Latest / Startup & Tech News from Germany, Austria, and Switzerland by Startuprad.io™ / DACH Fintech Review 2024: A Decade of German, Austrian & Swiss Digital Finance
Transcript
- WEBVTT 1 00:00:05.759 --> 00:00:08.660 Welcome to start up rad dot io, 2 00:00:09.519 --> 00:00:13.360 your podcast and YouTube blog covering the German startup 3 00:00:13.360 --> 00:00:17.195 scene with news, interviews, and live 4 00:00:17.255 --> 00:00:21.095 events. Hi, everybody. This is 5 00:00:21.095 --> 00:00:24.935 Joe from start up rate dot o, your startup podcast and YouTube blog from 6 00:00:24.935 --> 00:00:28.294 Germany. Today, I'm bringing you incredibly the 7 00:00:28.294 --> 00:00:31.970 10th edition of our 8 00:00:31.970 --> 00:00:35.590 annual fintech review by stutterbreak. Io. 9 00:00:36.210 --> 00:00:39.970 This milestone edition marks a decade of 10 00:00:39.970 --> 00:00:43.410 exploring the dynamic fintech landscape, offering insights into 11 00:00:43.410 --> 00:00:47.085 groundbreaking innovations, emerging trends, and 12 00:00:47.085 --> 00:00:50.925 the challenges shaping the industry. For 10 13 00:00:50.925 --> 00:00:54.605 years now, we have accompanied you during the holidays, and 14 00:00:54.605 --> 00:00:58.410 I'm happy to say many frequent guests came back. 15 00:00:58.890 --> 00:01:02.730 This year's review is especially significant as it reflects on 16 00:01:02.730 --> 00:01:05.870 the evolution of Fintech over the past 10 years 17 00:01:06.410 --> 00:01:10.090 while addressing the transformative developments of 18 00:01:10.090 --> 00:01:13.505 2024, namely AI and the regulations, 19 00:01:13.645 --> 00:01:17.185 especially DORA and indirectly the AI act 20 00:01:17.405 --> 00:01:20.925 from the rise of AI powered solutions and sustainable business 21 00:01:20.925 --> 00:01:24.284 models to the increasing convergence of digital assets and 22 00:01:24.284 --> 00:01:28.110 traditional banking. The Fintech sector continues to redefine 23 00:01:28.170 --> 00:01:31.310 itself in the face of economic and technological 24 00:01:31.690 --> 00:01:35.130 shifts. In this comprehensive review, we'll bring you 25 00:01:35.130 --> 00:01:38.890 exclusive insights from industry leaders, in-depth analyzers of 26 00:01:38.890 --> 00:01:42.475 key trends, and thoughtful predictions for the year ahead. 27 00:01:42.695 --> 00:01:46.135 Whether you are an entrepreneur, an investor, an 28 00:01:46.135 --> 00:01:49.495 industry enthusiast, an analyst, this 29 00:01:49.495 --> 00:01:53.050 episode is designed to equip you with the knowledge to navigate the 30 00:01:53.050 --> 00:01:55.870 Fintech ecosystem in Germany, Austria, and Switzerland 31 00:01:56.570 --> 00:02:00.090 with confidence. Join us as we celebrate a 32 00:02:00.090 --> 00:02:03.850 decade of Fintechs join us as 33 00:02:03.850 --> 00:02:07.310 we celebrate a decade of Fintech excellence and look forward 34 00:02:07.505 --> 00:02:10.805 to the opportunity and challenges that lie ahead, 35 00:02:11.185 --> 00:02:14.785 let's dive into the innovations and narrative shaping the 36 00:02:14.785 --> 00:02:18.005 financial future of the DACH region and beyond. 37 00:02:18.785 --> 00:02:22.400 Therefore, I would like to welcome Paolo, the global 38 00:02:22.400 --> 00:02:26.160 research leader, banking and financial markets, best selling 39 00:02:26.160 --> 00:02:28.100 author as well as fellow podcaster. 40 00:02:33.055 --> 00:02:36.895 Most likely, I'm an aficionados, and, I just like it. So 41 00:02:36.895 --> 00:02:40.495 I'm happy to be here this year too. I would also like to welcome a 42 00:02:40.495 --> 00:02:44.035 frequent guest, professional board member, strategic 43 00:02:44.255 --> 00:02:47.775 adviser, and the cofounder of the Fintech Forum, Frank 44 00:02:47.775 --> 00:02:51.340 Schwab. Thank you. I'm fine. How are you? I'd like to 45 00:02:51.340 --> 00:02:54.160 welcome back Luca Finani, 46 00:02:55.020 --> 00:02:58.700 the CEO and cofounder of Frankfurt based Fintech 47 00:02:58.700 --> 00:03:02.160 Exelon. Hey, Jan. Hey. It's great to be back. 48 00:03:02.675 --> 00:03:06.055 And I would like to welcome for the first time, Pascal 49 00:03:06.515 --> 00:03:09.875 Lauria, CEO and cofounder of 50 00:03:09.875 --> 00:03:13.655 Covia as well as coin analyst. Hi, 51 00:03:13.955 --> 00:03:17.490 Jorn. It's a pleasure. Let's start with the first 52 00:03:17.490 --> 00:03:21.190 question. What are the biggest challenges Fintech companies 53 00:03:21.410 --> 00:03:25.170 faced in 2024, and how are they 54 00:03:25.170 --> 00:03:28.905 adapting to these challenges? So what we 55 00:03:28.905 --> 00:03:32.665 see over not only in 2024, but over the last 56 00:03:32.665 --> 00:03:36.205 couple of years that let's say the 57 00:03:36.745 --> 00:03:40.045 spirit of the beginning is over the 58 00:03:40.739 --> 00:03:44.280 economic slowdown and reduced finance 59 00:03:44.819 --> 00:03:48.500 can be experienced. So we have seen another 60 00:03:48.500 --> 00:03:52.099 couple of Fintechs closing the door. And, 61 00:03:52.500 --> 00:03:55.159 therefore, for the surviving ones, 62 00:03:55.995 --> 00:03:59.675 it's very important, to 63 00:03:59.675 --> 00:04:03.055 get the funding or to enter a stage 64 00:04:03.194 --> 00:04:06.175 where they actually become profitable. 