there, you can do everything from there. Order food, you know, cars, and we're seeing these massive super apps. I know Asia's not A stranger to that with things like WePay and WeChat. Do you, but we don't see that as much in the United States and in North America and Western world.

What are your thoughts? Because you're traveling back and forth. Are you seeing like, why isn't there a bigger play in North America where people are always on their phones versus in Asia?

Emmanuel: The, Super app phenomenon. And I, I, you know, I I, I spent a lot of time in China. I I was there when, in 2020 sorry, in 2010 when Alibaba and, and 10 and 10 cents. And and WeChat, you know, I, you know, in China we all use WeChat, right? So we're talking to each other and then my staff say, guess what?

You can do payments on it. That was 2010. I still remember. You know, now the thing is that that whole super app phenomenon was unique to China in a very special period in history, where the regulators hadn't come on stream yet, and these two players were able to scale incredibly, and they became the world's defining super apps.

Interesting thing is when they tried to replicate that model in Southeast Asia. And in Southeast Asia, we have the the, the, the Southeast Asian equivalent of super apps like Grab, which is a you know, which is a taxi or rather a ride hailing company, and then which is trying to add functionalities to it.

It became even more difficult because Southeast Asia is highly fragmented. It's, you know, it's What, 12, 15 countries all with different regulation and different social practices and all that. It was very difficult to get super apps going and, and in fact there are probably three or four super app wannabes rather than you know, any defining super app.

And then you go to India. Now the thing is this, the Chinese government today is a lot more competent in in regulating platforms, okay? The 2020 10 to 2014 period, they were just getting their act together. In fact, in 2013, I was having, you know, meetings with the regulators in China, and they were asking me things like, How do you regulate a non bank deposit taking business?

And I said, well, you already have WeChat and Alipay, why are you asking me this question three years later? You know, we all use WeChat. So the regulator was actually just getting the act together. Today, after 2018, when they finally came up with a super regulator in China there is not going to be another Alipay or Tencent you know, having the kind of freedom of access.

In fact, the regulator wants that platform phenomenon to be brought back into the banking industry. They, they, you know, they, they try to do that. Now, the Indians looked at what was happening in China, but because India was a far more regulated country than China was in that period, the Indian regulator you know, unilaterally created its own payment universe, which was to give every Indian national an identity, an Aadhaar, the identity scheme.

And then on that came up the UPI, the Universal Payment Interface. Which then enabled any platform to to use the, the identity program to, to be a interoperable payment platform. You know, so, so, so the, the, the short answer to where we are with super apps is that The Indians Indian regulator you know, stymied the super app approach by making every app highly fragmented.

So, so now you need to think about your app in a fragmented environment where you need to be interoperable with multiple different apps instead of being a super app yourself. So, we now have different working models around the world. And then in the US, of course even the super app players, like, like, you know, Facebook could have, or Messenger could have easily been a super app WhatsApp could have easily been a super app but then it eschewed it because you know, it was, they were afraid of regulation and, and all that.

So where we are is we are on the cusp of waiting to see how the individual will be empowered so that the individual will become the super app. In other words, I decide who I want to have on my platform. And blockchain technology enables the individual to do that. You know, and so then the power of the relationship is taken away from the platform players as we know them today.

But then that puts into question how the VC is going to fund who to you know, who to support, who to scale. You know, so I think that's where we are heading in general.

Stephen: What are your thoughts about regulation? Because you talked a lot about regulation, but you also talked a lot about crypto. We saw the SEC finally allowed, you know, the Bitcoin spot ETF after pretty much being sued into, forced, being forced into it. Where do you see regulations going? What do you see around the world?

Because I know Singapore Hong Kong has emerging crypto regulation. We see what they're doing in the EU with MICA which is being, you know, deemed one of the most comprehensive regulations. Dubai has its own virtual asset regulator. What are your thoughts around the regulation?

