Where Finance Finds Its Future

The principality of Liechtenstein provides the most welcoming environment on the planet for the entrepreneurs of the token economy. Thomas Nägele, managing partner at the Nägele law firm in Vaduz and a software developer as well as a lawyer, was a member of the government working party that drafted the Liechtenstein Trusted Technology Law (TVTG) or Blockchain Act.He spoke to Future of Finance founder Dominic Hobson about the difficulties of capturing novel, technology-based concepts in law and implementing them in regulation, the need for forms of reintermediation as well as disintermediation in digital asset issuance and investing, and how Liechtenstein can capitalise on its leading position before the Markets in Crypto-Assets Regulation (MiCaR) of the European Union becomes part of the law of Europe. Hosted on Acast. See acast.com/privacy for more information.

Liechtenstein was the first jurisdiction in the world to pass a comprehensive law on tokenization. When the Token and Trustworthy Technology Service Provider Act (TVTG) became law on 1 January 2020, it became possible for issuers to tokenize any asset that exists in the physical world - from real estate, through precious metals and collectibles, to securities such as equities and bonds – with the comfort of legal certainty. Dr Thomas Dünser, director of the office of financial innovation of the Government of Liechtenstein and a member of the Supervisory Board of the BFG Blockchain Founders Group in the principality, told Dominic Hobson how intermediaries, issuers and investors are using the law to make a reality of the coming “token economy.” Hosted on Acast. See acast.com/privacy for more information.

Despite their importance, size and liquidity the global FX markets have remained largely immune to the digital technology revolution. The reasons for this include their global scale, amorphous and fragmented structure and lack of an over-arching regulatory framework, but the principal cause of the lack of innovation is the domination of the FX markets by a small coterie of large global banks. Even the FX services for consumers developed by household name FinTechs have done little more than reduce the margins banks enjoy in one area of their business. In the wholesale FX markets large corporations, asset managers and asset owners continue to pay high prices for FX execution and hedging. This Future of Finance event engages with a group of innovators that have identified ways to challenge the banking oligopoly in FX. Hosted on Acast. See acast.com/privacy for more information.

On the face of it, wealth managers ought to be full of confidence. An ageing population is about to bequeath its accumulated wealth to a younger generation still at work. The tax system is designed to encourage saving but also sufficiently complex to create the appetite for technical advice. Digital technology is cutting the cost of acquiring and servicing customers. Stock markets buoyed by extraordinary monetary policies mean revenues based on ad valorem fees increase effortlessly. Capital requirements are lower than in banking. Yet wealth managers nevertheless find themselves under margin pressure. Clients are less willing to pay fees, especially for active asset management, but are demanding better digital services, access to environmental social and governance (ESG), social impact, crypto-currency, digital asset and other alternative asset classes. They also want increasingly detailed tax and investment advice. A range of new entrants, armed with new technologies and rich customer data, are taking the next generation business the incumbents once took for granted. And clients, who remain more loyal to their advisers than the firms the advisers represent, are more willing to move than ever before. The burden of regulatory compliance is getting heavier. As a result, wealth managers find their revenues under pressure from the shift to passive investing while investment in new technology, compliance and a different type of talent is driving up their costs. As firms struggle to bring revenue into better alignment with costs, the wealth management industry is consolidating, placing further pressure on the cost structures of the firms that remain independent. This webinar, hosted in conjunction with FinTech Wales, will explore how wealth managers are adapting their businesses to margin pressure, mutating competitive threats, rising demands to invest in new technology and data and the difficulty of combining personal relationships with digitised offerings. Hosted on Acast. See acast.com/privacy for more information.

Pension fund trustees in the United Kingdom are now under a fiduciary obligation to manage environmental, social and governance (ESG) risks on behalf of the members of the fund. This is not an easy duty to fulfil.That is partly because pension fund trustees cannot simply choose what they believe to be right in terms of ESG. They must ensure the fund has sufficient assets to pay the promised pensions (in defined benefit, or DB, schemes) or maximise the value of the pension portfolio of the members (in defined contribution, or DC, schemes).Trustees have somehow to demonstrate that they take ESG fully into account, without causing financial detriment to the fund. Needless to say, there is no shortage of investment consultants and asset managers willing to declare that this is a bogus dilemma, because ESG-driven funds will outperform in future years.The “wall of money” ESG strategies are attracting may prove them right, even after taking into account the massive transactions costs of transitioning to an ESG-driven strategy.But proving ESG credentials will take more than ditching managers that buy oil, mining, tobacco and firearms stocks and appointing managers that invest in renewable energy, or adding an ESG fund to the defined contribution pension plan roster, or signing up to the United Nations-backed Principles of Responsible Investment (PRI).It will take data, not just to choose investments but to convince members and regulators that the fund is fulfilling its duty to take ESG seriously.The Pensions Regulator (TPR) has told trustees that they ought to sign up to the Stewardship Code published by the Financial Reporting Council (FRC). Its purpose is to encourage the “responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.”Trustees have since October 2019 had to include in their Statements of Investment Principles verbiage on how they vote at AGMs and how they engage with the companies they invest in – even though the switch to passive investing makes it virtually impossible for some funds to do this.In addition, trustees must (since October 2020 for DC schemes from 1 October 2021 for DB schemes) report how they fulfilled their ESG responsibilities in the previous year, in online, publicly available statements.Although there is no shortage of consulting services and ratings from the major investment consultants, and a wide variety of other products from data vendors, rating agencies, technology vendors and global custodian banks – many of which want asset managers as clients, not asset owners – the extent and quality of the data about ESG factors falls far short of what is required to make informed and convincing public statements.This Future of Finance webinar will explore what ESG data is available, where the most serious shortcomings lie, and what is needed to fix them Hosted on Acast. See acast.com/privacy for more information.