65 00:04:07.780 --> 00:04:11.459 And and therefore, what we have also seen a lot of 66 00:04:11.459 --> 00:04:15.000 Fintech starting to streamline their operations. 67 00:04:15.379 --> 00:04:18.120 You we see, more and more, 68 00:04:19.220 --> 00:04:22.775 layoff of staff, in order, let's 69 00:04:22.775 --> 00:04:25.835 say, to, be able, 70 00:04:26.535 --> 00:04:29.914 to survive. So I I would argue 2024 71 00:04:31.335 --> 00:04:33.914 was for many Fintechs a tough year. 72 00:04:35.190 --> 00:04:39.030 And, probably as long as the interest rates 73 00:04:39.030 --> 00:04:41.850 are as high as they currently are. 74 00:04:42.950 --> 00:04:46.410 Investors, have much more options, 75 00:04:46.870 --> 00:04:50.634 let's say, to invest their monies. And therefore, let's 76 00:04:50.634 --> 00:04:54.155 say, the Fintech investments and the 77 00:04:54.155 --> 00:04:57.294 Fintech funding, will probably 78 00:04:58.074 --> 00:05:01.914 stay at a significant lower level compared to what we 79 00:05:01.914 --> 00:05:05.300 were used, before. That's 80 00:05:05.300 --> 00:05:09.140 definitely a tough question that you're asking right there. So I would 81 00:05:09.140 --> 00:05:12.600 say probably you can summarize it specifically, 82 00:05:13.220 --> 00:05:17.005 with a with a view on on lending. I would say it was 83 00:05:17.005 --> 00:05:20.605 a combination of a changing macro environment, which was certainly pretty 84 00:05:20.605 --> 00:05:24.305 challenging for a lot of lenders because, you know, we've had 85 00:05:24.365 --> 00:05:27.965 significantly higher interest rates since 2022. And, 86 00:05:28.445 --> 00:05:31.950 I mean, the expectation was that the rates will be coming down fairly 87 00:05:32.030 --> 00:05:35.870 quickly. They didn't. And, in our estimates, they won't be 88 00:05:35.870 --> 00:05:39.230 coming down very quickly as or as quickly as many people 89 00:05:39.230 --> 00:05:42.750 expect. So that means cost of funding is pretty high for a lot of 90 00:05:42.750 --> 00:05:46.270 lenders. And, that was certainly something that was also one of 91 00:05:46.270 --> 00:05:50.005 the one of the challenges, I would say that had 92 00:05:50.005 --> 00:05:53.365 its implications, A, on equity 93 00:05:53.365 --> 00:05:56.965 fundraising, but also B, in general, if you're, you know, a lending 94 00:05:56.965 --> 00:06:00.805 fintech, then basically trying to manage your cost of funding and 95 00:06:00.805 --> 00:06:04.500 cost of capital. And so we have 96 00:06:04.500 --> 00:06:08.099 seen that pretty much this combination of a tough 97 00:06:08.099 --> 00:06:11.539 macro environment and then also the difficulties of 98 00:06:11.539 --> 00:06:14.979 actually raising additional equity capital, in 99 00:06:14.979 --> 00:06:18.525 particular for debt facilities. That 100 00:06:18.525 --> 00:06:21.885 was one of the main issues that affected kind of the 101 00:06:21.885 --> 00:06:25.105 ability to lend at affordable rates for a lot of 102 00:06:25.885 --> 00:06:29.500 balance sheet lenders or lending Fintechs. And 103 00:06:29.560 --> 00:06:33.340 that was kind of the overarching theme that, you know, 104 00:06:33.639 --> 00:06:37.100 that we see and that we work with a lot of these lending 105 00:06:37.160 --> 00:06:40.919 platforms to rethink how to actually build 106 00:06:40.919 --> 00:06:44.655 alternative funding sources, how to actually access new ways 107 00:06:45.135 --> 00:06:48.175 of capital in order to be able to continue lending and to be a bit 108 00:06:48.175 --> 00:06:51.855 more resilient. And, that was that 109 00:06:51.855 --> 00:06:55.475 is certainly also one of the things or one of the themes that we expect 110 00:06:55.935 --> 00:06:59.075 to to be continuing, when we enter 2025. 111 00:07:00.200 --> 00:07:03.560 And I mean, that is also accompanied 112 00:07:03.560 --> 00:07:07.320 with, you know, VCs or or investors expecting a 113 00:07:07.320 --> 00:07:10.680 clear path towards profitability, and reduced 114 00:07:10.680 --> 00:07:14.235 dependency on on essentially equity fundraising. So that's what we've 115 00:07:14.235 --> 00:07:17.835 been seeing. And, yeah, that was a pretty tough environment to 116 00:07:17.835 --> 00:07:21.595 operate in, especially in in all aspects, you know, 117 00:07:21.755 --> 00:07:25.595 within Fintech lending verticals that we've seen. And, 118 00:07:25.755 --> 00:07:29.289 yeah. So there there is a lot of, a lot of 119 00:07:29.289 --> 00:07:32.650 movement going on and, definitely, what we see a lot of 120 00:07:32.650 --> 00:07:36.349 different approaches on how to how to mitigate this going forward. 