Emmanuel: Actually, in some of these jurisdictions, like you take Dubai, Abu Dhabi you know, the the regulator, there are two regulators in, in the UAE. Domestic and the other is international. So Dubai is the DIFC, which is more of a, you know, offshore international regulator. The thing is that in Hong Kong, Singapore, these regulators take on almost like a marketing perspective to their regulation.

They want everyone to be domiciled in their respective jurisdictions. So that they can have a watching brief of who's doing what. So they want the applications to come in so that they can read the applications and understand what it is that you do. And then what they end up allowing to be done on shore turns out to be something very highly restrictive as a result.

You know, what I say in my book was that the thing about regulation is the best way to describe regulation is like when the motorized vehicle was invented and, and popularized with Henry Ford in 1901, was that the original Set of regulation, were all stacked up against the motorized vehicle, you know, because you know, the, the combustible engine car, the, the, the motor car was noisy, was slow.

It damaged the streets. It, it, it frighten the horses. You know, and, and he was uncomfortable and all of that. So, all the regulations were stacked up against the new technology. But then as the new technology became increasingly, you know, when the automobile became you know, faster, quieter, more comfortable didn't damage the streets, the regulations just dropped by the wayside and it became irrelevant to apply them.

So I think that's what we will see taking place in finance. Which is that a lot of the regulation stacked up against the innovations taking place because they attract you know, bad actors, they they, they make it uncertain, they, they make it susceptible for being, you know, defrauded and all that.

But as we become more of a network society the safety and soundness of a financial system is in the network itself. And I think that you'll see a lot of the regulations as we know them today to be falling by the wayside. And then you'll see a new set of regulations coming on to regulate the network effect rather than the platforms themselves.

Stephen: I love it. You talked a lot about, you know, us becoming the super app versus having, you know, these large organizations. We're going to dive into your book. You, but you mentioned something in your book about, you know, you're forecasting the unprecedented personalization. Of the banking service. And then he talked about us being the super app.

Can you kind of combine those two theories and, you know, maybe explain exactly what you meant by this, you know, this euphoria of personalization when it comes to

Emmanuel: Now, in fact, whenever I say personalization, what happens is a bank, the bankers tell me, they say, ah, we know what you're talking about. You know, we, we, we are able to make the customer feel like he's the only customer in the world. You know, and and we, we're getting there, we're, we're almost there.

You know, we make our customers feel great. You know, we, we give, we, we design products around themselves and all that. And then I say to them personalization means that the customer doesn't need you anymore. You know, that, that, that, you know, he's able to you know, execute the transactions that he wants from his own platforms and then decide who he wants to relate with, relate to.

Now, conceptually, that technology already exists, because that's what Bitcoin is, which is you and I can, can send Bitcoins to each other without having a bank you know, intermediary, and, and I, and I only need to give you the code and, and I can have that transferred to you. So, so the peer to peer element in personalization the technology already exists and the only reason it is not being affected is because of the way in which disruptors are being funded.

They are being funded by venture capitalists. who want to insist that everything sits on a platform somewhere. And in fact, they're doing the same thing with AI today. They, they want to see AI sitting on platforms. But AI as a technology is something that we can apply to institutions, to individuals.

We can garner all of the information that we have access to and create our own you know, AGI in a way. So, so conceptually these these possibilities of personalization exist. It's just that we need to go through the process by, by which they're funded, they are regulated and, and the unintended consequences, and I know that, that we see in society.

Now, the example I give about society being able to regulate itself is, is from the dancing industry dancing phenomenon, right? You know, it doesn't matter if you're a ballroom dancer or a salsa dancer or a tango dancer. It doesn't matter. It's just so amazing that wherever you go in the world, in Salsa and Enchufla or a cross body lead, it's the same in Singapore as it is in Washington, as it is in Cuba, as it is in Columbia, and then you look around and you see there's no There's no global authority on salsa movements you know, that approves you know, new steps or something like that, you know, and ballroom, the same thing, you know, you you, you've got all those different moves, and, and then, not only is there no global authority the changes that take place in the industry are quickly absorbed and, and internationalized and globalized.