Central Bank Digital Currencies (CBDCs) are happening. On the last day of March 2021, the Eastern Caribbean Central Bank (ECCB) became the first central bank in the world to launch a retail CBDC in a currency union. Now being piloted in four of the member states of the currency union, DCash is being used by consumers and corporates in their day-to-day business. Simon Chantry, chief business development officer at Bitt, the FinTech company which helped the ECCB develop its DCash CBDC, talked to Dominic Hobson about the boldness of the ECCB decision, the development of the project and the benefits for the citizens of the eight islands that make up the currency union. Hosted on Acast. See acast.com/privacy for more information.

What would happen if we could identify and find and grant access to individual bits of data on the Internet as easily as we can reach people and companies through their internet addresses? What would happen if machine learning algorithms could be trained on data sets wherever they were? And what if we could do both these things without breaching privacy or confidentiality? We would have the power to create digital marketplaces in virtually anything, enable governments, companies and people to work off the same set of data with sharing the raw data, speed up and cut the cost of production processes and supply chains, empower everyone to control and get paid for their personal data without having to share it with anyone, and not only accelerate the adoption of data standards but make it much easier to translate between them. In short, we would have a new application of the Internet: the Datanet. Dominic Hobson asked Philip Treleaven, Professor and Director of the UK Financial Computing Centre at University College, London, how close we are to the Datanet. Hosted on Acast. See acast.com/privacy for more information.

It is not surprising that RegTech attracted so much money and so many entrepreneurs as the Fintech start-up boom took off from 2012. Banks, asset managers and insurers were hit by successive waves of regulation in the long aftermath of the great financial crisis of 2007-08, and automation of transaction monitoring and reporting, KYC, AML, CFT and sanctions screening checks, data protection, mis-selling risk, cyber-security and even operational resilience was an easy sell. A future in which regulators were just another node on a blockchain network which hosted everything they needed to know seems more distant today than it did in 2017-18, and the RegTech sector is now consolidating. But as Rupert Brown, CTO at regulatory advisers Evidology tells Dominic Hobson, the hard work of mapping and then standardising regulatory events and data flows is now beginning. Hosted on Acast. See acast.com/privacy for more information.

The global pandemic has left no aspect of life untouched, and FinTech investing is no exception. Jan Arp, founding managing partner at Montreal-based Holt Accelerator, the leading early stage FinTech investor in Canada, told Dominic Hobson, co-founder of Future of Finance, that although the pandemic has reduced appetite for early-stage risk, investors have not lost their enthusiasm for the sector. The health crisis is accelerating the digitisation of financial services, and interest in fraud-busting cyber-security technologies that can protect financial institutions from compliance risk as well as crime. Interest in start-ups aiming to transform insurance is also rising. But Canadian FinTechs would like to see the local Open Banking initiative regain momentum. Hosted on Acast. See acast.com/privacy for more information.

A Future of Finance Case studies: an interview with Matt Addison and Lucy Mullins from StepLadderStepLadder is a fintech start-up currently embarked on a crowd-funding campaign to fuel its growth as a peer-to-peer borrowing and lending platform for first-time buyers. The company is currently growing its membership by 13 per cent a month and already planning to extend its techniques and technology beyond the housing market. Join the founders at our Future of Finance Case Study at 14.00 London time on Thursday May 6 to find out how they raised the money and built the market, and whether their peer-to-peer platform could help your business grow too.To learn more about how StepLadder developed its personality and its business, and raised the funding to grow, join our Future of Finance Case Study at 14.00 London time on 21 April. Founders Lucy Mullins and Matthew Addison will both be there to tell their story and answer your questions. Hosted on Acast. See acast.com/privacy for more information.