121 00:07:36.729 --> 00:07:40.169 Well, I think it's a peculiar challenge in the sense 122 00:07:40.169 --> 00:07:43.655 that we are coming to the realization that Fintech innovation 123 00:07:44.035 --> 00:07:47.395 is making a big impact. And that 124 00:07:47.395 --> 00:07:50.535 comes through the innovation of artificial intelligence. 125 00:07:51.155 --> 00:07:54.590 It was on everybody's desk, the discussion about the 126 00:07:54.590 --> 00:07:58.190 generative AI, and now we're moving from large language 127 00:07:58.190 --> 00:08:02.030 models to larger reasoning models. The only issue with 128 00:08:02.030 --> 00:08:05.870 this one is that, this type of technology is owned by 129 00:08:05.870 --> 00:08:09.155 a few big companies that basically, 130 00:08:09.935 --> 00:08:13.395 demands others to use their services, which comes with 131 00:08:13.775 --> 00:08:17.535 sort of complexities also for the Fintech. So they're not owning the 132 00:08:17.535 --> 00:08:21.240 AI percent anymore. They need to rely on bigger ones. There 133 00:08:21.240 --> 00:08:25.000 is a pricing point. There is also a privacy point that has to be 134 00:08:25.000 --> 00:08:28.539 considered. So this is to me a shift in the way 135 00:08:28.759 --> 00:08:32.539 technology will be deployed from the fintechs 136 00:08:32.919 --> 00:08:36.654 to the bank. So it will be interesting to understand how the ecosystem 137 00:08:36.875 --> 00:08:40.475 around the generative AI will take shape because that will influence 138 00:08:40.475 --> 00:08:44.095 the configuration of the Fintech world going forward. 139 00:08:44.875 --> 00:08:48.394 So, Paolo, you think AI regulation will 140 00:08:48.394 --> 00:08:52.190 have impact on Fintech? Well, 141 00:08:52.190 --> 00:08:56.029 regulation always have an impact, on, the way the 142 00:08:56.029 --> 00:08:59.810 Fintech operate because in the end, it dictates 143 00:08:59.870 --> 00:09:03.709 the boundaries, under which the banks have to work and the 144 00:09:03.709 --> 00:09:06.635 Fintechs that become banks have to operate. 145 00:09:07.894 --> 00:09:11.334 On the one side, when regulation is too clear, sometimes, is 146 00:09:11.334 --> 00:09:14.935 too, if you like, restrictive, it's too precise in a world 147 00:09:14.935 --> 00:09:18.635 that requires flexibility. On the other side, the way regulation 148 00:09:18.695 --> 00:09:22.140 is not there yet, there is sort of, a gap 149 00:09:22.140 --> 00:09:25.920 between, the art of possible as many are not be comfortable 150 00:09:26.060 --> 00:09:29.440 to put down their investments, if, it is not clear 151 00:09:29.820 --> 00:09:32.720 what will be allowed and what will not be allowed. 152 00:09:33.635 --> 00:09:37.255 So I think that there has to be a new rethinking 153 00:09:37.315 --> 00:09:40.995 about how regulation is impacting financial services, at 154 00:09:40.995 --> 00:09:44.535 least thinking first principles instead of thinking roles. 155 00:09:44.915 --> 00:09:48.535 Because many things are really happening in the realm of technology. 156 00:09:49.550 --> 00:09:52.990 And I'm I'm I remember fearing that, you know, too narrow, if you 157 00:09:52.990 --> 00:09:56.510 like, rails might not 158 00:09:56.510 --> 00:10:00.190 allow the innovation to to be competitive, especially in the 159 00:10:00.190 --> 00:10:03.905 European continent. At the same time, you know my work literature. 160 00:10:04.125 --> 00:10:07.265 I'm an institutionalist. I do believe that regulation 161 00:10:07.485 --> 00:10:10.845 is an engine for innovation as long as, it 162 00:10:10.845 --> 00:10:14.545 corresponds to the key principles asking for transparency and accountability 163 00:10:14.960 --> 00:10:18.800 and leaving then the industry somehow to identify what is the best business model to 164 00:10:18.800 --> 00:10:22.260 work with. Well, we have several 165 00:10:22.400 --> 00:10:25.540 challenges. Number 1, of course, cybersecurity threats are 166 00:10:25.920 --> 00:10:29.644 increasing. Right? So, you might have heard about 167 00:10:29.704 --> 00:10:33.545 the Evolve Bank that has been attacked by ransomware. Right? So 168 00:10:33.545 --> 00:10:37.324 this is this is definitely something we, especially as start ups and the Fintech 169 00:10:37.464 --> 00:10:41.040 side, have to, you know, watch for and be more 170 00:10:41.040 --> 00:10:44.020 cautious about. Right? Security is a very important topic. 