So when you have new forms of you know, Latin dances like, like Zouk or Kizomba or something, everyone knows what it is. You know, so human society is actually able to organize itself far more profoundly without regulation than we imagine. You know, so I put that at one extreme and I say that that's what we are capable of.

And then, and then put banking at the other extreme and say this is how we're dealing with it today. You know, but technology is going to take us. Somewhere along that route where you know, we, we won't be regulated the way we are today, but, you know, we probably never reach that, that, you know, self regulation utopia.

But, but regulation will exist within the network system by which we interact with each other. And we will get there.

Stephen: And your book is called The Great Transition. The personalization of finance is here. You talk a lot about TradFi, you get into a number of factors, including what you're talking about, maybe now is like consumer behavior as well as, you know, tech one of the concepts though, is like, what do you feel is happening in the financial industry that people were, Missing that you needed to write it.

Like what was missing that you're like, Hey, we need to start talking about this. Everyone's talking about automation and technology, but you know, there's the personalization of finance. Where was the gap that you felt you needed to write this book?

Emmanuel: It wasn't so much a gap as it was a journey. And I, I started by saying, okay, look, I want to write a book. That is consequential about the future of finance. And then, when I was starting to write, I was writing like everybody else. And, and, and I was, I was describing that transition from, you know, Brett King covers this very well, which is, we will come to a day when we will not have any branches.

You know, we will, banking is not something, not somewhere you go to, it's somewhere, it's what you do. All of that is good. But then, when crypto came along, it's like. You know, the ability to transact without an institutional intermediary already exists. So then I saw the gap, which is that where crypto is and where banking was banking is essentially an intermediary business.

In fact, that's the one area that I'm struggling with right now, which is that all through human society human history we've never had the concept of, of a lack of an intermediary you know, so, they, they keep changing and transposing and, you know, and morphing but always there's an intermediary effect.

So, I spent a lot of time studying intermediaries as we know them today. And the biggest culprit in intermediaries today are the venture capitalists themselves. You know, and that's why in banking, for example, I say this thing called inclusive finance you know, it's a lie. You know, and because the whole idea is to onboard millions of Customers and then to monetize them you know, the, the, the venture capitalists not interested in in making finance you know, ubiquitous to the unbanked or, you know, the underbanked there is no goodwill in that. You know, the..

Stephen: Are you, are you shocked by the amount of underbanked and underserved, you know, people in the United States? Especially, I think people think, you know, third world countries, places in Africa. Are you shocked by the amount of Americans that are unbanked or underbanked?

Emmanuel: In fact, the u the un you know, the, the, the World Bank publishes an annual data about the number of people around the world who are un unbanked and, and underbanked, right? And my answer to that, that data that they put out is why did they need banking in the first place? You know, it's not banking that they need.

They, they, they need they need services. They need to remit money. They, they need access to capital. They don't need banking. What you're saying to them is banking is, is this such a desirable service that everybody should have access to. But what is banking? Banking is a highly overcapitalized expensive you know, technology intensive and, and KYC you know, you know, heavy industry, which adds to the cost of the transaction beyond you know, the ability of, of many of the un unbanked and underbanked to afford it.

So that's not what we should be looking at. We should be looking at you know, access to payments, access to capital, access to lending. You know, and then, and then work out what is the best form that is, you know, that they can, can, can give them that access. And there are enough examples now around the world of alternative forms of financial intermediation.

You know, when I look at Bangladesh, for example it started with the microfinance industry and the microfinance industry was about lending money to groups of six women you know, to buy a bicycle so that they could buy fresh vegetables from the next town and and raise their level of income.

