Last week we held the Future of Money Summit, a day of ThinkIns examining the rapidly evolving financial landscape and the implications of change for business, society and government
We really hope that you were able to join us at our Future of Money summit last Thursday. Thanks to our brilliant speakers and your insightful contributions, the day was both enjoyable and enriching. A reminder that all the sessions are now available for you to watch back at your leisure or share with a friend. You’ll find them in here in the “Sessions” tab.
Here are some of the key takeaways and the story lines we’re interested in pursuing further. Any thoughts, comments or questions, please do let us know at email@example.com. We’d love to hear from you.
Session 1: Keynote with Ann Cairns
- We shouldn’t be asking whether the cashless tipping point has arrived – it’s already here. There has been a massive spike in digital payments since the pandemic began, which has accelerated the trend.
- Open banking is happening all over the world and the growth in recent years has been rapid. Globally, voice-activated payments alone are expected to reach $40 billion by 2022.
- Newer alternatives to cash have their own issues. Bitcoin is risky and is actually more of an asset class than a payment instrument: it’s too volatile to be the latter. In contrast, “stablecoins” or central bank cryptocurrencies might end up being the step-change innovation.
- The migration to digital and away from cash is a risk to some people. There’s a tension between financial innovation and fairness.
- More than 1 million people in the UK are “unbanked”, meaning they don’t have access to bank services, and 12 million more have poor connectivity. Unless processes to foster inclusion are put in place, marginalised groups of people will suffer. For example, 35 per cent of women do not benefit from full access to financial services.
Session 2: Who are the winners and losers of a cashless society?
With Devie Mohan, Huw van Steenis and Eswar Prasad
- How do we avoid leaving anyone behind as economies migrate away from cash? By increasing both trust and education.
- One attendee – Dave Birch – told us he taught his kids about money using the computer game World of Warcraft, where they could “corner markets, exploit information asymmetries and rig the markets for magic swords.”
- Where is the UK on this journey? Before the pandemic, it was already moving towards a “cash lite” economy. But Covid-19 has accelerated progress by up to four years.
- We need a more coordinated approach to ensure that people with bad connectivity and in vulnerable groups are protected in the wave of this accelerated time frame. We need a national broadband plan, for instance, and more small businesses trading online.
- In the midst of progress, we have to remember that half the world’s population did not make a digital transaction last year. We can’t forget that for many, especially in disaster zones, cash is critical.
- In Britain and elsewhere, central banks will be the driving force in ending physical cash. But the state may actually have to support a cash economy if it becomes economically unviable.
Session 3: Keynote with Bill Winters
- Financial reforms will revolutionise the concept of ownership.
- In the future there will be hundreds, maybe millions, of digital assets. You could take a building and digitise it and you could own a share of that building for just a penny.
- Central banks are launching their own digital currencies. But in countries such as China, do governments have an ulterior motive? Do they want the data that such technology will give them on users?
- Whatever the truth, currencies issued by central banks will become a key geopolitical topic in future years.
- In the private sector, if banks stand still they will be replaced by fintech companies that know how to satisfy customers.
- Standard Chartered is spending $1.6 billion on innovations including new technology. If its name was Revolut, everyone would call it a Fintech.
- Banks have to accommodate themselves to delivering products through platforms because this is what the customer wants.
Session 4: What’s next in the fintech revolution?
With Thomas Cheesewright, Dan Hegarty, Anna Maj and Charlotte Wood
- Fintech innovations are evident everywhere from the banking sector to sustainable investment. In the property space, fintech is helping customers take out mortgages with less effort and more flexibility.
- Fintech enables investors to understand their carbon footprint in much more detail than before, according to Charlotte Woods from Schroders. It’s also opened the door to truly personalised investments and is driving a new wave of “robo advisors.”
- But the application of open banking data raises privacy concerns. If a banking app can advise you not to buy a t-shirt because it’s calculated you might not be able to pay your electricity bill, it will need a “360 degree” view of your finances: this brings with it dangers.