171 00:10:44.560 --> 00:10:47.620 Regulatory compliance is a big thing. So this is this year, 172 00:10:48.160 --> 00:10:52.000 NIST 2, DORA are becoming, you know, set in 173 00:10:52.000 --> 00:10:55.460 stone, and companies are the big fintechs 174 00:10:56.095 --> 00:10:59.695 needing to apply Dora and NIST 2, you 175 00:10:59.695 --> 00:11:03.215 know, standards. So if you want to play in the same 176 00:11:03.215 --> 00:11:06.975 field as a as a fintech, you need to, you know, make sure that 177 00:11:06.975 --> 00:11:10.275 you kinda keep with the same standards, right, even with the traditional 178 00:11:10.740 --> 00:11:14.200 players. So this is definitely very big resilience in communication, 179 00:11:15.300 --> 00:11:18.660 for example, stuff like that. There's a lot of things that we need to worry 180 00:11:18.660 --> 00:11:22.420 about. Well, data management issue is a big thing as well. Like, 181 00:11:22.660 --> 00:11:26.285 Fintech struggle with data silos. Right? They need to connect all those 182 00:11:26.285 --> 00:11:30.125 data, and that is a big challenge. And, 183 00:11:30.125 --> 00:11:33.805 of course, to be honest, we have intense competition. So it's not 184 00:11:33.805 --> 00:11:37.630 like an easy walk anymore. So we're tough 185 00:11:37.630 --> 00:11:41.170 competition. I think these are the main challenges, to be honest, in 2024. 186 00:11:41.949 --> 00:11:45.410 AI and machine learning have been definitely the buzzword 187 00:11:46.029 --> 00:11:49.790 of this year. So how are artificial intelligence and 188 00:11:49.790 --> 00:11:53.565 machine learning transforming, especially the customer experiences 189 00:11:54.105 --> 00:11:57.865 in Fintech and banking? Yeah. AI and machine learning, 190 00:11:57.865 --> 00:12:01.625 that was kind of the buzzword of 2024. Right? I mean, so 191 00:12:01.625 --> 00:12:04.950 we've we've seen a broader use of AI both 192 00:12:05.190 --> 00:12:09.030 internally and externally, which is pretty interesting. We as 193 00:12:09.030 --> 00:12:12.470 well, we are a big, we're a big user of, of of 194 00:12:12.470 --> 00:12:16.150 generative AI, particularly internally, to actually 195 00:12:16.150 --> 00:12:19.770 increase productivity, on on, particularly 196 00:12:20.070 --> 00:12:23.505 on coding and, on essentially 197 00:12:23.644 --> 00:12:27.485 summarizing content, creating content. And, but 198 00:12:27.485 --> 00:12:31.325 we've seen also some elements around customer support, where you 199 00:12:31.325 --> 00:12:34.820 have, you know, AI enabled kind of chatbots to be 200 00:12:34.820 --> 00:12:38.233 reachable 20 fourseven and just to improve kind of the 201 00:12:38.233 --> 00:12:41.640 the customer, the customer relationships, borrower 202 00:12:41.700 --> 00:12:45.480 relationships, and the like. And we've also seen, 203 00:12:45.940 --> 00:12:49.675 again, with a focus on lending, we've seen, you know, enhanced 204 00:12:49.735 --> 00:12:53.415 models and tendency to start implementing AI 205 00:12:53.415 --> 00:12:56.935 in in credit scoring. Basically, aggregating more and more 206 00:12:56.935 --> 00:13:00.590 data, trying to, trying to come up 207 00:13:00.590 --> 00:13:04.190 with ever more creative ways to assess probabilities of default and 208 00:13:04.190 --> 00:13:08.030 ultimately, you know, make better, faster lending decisions. And, 209 00:13:08.350 --> 00:13:11.950 that's certainly the the name of the game, but it's in fairly early 210 00:13:11.950 --> 00:13:15.625 stages so far from what we see. Well, I think that you can 211 00:13:16.964 --> 00:13:20.745 think of the latest 10 years of innovation in banking 212 00:13:21.365 --> 00:13:24.904 this way. And I'm simplifying a bit, taking from my 2024 213 00:13:25.204 --> 00:13:28.889 global outlook for banking and financial markets. And in a few weeks, I will release 214 00:13:28.889 --> 00:13:32.730 a 2025 global outlook for banking and financial markets. So 215 00:13:32.730 --> 00:13:36.110 what did we say at the beginning of 2024 is that 216 00:13:36.730 --> 00:13:40.329 10 years ago is when the banks understood that their cost 217 00:13:40.329 --> 00:13:43.705 income ratios were not sustainable as a consequence of the global financial 218 00:13:43.705 --> 00:13:47.545 crisis, very low interest rates, high cost of capital. They 219 00:13:47.545 --> 00:13:50.985 needed to, if you like, the risk. And, therefore, the 220 00:13:50.985 --> 00:13:54.825 marginality in in the core revenue pools of 221 00:13:54.825 --> 00:13:58.190 banks started going down. And so in order to 222 00:13:58.190 --> 00:14:01.790 rationalize and cut costs, what did banks do well? They could close branches in 223 00:14:01.790 --> 00:14:05.550 essence. And at the same time, knowing that consumers were more and 224 00:14:05.550 --> 00:14:09.329 more inclined to use mobile or websites to do banking, 225 00:14:09.389 --> 00:14:12.765 they started lifting and shifting on cloud. Lot of their 226 00:14:12.765 --> 00:14:16.545 operations in order to power up this, if you like, mobile technology, 227 00:14:16.845 --> 00:14:20.524 okay, in different forms, they're getting a bit more flexibility to do so. 228 00:14:20.524 --> 00:14:23.985 But those were years of, let's say, outranked the digitalization. 