That's it. And today, just through that phenomenon alone Bangladesh per capita GDP has now exceeded that of India. And the Indians are actually very upset about that. And this is a country that Henry Kissinger once called a you know, a basket case. Like, like there, there is no hope in 1971, there is no hope for Bangladesh.

And today it's got a per capita GDP that is, you know, above a number of the larger countries, which are which have had a much stronger growth. You know, so, and that's just by providing financial intermediation without banking you know. So, so what the, what the the, the, the global regulators and the global, you know, World Bank, the development banks should be thinking about is not banking, it's you know, it's, it's access to finance.

Now, in terms of the unbanked in the US, I think because there is a large undocumented population in the US that's what we're actually looking at. And on top of that, traditional banking is expensive in the U.S. You know, and so therefore many of the undocumented you know, workforce look for alternative forms and, and in fact, they end up paying even more as a result.

Payday Lending, for example, is basically usury. You know, but, but what is the alternative for them, you know, to, to be part of the formal banking industry? And the formal banking industry in the U.S. Itself is ripe for a transformation. If you take an average payment processing the number of players involved in a, in a, in a normal visa transaction is far more than you know, what's happening in Africa today with, with flutter wave in, in in Nigeria, for example, who are intermediary free you know, and, and all the profit of the transaction accrues to the company directly in Nigeria and not to a listed company in the us you know, so, you know, so there's a lot to there's a lot happening and a lot of vested interests that need to be broken down. And it will, you know, work its way through. And, and then what I also say in my book is this, that the inflection points at which finance actually makes that change only ever happens in times of crisis.

You know, it doesn't happen as a, as a, as a form of intention or design of the, of the current players. You know, if you take Visa, Mastercard yes, they are funding a whole range of new innovations in finance, but what they're trying to do is to absorb them back into the traditional model that they have so that the, the profit continues to accrue to themselves.

You know, and that's why Visa and MasterCard are, you know, incredibly profitable. Even though there are alternative models you know, coming on stream right now,

Stephen: What do you think are some of the challenges, even in this personalization of banking world, what are going to be some of the challenges do you believe are going to come up for consumers?

Emmanuel: challenges for consumers. It's really access to financing to build the wealth that they, you know, that, that they deserve. On that front, actually, it's different challenges in different markets. And right now, around the world, there are critical mass or a momentum in different countries which are being expressed differently.

So you take a country like Indonesia, for example, Which had been a basket case for a long time, and then today it's a 1. 2, 1. 3 trillion dollar economy. It's, you know, at least 240 million people. You know, it's almost two thirds the size of the U.S. You know, and, and it is dealing with its own challenges in its own way which are specific to Indonesia, which are different from the way in which the Chinese are, you know, building their infrastructure, and the way in which the Indians are building the infrastructure.

Yep. Something I've observed from large countries is that that there are many layers of intermediaries. You have the large banks, you know, national banks, and then you have the provincial banks, banks, and even rural banks, rural credit cooperatives and, and, and, and even right down to the last money lender at the bottom of the pile.

The, the whole intermediary business. will be multi faceted you know, but what technology does is it enables anyone who wants to be in the business to plug in and be a player. So, I think that regulators have to take a view of what it is that they want to see happening in their, in their economy.

If What they want to do is to protect the incumbent they do it at a great cost to themselves because the incumbent banking system in almost many, most of the countries around us. Is that as I said, it was it's capital intensive, it's cost intensive and, and therefore the value will not accrue to the economy itself.

You know, so, what I've seen regulators do is that when the disruptors were coming on stream in the early two thousands into the 2000 and tens. The regulator's mindset was to protect the incumbents to, to make sure that all these new technologies accrue back to the incumbents. Now we are in a phase where regulators are comfortable enough with all the changes taking place that they're willing to see, like in many countries today, there are new licenses for digital banks and then also new laws in place to allow digital assets to become mainstream and to be licensed, and so on.