- Fintech applications have been massively adopted by a generation of older people during the pandemic. The fastest growing group for PayPal is the over 50s.
- There are dangers – however – in removing all the friction from online payments, mortgages and other transactions. We might not want to let someone buy a house in under a day. Regulators should step in when technology appears to be creating the opportunity for financial harm.
Session 5: Wealth: the case for a wealth tax (or for other radical thinking)
With Dr Arun Advani, Deborah Meaden and Martin Wolf
- British attitudes to inequality and government spending have fundamentally changed in the last two decades, with more people now concerned we have become an unequal society. Covid-19 has opened the door to previously-radical solutions that would have been off the table before the pandemic.
- According to Martin Wolf, the FT’s Chief Economics Commentator, the government should reform the tax on lifetime gifts if they really want to shake up the taxation system. Our tax system is riddled with inconsistencies – no-one knows what it’s trying to do. Wolf also suggested reforming the “grotesque” and regressive council tax.
- Britain already taxes wealth through inheritance tax, capital gains, and through stamp duty. However, that hasn’t stopped the total value of wealth in the UK as a share of the economy more than doubling over the past 30 years, strengthening the case for new measures.
- Furthermore, actual wealth disparities are even more unequal than official figures suggest: because of the ability of the super-wealthy to hold weath where it’s not obvious.
- Covid-19 is a chance to think about how we live, in a much bigger way, according to investor and entrepreneur Deborah Meaden. Wealthy people should want to contribute to their society, but many don’t like the way taxes are spent – and think money is wasted. Government spending must become more transparent to increase trust.
Session 6: Corruption: are financial regulators fit for purpose?
With Robert Barrington, Sue Hawley and Lord Prem Sikka
- The UK has been a fermenter of corruption abroad, with devastating consequences, said Robert Barrington, former head of Transparency International. He added that the global anti-money laundering system was not fit for purpose. In the UK, banks are above the law, according to Sue Hawley of Corruption Watch.
- After Brexit, we should be asking what kind of country we want Britain to be. Do we strengthen our own regulators, or weaken them and pack them full of cronies? It’s a real turning point.
- “Auditors are part of the problem, rather than the solution”, Baron Prem Sikka said. They have a duty of care to their corporate client, not to wider society. And current legislative changes – such as the Financial Services Bill being debated in parliament – will potentially put up further barriers to parliament’s ability to oversee the financial industry, he added.
- Regulators are conflicted: they are trying to promote and support industries on one hand at the same time as protecting the public from malpractice. Twenty-two out of twenty-five regulators are outside the UK FOI net.
- The BCCI case – where the failed bank was allegedly connected with Al Qaeda – shows that the government has stymied investigations into financial crime.
Session 7: Debt: do we want more of it or less?
With Aimie Chapple, Selina Flavius, Eric Lonergan and Emre Tiftik
- Government debt is very different from private sector debt. The UK government can borrow at close to 0 per cent. We should use that debt to borrow more and create more value, Eric Lonergan, the co-author of Angrynomics said.
- There are extraordinary opportunities to use borrowing to make transformations based on greening and “levelling up”. When we can make large capital investments after borrowing at negative interest rates, that’s a gift.
- In terms of personal debt, the rug has been pulled from underneath people: financial institutions owe a duty of care and to treat those in debt with respect.
- The UK has bought back a lot of its debt – the Bank of England owns 25-40 per cent of our debt; leaving it in a better position for greening the economy – environmentally and regionally at negative interest rates – than some might think.
- Lonergan argued that the government should use the proceeds of a debt issue to set up an endowment fund like Norway, with a clear constitution and clear oversight. The fund would generate a 4-6 per cent return, and give a stake in the fund to a large proportion of the UK population with very few assets.
- The panel agreed: like cholesterol, we need more good debt – and less bad debt.
This Summit was in partnership with