229 00:14:24.365 --> 00:14:27.880 So the primary was cloud or 230 00:14:27.880 --> 00:14:31.340 infrastructure transformed to put a branch on mobile. 231 00:14:31.720 --> 00:14:35.560 However, banks realized that that wasn't enough because it is not easy 232 00:14:35.560 --> 00:14:39.385 to self direct yourself on a mobile bank. And 233 00:14:39.385 --> 00:14:42.745 and therefore, banks started learning through time that machine 234 00:14:42.745 --> 00:14:45.805 learning was relevant in order to create personalization. 235 00:14:46.585 --> 00:14:49.785 So what about you go to your app and you see the things that you 236 00:14:49.785 --> 00:14:53.430 care the most? So you may have a lot of things happening on your app. 237 00:14:53.570 --> 00:14:57.270 It could be confusing. So with machine learning, you can basically 238 00:14:57.570 --> 00:15:01.410 receive a service which is a bit more personalized, cleaner if you 239 00:15:01.410 --> 00:15:04.950 like and use it to use. However, even if 240 00:15:05.765 --> 00:15:09.465 banks apply machine learning at best, that doesn't necessarily 241 00:15:09.525 --> 00:15:13.365 mean that mobile banking is generating enough 242 00:15:13.365 --> 00:15:17.125 revenues that basically cover the cost of running mobile banking. And 243 00:15:17.125 --> 00:15:20.810 that's very interesting because I've been talking to a lot of banks and new banks 244 00:15:20.810 --> 00:15:24.270 worldwide, and a lot of them got trapped into the situation where 245 00:15:24.490 --> 00:15:27.950 they turned the core banking architecture 246 00:15:28.250 --> 00:15:31.930 into a variable cost structure using a 247 00:15:31.930 --> 00:15:35.625 cloud or cloud native, which is okay as long as you can 248 00:15:35.625 --> 00:15:39.465 control that variability. And through the pandemic, volumes skyrocketed because 249 00:15:39.465 --> 00:15:43.065 everybody went on their apps to check the bank account. But every time you click 250 00:15:43.065 --> 00:15:46.905 on something, there's an API that hits a cloud resource, which means the dollars 251 00:15:46.905 --> 00:15:50.360 you have to spend. So they ended up with a lot of activities on the 252 00:15:50.360 --> 00:15:54.040 mobile banking, but not enough revenues because most of those activities are due to 253 00:15:54.040 --> 00:15:57.880 their margins. And and the reason is because there is 254 00:15:57.880 --> 00:16:01.400 typically distance between the consumer and the banker that 255 00:16:01.400 --> 00:16:05.085 requires a relationship. I discussed that lengthy in my literature, 256 00:16:05.085 --> 00:16:08.705 especially the latest bestseller banks and Fintech on platform economies. But 257 00:16:09.485 --> 00:16:13.265 things started to change now because, if generative 258 00:16:13.485 --> 00:16:17.110 AI is known for something, it's about language. So So now this is the 259 00:16:17.110 --> 00:16:20.709 time where communication becomes effectively the 260 00:16:20.709 --> 00:16:24.550 core element of business transformation. You may remember that years 261 00:16:24.550 --> 00:16:28.389 ago, I was already talking about conversational banking. So 262 00:16:28.389 --> 00:16:31.915 we went from outright digitalization that 263 00:16:31.915 --> 00:16:35.675 is a cloud through personalization, which is AI in terms 264 00:16:35.675 --> 00:16:39.355 of machine learning, into generative AI, which is now the elements 265 00:16:39.355 --> 00:16:43.035 of communication. Still to be seen how AI would be 266 00:16:43.035 --> 00:16:46.610 effective in doing that. There are a lot of concerns. Of course, there is 267 00:16:46.610 --> 00:16:50.130 risk management that needs to be created. Just because you can 268 00:16:50.130 --> 00:16:53.330 access it, that doesn't mean you can use it if you don't have a strong 269 00:16:53.330 --> 00:16:57.010 platform to enable you governance of the AI. But this 270 00:16:57.010 --> 00:17:00.690 is basically the way AI is now reshaping the focus 271 00:17:00.690 --> 00:17:04.335 of bank's investment and therefore where Fintech 272 00:17:04.335 --> 00:17:08.175 will focus to be successful? Not me, but a friend of mine. Is it 273 00:17:08.175 --> 00:17:11.955 another in in a Fintech? Or let's say startup, not Fintech. 