So, so they are, they are willing to accept a multifaceted ecosystem in their respective jurisdictions. And then they will evolve again. So, so the regulators themselves are evolving as they go along.

Stephen: As you focus on the future and you see a lot of the disruption when you talk about the future of finance, fintech, Crypto exchanges, we see a lot of players in the EU that are kind of like non banks, but as you're saying, they're providing all the services that people actually want from their banking institution. What are some of the things, especially as we look into crypto space, that they should bring from the traditional space? Like, I think a lot when I'm, you know, talking to protocols, the word governance comes up a lot, which we think that, you know, the traditional institutions have done a great job at. What are some of the things that, although we're trying to disrupt, that we might want to bring into that framework that may cause us trouble if we don't kind of adopt the traditional mindset.

Emmanuel: Very, very, very, very good point. And I've only got one word for, for, for what we should bring from the traditional players, which is trust. And that's something, I mean, you must give credit to the traditional banks. Their IT managers you know, every single day, they, they worry themselves silly you know, if there's a, if there's a breakdown in surveys, or if, you know, if money gets stolen and stuff like that.

And for everything that banks, traditional banks have done wrong the trust part is what they've that they've secured and they've protected admirably and, you know, just universally. And that's what you want to see transposed from the banking industry that we know today to what whatever it can become in the future.

Stephen: That's such a great answer. I think that's what we're lacking a lot, especially as we get into, as you're saying, personalization and finance, Web3, decentralization, a lot of these decentralized financing protocols, you don't trust that they're not going to be hacked. You don't trust that your money is going to be there tomorrow, because to your point, they haven't built in those systems. They haven't done the audits. They haven't done the pen testing to ensure that they're not going to lose your money. And while a lot of them are like, Hey, like a bank, like, Hey, if we, if we get hacked, you're still going to have your money there. A lot of them go out of business that people don't even know they lost millions of dollars. What are your predictions now for the future of finance over the next 20 years? We just had Grant Blaisdell from Copernica, from Copernic Space, so talking about space assets digital assets going to space we see Filecoin doing a lot of work out there in space and, you know, sending data. What are your thoughts on what the next 20 years looks like?

Emmanuel: Wow. Well, we, we can all throw ideas out there. You know, depending on on you know, what our favorite themes are, right? So, you know, if space is your thing, then, you know, there's so much that we can we can talk about, except that you need triggers. So, when will man you know, take space really seriously, where, you know, your kids or, you know, the kids of my friends you know, will even think about, you know, traveling out?

Whenever there's a crisis when there's a war on planet Earth you know, that's, and when there's, when maybe there's overpopulation or lack of food or something, there's a trigger That takes us to the next level, even if the preparatory work is being done right now, you know. Elon Musk can go out there and prepare all the glass houses in Mars, but, but it only gets populated when people want to go there, you know, and stay there.

So, the thing that I worry about for the next 20 years most, is the effect that personalization will have on society as a whole. When individuals don't need intermediaries, when they become intermediaries themselves and create communities around themselves, in fact, I end my book that way, but I started by writing about the future of finance.

Then I realized that I was actually describing the future of society as a whole. You know, and already we are finding that, you know, in a country like the U.S. Where personal liberties are so important, a sacrosanct, when you take it to its extreme, that's what the U.S. Looks like today. You know, it, it becomes dysfunctional, it becomes you know, in, insecure all of that.

And, and so the, the personalization of finance is also the and grant and grant ment of the personalization of the individual, right, of the, of the value of the individual. So, I think that we already need to start thinking about how society is configured. As a result of giving not just personal liberties, but personal value, personal you know, substance to you know, the personal control over community.

We need new forms of organizing ourselves, new political systems you know, those are the things that I worry about. For where we are today and where we're going in the next 20 years.

Stephen: I love that. I love that answer. Do you think that when you talk about personalization and finance, do you think that, you know, generational change is going to have a big impact on the financial institutions? Like, you're in the U.S., I'm in Canada. There's a good chance that 90 percent of people under 25 that don't already have a house. Are they gonna be able to get into their first house anytime soon. So they're not going to be going for mortgages. They're not going to be worrying about the stock market. They're busy, you know, they're making brand deals on TikTok where they'll make more than the S and P five. Like, what do you think the changing of society will have a big impact?

Where, and I know we kind of touched on it before about the younger generation, not going to the bank. Cause they're not familiar with it. But almost not going to the bank because there's no need for it because they don't need to make these life changing transactions that maybe me and my parents had to make.

Emmanuel: what I say in my book, and this is something that you know, all the people interested in innovation on your podcast would would do well to listen to, is that I say in my book, if the product doesn't change, nothing changed. Okay, so if all the innovations that you're doing in finance or, you know, the technology that you're investing in or you're proposing and all that doesn't change the nature of the product, if the product you're selling is still good old fashioned mortgage, nothing changed.

You know, so when we think about the next generation where property prices are beyond their reach but now they're able to own fractional assets you know, of of of ownership of a, of a piece of property. And they're able to flip it at will. That means, you know, in your bedroom on your mobile phone, you can buy and sell a mortgage as you like.

Then it's no longer a mortgage. It's something else. You need to give it a new name. You need to describe it differently. It becomes a lifestyle choice. No one's going to hang on with a mortgage for 30 years of their life. They, you know, they're going to have five years of this particular piece of property and then another five years of something else.

You know, and they're going to share that and sharing itself, you know, it's no longer just timeshare. It's it's asset. Sharing is digital assets and stuff like that. So, so we need new names. We need new product features. You know, that's what we need to do to be relevant to the next generation.

Stephen: I love it. I love your answers. The trust one was really good. That's a really good answer to the book is definitely something that people

have,

Emmanuel: if the product doesn't change, nothing changes.

Stephen: that people have to get out there and, you know, read this full book. One thing that's interesting though, is like, who do you think? You're traveling all around the world.

You just came back from Africa. You're in Singapore. You're going to the United States. Who do you think is kind of leading the way when they come? I know it's kind of hard to measure a winner versus loser. It's not the Olympics, but if you have to say somebody or a jurisdiction is really understanding the concept of innovation, it's really understanding the concept of the personalization of finance. What jurisdiction comes to mind if I had to, you know, press you right now and say, Hey, name a jurisdiction that comes to mind when you think about, Oh, they're doing something right here. They understand at least the concepts from your book.

Emmanuel: A lot of the innovations in technology as a whole still comes from the United States. You know, so and I, I call it an original state and the rest of us are peripheral states. And, and the rest of us. Get to pick and choose what we want to, you know, apply and, and, and reject the things that we don't want to.

So the rest of us look a lot more organized you know, a lot more deliberate you know, and a lot more directional in terms of what we want to achieve with technology. You know, take AI right now AI could only get to where it is today because of the liberty of information, the freedom of information in the U.S. And China on the other hand can pick and choose what about AI it likes and then not allow you know, generative AI within the country to be used for you know, GPTs because, you know, it will throw up all kinds of information that may be against the state, for example. So. So China is able to pick and choose you know, so, so there are the, the, there are the countries and the ecosystems that originate ideas, and there are the rest of us who, who are able to be applicant, application developers, they, we, we build applications around it and then we can scale and we look good you know, so I think top of the line, a lot of the innovations still come of the U.S. But the countries that perfected and look good are the ones which are of a middle size, okay? A hundred million people and above in terms of population. And there, I would even put in countries like Vietnam, where people are not talking very much about it yet. But its political system is coming together quite well, where they're able to pick and choose technologies that they want to invest in, just like China.

And then, of course, Indonesia, India, and Nigeria these are the countries that are going to look really good, but the fact that they look really good doesn't mean that they are originators of technology. So, you know, and that's how the game will be played you know, going forward.