274 00:17:12.015 --> 00:17:15.474 Let's call him startup. He he has he has applied it. Unfortunately, 275 00:17:15.695 --> 00:17:19.320 because of the rules, he always has to say, you know, be 276 00:17:19.320 --> 00:17:23.160 careful, customer. This is an AI making you support. So you have 277 00:17:23.160 --> 00:17:26.920 to be transparent. I would have loved just just let auto let's call them 278 00:17:26.920 --> 00:17:30.460 auto, you know, speak frankly and not have, like you know, scale the people. 279 00:17:30.680 --> 00:17:34.495 AI is not responding to you. Like, I would rather have, you know, not having 280 00:17:34.495 --> 00:17:37.715 to have to mention that. But, oh, well, these are rules and regulations. 281 00:17:38.815 --> 00:17:42.575 Yeah. So I know people. I'm thinking of using it. Right now, 282 00:17:42.575 --> 00:17:46.415 my business is just in the start, you know, with my copy trading and my 283 00:17:46.415 --> 00:17:49.800 quant algorithm as you know. And I am thinking of applying 284 00:17:49.800 --> 00:17:53.640 those cool, you know, accents for the targeted regions that we want to 285 00:17:53.640 --> 00:17:55.900 go after. Right? Alright. 286 00:17:57.160 --> 00:18:00.840 Another very interesting part is you can do proactive engagement by 287 00:18:00.840 --> 00:18:04.535 predicting customer needs. So using the data, having the 288 00:18:04.535 --> 00:18:08.295 AI, the AI can help you, like, having predictive engagement. Like, 289 00:18:08.295 --> 00:18:12.055 it's seen that now this and this could be useful for the customer. So 290 00:18:12.055 --> 00:18:15.735 that that is another revolutionary thing that you can maximize on your 291 00:18:15.735 --> 00:18:19.460 lead pool, and, you know, and the engagement possibility 292 00:18:19.920 --> 00:18:23.600 be by being proactive and not, you know, reactive. Right? So 293 00:18:23.600 --> 00:18:27.280 being proactive to see, you know what? Now a change of loan would be useful 294 00:18:27.280 --> 00:18:30.905 for you. Right? Now we have better terms that you could benefit from. Proactively 295 00:18:31.045 --> 00:18:34.805 looking at your situation and your data. The AI could 296 00:18:34.805 --> 00:18:38.105 be very valuable for this. And, of course, I mean, the operational 297 00:18:38.165 --> 00:18:41.785 efficiency. Right? AI was, you know, automating 298 00:18:41.925 --> 00:18:45.510 routine tasks, all this kind of stuff. This is really fun. I mean 299 00:18:45.670 --> 00:18:48.970 and let's not just talk about AI. It's basically machine learning combination 300 00:18:49.110 --> 00:18:52.470 with AI. Right? Certain tasks are not ideal for 301 00:18:52.470 --> 00:18:56.250 generative AI. So that for that, you wanna have clean 302 00:18:56.390 --> 00:19:00.195 machine learning that does very precise tasks, but 303 00:19:00.195 --> 00:19:04.035 then the generative AI will take that result and make it flow in flowery 304 00:19:04.035 --> 00:19:07.875 words. And like I said, OpenAI, no, just 305 00:19:07.875 --> 00:19:11.555 really store up. Right? Also there, we could provide even 306 00:19:11.555 --> 00:19:15.170 cool help videos. Like, amazing. Yeah. Like, imagine. Like, you 307 00:19:15.170 --> 00:19:19.010 know, I could even give the person attractive, you know, help videos 308 00:19:19.010 --> 00:19:22.770 and get give them guidance even you know? And this this is the 309 00:19:22.770 --> 00:19:26.505 the the possibilities are just tremendous. Right? 310 00:19:26.565 --> 00:19:30.165 So AI is gonna be revolutionary. You will be very efficient. You can have 311 00:19:30.165 --> 00:19:33.924 very heen teams and be very effective to do quite a broad 312 00:19:33.924 --> 00:19:37.285 task, like, you know, bandwidth of tasks using those AI 313 00:19:37.285 --> 00:19:40.970 agents and bots. So 314 00:19:40.970 --> 00:19:44.730 whether that's now specific to Fintech or not, I think that's 315 00:19:44.730 --> 00:19:47.070 a very, own question. 316 00:19:48.809 --> 00:19:52.345 For sure, we experience, let's say, the chatbots and the 317 00:19:52.345 --> 00:19:55.644 improvement of the chatbots in order to interact 318 00:19:57.705 --> 00:20:00.605 with the customers in an automated way. 319 00:20:01.784 --> 00:20:05.490 That's not only due to generative AI, but 320 00:20:05.809 --> 00:20:09.030 in general applying, let's say, machine learning 321 00:20:09.170 --> 00:20:12.950 and, let's say, grading and 322 00:20:13.250 --> 00:20:16.630 and insightful but automated, contact 323 00:20:17.170 --> 00:20:20.965 center with with the customers. So that's something which 324 00:20:20.965 --> 00:20:24.725 has significant influence. However, we 325 00:20:24.725 --> 00:20:28.425 will also see, in, let's say, general 326 00:20:28.485 --> 00:20:31.385 banking themes like AML, 327 00:20:32.005 --> 00:20:35.540 fraud, cybersecurity, the 328 00:20:35.540 --> 00:20:38.980 impact, not only on the 329 00:20:38.980 --> 00:20:42.760 Fintech, but also on their customers. So, 330 00:20:43.700 --> 00:20:46.200 in in terms of balancing 331 00:20:47.300 --> 00:20:49.320 convenience with security, 332 00:20:51.195 --> 00:20:55.035 empowered, let's say, by by by AI. So 333 00:20:55.035 --> 00:20:58.795 these are basically, let's say, what 334 00:20:58.795 --> 00:21:02.554 what we can see going forward, I would also 335 00:21:02.554 --> 00:21:05.920 expect that we see much 336 00:21:06.300 --> 00:21:07.600 more personalization. 