Stephen: I love it. You had this uninteresting LinkedIn post where you said, whoever controls identity controls finance. And, you know, we've spoken to a lot of L2, Layer 2, you know, projects here. Where do you see, you know, decentralized identity? Is that the main thing for your focus? We know, you know, a lot of the major outlets around the world organizations are talking about decentralized identity.

What are your thoughts there?

Emmanuel: Yeah. In fact, I I, I make this point in my book where we actually moving from the markets economy to the network economy and when we make that transition, we sometimes get confused what it is that we are dealing with. The idea of a decentralized identity is where the network effect enables us to validate each other.

And even there, we don't need intermediaries, we don't need a state to validate us. We're actually validating each other. So the more networked you are, the The more you're a known quantity the easier it is to lend you money to to make a payment to you because you know, your, your network knows who you are.

You're, you're a known quantity. And that is the holy grail of identity in the network world. A lot of work is being put in place right now, and there are different options, different models that going on stream regulators are pushing back on models where any one platform you know, pulls out a lot of personal information on individuals you know, that can, that can put the state at risk as a result.

So whoever's developing identity systems need to figure out how identity doesn't sit on any one platform. It's not a cloud game, it's a network game. So, I think we're still in the formative years of those of those developments. But I think what will probably happen is that, just like, in blockchain at the end of the day, the individual have, will have control over his identity, and that's something I say in my book, and what's devious about identities in the future is that each of us can have multiple identities.

You know, if the state controls you, then you have a, you know, social security number and then that's who you are. But if you control your own identity, you can be different things to different people. So then that creates a whole new set of challenges and, and the way in which society itself needs to be configured you know, so that, that's, those are the issues where I think identity is in, in a transitionary phase.

And we need to see how that will play out. The fact that almost, I mean, all of the identity initiatives are funded by venture capitalists means that they want to be rewarded for their investments in identity systems. Identity should technically be a social good you know, but the fact that the technology is being invested in for profit.

So, that we haven't seen yet. You know, you take Sam Altman's you know, the globe, one, one globe payment, I mean, identity system that he's been trying to generate and that's actually blockchain based. That's web, that's really web free technology. But he's had pushback in several jurisdictions.

Hong Kong said that he wouldn't be allowed to you know, to collect data on Hong Kong residents because there's too much data to you know, that accrues to one identity player. So, so the identity players have to figure out how the individual will continue to have control over the identity, but then that creates the other problem, which is the individual can have multiple identities.

Stephen: That's so true. I think once you can open up some of the identity, it's a lot easier, right? It enters a lot more of, you know, these fintechs in the, in the game. I'm thinking about like even my car insurance. Like I don't want to call another car insurance company. I have to go through all that same information that I had to go through.

But if I could just port them and say, Hey, this is the exact same information this company has. Give me a quote based on this information. That takes us, you know, that process down from 33 minutes. To 30 seconds. And I think once you're able to open up some of those gateways, a lot more, you know, as you said, a lot more personalization can come in and you know, that's really why a lot of us keep a lot of the same applications, the same carriers, the same service providers, the same banks is because we're just, you know, we're just too busy to want to change it.

Emmanuel: Yeah,

Stephen: And lastly what's the... Sorry, you wanted to add

Emmanuel: Was going to say to that, that. And what you've been talking about in terms of you know, having to repeat your information for different applications you're making is that that's the world we know today, which is These players are asking, even the information on your identity that they're asking for, are static information.

Which is, they're asking something about you which is historical. You know, you were born in 19 whatever, you know, and that's historical information. But the information that enables them to make decisions is It's actually, you know, real time information. It's future forward type of information. And that's what they need to be capturing, and they're not, you know.

So, so, you know, so we've got a transition to do on that front, yeah.

Stephen: What's the future? What are you looking at? Like, and I know it must be hard for you to kind of like, obviously AI is a conversation. I'm glad we didn't even talk too much about AI because I love when we can talk about the reasoning for AI based on what's currently happening and what we see in the next few years. What's the technology that you're looking closely at? I think it's hard to deny that AI is gonna, you know, I think even bolster blockchain, you know, with deep fakes and everything coming on in AI and changing my face and putting it on somebody else's in real time looking video. Blockchain is gonna be pretty important in the emergence of AI.

But is there any other technology that we haven't thought about?

Emmanuel: The one technology that I'm putting my finger on is device independence. So we've made that transition from desktop to mobile, and I'm very curious. how device independence will play out because once you put AI into everything around us, We already have AI in the autonomous vehicles, so, you know, they have a, you know, they have a function of their own, they can park themselves, you know, things like that.

So that takes us away from our incredible dependence on the mobile device today, you know. So, So I look at robotics, I look at autonomous vehicles, I look at you know, technology that sits on things like refrigerators and, and you know, stoves and stuff. You can put AI in so much around us that, that we become less dependent on the mobile device that we, that we are, that we are accustomed to today.

So that will be the next transition. There's a lot happening on that front. And then, you know, the thing is that when will the inflection point come is when you're able to deploy AI right into the devices themselves directly. And that will, you know, that will like, not happening for a long time and then suddenly it, you'll see a huge breakthrough and it just changes the way in which we, we live.

Stephen: For people that are working at the banks, you know, I was listening to a podcast earlier today, and this will be our last topic, where they're talking like, you know, people are begging, manufacturing companies are begging, you know, promoting, advertising, for people to come work in the factories again, like they did in World War II. Do you think the banks are going to be at that kind of static point as well, where it's like people don't want to work in factories anymore when they can make 80, 000 from Nike to kind of do a funky dance online? Are the banks going to end up like that? Do you think like the banks are nearer to that than we think, where they're going to be, you know, spending a lot of money to get people to come want to work at the bank again?

Emmanuel: That only applies if you know, wealth management or customer centric relationships at a personal level, it's important out outside of that 90% of banking is automatable. You know, 90% of the, the transaction in banking do not need human intervention. You know, and we see that already in payments.

A lot of the KYC and you know, and, customer processing business is now highly automated. So, and not only is it automated AI can help make meaning of the transaction. That is, see patterns that we don't see. So, so not in banking. In fact, even in even in factories in manufacturing the one, the reason manufacturing is going back to developed countries is because today, and you, you see this happening in automobile manufacturing, where the French car makers like Renault are now making cars back in France because there's no one in the factory. It costs the same manufacturing a car in China as it is in France because the labor costs are minimal you know, and there's a high level of automation. So, It doesn't matter where you are in the world.

Manufacturing can come back to where you are. So I think that's really the phenomenon that's taking place. And that's why Tesla is as big in Texas as it is in Shanghai, and then now in Mexico, and so on. And that's more to do with tax breaks and market access than it has to do with labour.

Stephen: I love it. What's one last line that you want to leave the people with listening to this episode?

Emmanuel: You've been really good about you know, bringing out the the, the way to think about the future. So I think the one last line really is that it's more important to know how to think about the future than to know you know, what the future will be exactly.

Stephen: I love it. I love it. Where's the best place for people to reach you? You're very, you're more popular than me on LinkedIn, which I'm a little bit jealous of. Uh, But where's the best place for people to reach you?

Emmanuel: Not as much as I want to be, and I'm curious about that too, but emmanueldaniel.com is the best place because That's where I aggregate everything I do, both my personal travels my future books on things like civilization and, and the work I've been doing in finance. So all of that, emmanueldaniel.com.

Stephen: I love it. I love that you didn't spend the whole time talking about AI and you just kind of intricate it into certain discussions.

That's a true sign of a futurist in my opinion. Emmanuel, thank you so much. This was one of my favorite episodes.

Emmanuel: Stephen, it's been great. Thank you so much. Yeah.