337 00:21:10.540 --> 00:21:14.000 That's probably due to the fact that I I, 338 00:21:14.860 --> 00:21:18.135 has the algorithms and has the capability to 339 00:21:18.375 --> 00:21:21.895 cater products and service offerings, to 340 00:21:21.895 --> 00:21:25.655 individual needs. I would argue we are still at the 341 00:21:25.655 --> 00:21:29.495 very, very beginning of that whole new 342 00:21:29.495 --> 00:21:33.270 theme of artificial intelligence, so I would 343 00:21:33.270 --> 00:21:37.030 expect much more to come going forward. What do you 344 00:21:37.030 --> 00:21:40.810 think? What role do regulations and compliance 345 00:21:41.190 --> 00:21:44.805 play in shaping the Fintech innovation this year, 2024, 346 00:21:45.585 --> 00:21:49.265 and looking into future 2025, think about the AI act, 347 00:21:49.265 --> 00:21:52.865 Dora, and so on? Well, as I have mentioned before, right, we 348 00:21:52.865 --> 00:21:56.705 have Dora and this too. It's right here. It's happening right now. 349 00:21:56.705 --> 00:22:00.520 So this is gonna influence us. Right? And there's the 350 00:22:00.520 --> 00:22:04.040 European Digital Operational Resilience Act coming as well. 351 00:22:04.040 --> 00:22:07.720 Right? That will also force companies and 352 00:22:07.720 --> 00:22:11.400 Fintechs to come up with solutions, ideas, innovative ideas, how 353 00:22:11.400 --> 00:22:14.855 to be able to comply to regulations but keep the 354 00:22:14.855 --> 00:22:18.215 costs low. That is our opportunity, our chance to try to 355 00:22:18.215 --> 00:22:21.915 see how to make it possible 356 00:22:22.375 --> 00:22:26.100 to have compliance but without a big overhead by 357 00:22:26.100 --> 00:22:29.860 using automation and intelligent, you know, solutions. Right? This 358 00:22:29.860 --> 00:22:33.539 is the key because compliance and regulations always produce 359 00:22:33.539 --> 00:22:36.360 costs and overhead. That's the thing. Right? 360 00:22:37.539 --> 00:22:41.264 So this is one. And the what else 361 00:22:41.264 --> 00:22:45.105 can I say to you, about this? Yeah. So it will 362 00:22:45.105 --> 00:22:48.465 drive innovation, right, as I said. And there's gonna be a higher 363 00:22:48.465 --> 00:22:51.985 focus on data privacy. So we gotta be careful about 364 00:22:51.985 --> 00:22:55.550 privacy. Also, when using AI, we we have to be 365 00:22:55.550 --> 00:22:59.390 very sensitive on the regulatory, you know, about data 366 00:22:59.390 --> 00:23:03.150 privacy. You know? So it's not as you know, we have to be careful not 367 00:23:03.150 --> 00:23:05.950 just to use any model out there. You know, we have Gemini. We have Cloud 368 00:23:05.950 --> 00:23:09.550 AI. We have Mistral. We have all these things, all these players. And we have 369 00:23:09.550 --> 00:23:13.205 to watch, is this g g p r compliant. Are we moving 370 00:23:13.205 --> 00:23:17.045 data out there? Or do we have to take LLM models internally, train them, 371 00:23:17.045 --> 00:23:20.725 and then order to compensate and have this kind of same kind of service in 372 00:23:20.725 --> 00:23:24.250 order to fulfill the regulatory requirements? So this is gonna be very 373 00:23:24.250 --> 00:23:28.090 interesting to see what they will accept, especially on the privacy 374 00:23:28.090 --> 00:23:31.770 part of, of, you know, in the Fintech space because privacy is everything. Right? 375 00:23:31.770 --> 00:23:35.470 Fintech is about trust. So privacy is one of the key areas, 376 00:23:35.690 --> 00:23:39.435 right, that need to be watched for. Now, you know, as we just said, 377 00:23:39.435 --> 00:23:42.735 the regulation is, is, super important 378 00:23:43.195 --> 00:23:45.775 because it it lose all things together. 379 00:23:46.875 --> 00:23:50.095 I think that what is the most interesting 380 00:23:50.730 --> 00:23:54.490 to me in terms of regulation is what will 381 00:23:54.490 --> 00:23:58.090 happen when money will become more digital. So everything that 382 00:23:58.090 --> 00:24:01.530 moves around the money moving movement, there is the 383 00:24:01.530 --> 00:24:05.205 digital euro, for example. So the next year is the year 384 00:24:05.205 --> 00:24:08.905 where the first phase of the project definition 385 00:24:09.685 --> 00:24:13.445 will be done, and therefore, the European Central 386 00:24:13.445 --> 00:24:16.885 Bank will have to define what is the next course of action, which also 387 00:24:16.885 --> 00:24:20.380 requires, if you like, to create the legal and the regulatory 388 00:24:20.380 --> 00:24:24.220 framework around that, then make it all effective, not just 389 00:24:24.220 --> 00:24:27.820 for technology, but also regulation. So that is the one 390 00:24:27.820 --> 00:24:31.580 piece of the rule making that makes me 391 00:24:31.580 --> 00:24:35.285 more curious. Also, the intersection of all of these 392 00:24:35.285 --> 00:24:38.965 with the monetary policies. I I keep on seeing, for example, up from 393 00:24:38.965 --> 00:24:42.805 the BES, a lot of wonderful papers that are very technical, but not much 394 00:24:42.805 --> 00:24:45.945 discussions about the business implications in terms of 395 00:24:46.770 --> 00:24:50.450 the the monetary policies and so on and so forth. And and I think that 396 00:24:50.450 --> 00:24:53.890 is needed. So I hope there will be more research and discussions around 397 00:24:53.890 --> 00:24:57.490 that. I wouldn't necessarily say that, you 398 00:24:57.490 --> 00:25:01.015 know, regulation and compliance is actually shaping 399 00:25:01.015 --> 00:25:04.855 innovation. I I don't really have a lot 400 00:25:04.855 --> 00:25:08.455 of conversations where these are actually the 2 most favorite and most 401 00:25:08.455 --> 00:25:12.295 popular topics when I talk to other people. But, I think, yeah, in 402 00:25:12.295 --> 00:25:16.090 terms of in terms of regulation, the 2 big ones out there 403 00:25:16.090 --> 00:25:19.790 are DORA, so the Digital Operational Resilience Act, 404 00:25:19.850 --> 00:25:23.550 which is going to be phased in from, actually January 1st. 405 00:25:24.090 --> 00:25:27.690 So this is this is something that, we, but also 406 00:25:27.690 --> 00:25:31.425 other Fintech lenders, have had on their minds, 407 00:25:32.365 --> 00:25:36.065 because it particularly touches elements of cybersecurity 408 00:25:36.525 --> 00:25:40.205 and just making sure that you're, you know, that 409 00:25:40.205 --> 00:25:43.745 you're operationally resilient. In a way 410 00:25:44.200 --> 00:25:48.040 we think it's kind of a good thing because similar to, you know, 411 00:25:48.040 --> 00:25:51.800 other regulations like crowdfunding service provider regulation and so on, it's 412 00:25:51.800 --> 00:25:55.240 aimed at effectively leveling the playing field a bit. 413 00:25:55.400 --> 00:25:59.085 And additionally also improving kind of 414 00:25:59.085 --> 00:26:02.925 the resilience of of, Fintech lending business models. So 415 00:26:02.925 --> 00:26:06.765 in a way, it's a good thing. On the other end, obviously, additional processes 416 00:26:06.765 --> 00:26:10.385 that need to be designed, and, just additional 417 00:26:10.909 --> 00:26:14.510 sort of checks and balances around, you know, how how 418 00:26:14.510 --> 00:26:18.269 secure is your whole IT infrastructure with respect to cyber 419 00:26:18.269 --> 00:26:22.110 threats. So in a way, that that is going to 420 00:26:22.110 --> 00:26:25.725 probably also lead to additional, additional focus 421 00:26:25.965 --> 00:26:29.725 for a lot of players to reinforce kind of their processes and their 422 00:26:29.725 --> 00:26:33.405 infrastructure, which I think is gonna help overall the maturity of a lot 423 00:26:33.405 --> 00:26:37.164 of, of a lot of fintechs. But that's probably one of 424 00:26:37.164 --> 00:26:40.919 the one of the regulations that's going to shape whatever is 425 00:26:40.919 --> 00:26:43.260 happening in in the fintech space in 2025. 426 00:26:44.600 --> 00:26:48.360 And then on, on the longer time horizon, obviously, also the 427 00:26:48.360 --> 00:26:52.059 European AI Act, although our view is that 428 00:26:52.120 --> 00:26:54.940 there are still quite a few clarifications needed, 429 00:26:56.195 --> 00:26:59.955 especially in terms of, you know, the overarching kind of 430 00:26:59.955 --> 00:27:03.795 impact this regulation is going to have on the use cases and 431 00:27:03.795 --> 00:27:07.475 how also data processing is going to be affected by the 432 00:27:07.475 --> 00:27:11.309 regulation. And so we're not expecting this 433 00:27:11.309 --> 00:27:15.070 to be to have an imminent impact, but but certainly, like, over a 434 00:27:15.070 --> 00:27:18.750 2 to 3 year time horizon, this is also going to be one of 435 00:27:18.750 --> 00:27:22.130 the elements to to think about. So 436 00:27:22.190 --> 00:27:25.975 probably one of the biggest impacts 437 00:27:26.835 --> 00:27:30.215 we are currently facing is DORA, so the 438 00:27:30.435 --> 00:27:34.215 Digital Operating Resilient Act, especially here in Europe. 439 00:27:34.675 --> 00:27:38.195 But we also see that kind of thinking from the 440 00:27:38.195 --> 00:27:41.760 regulators, all over the world. So the, 441 00:27:42.220 --> 00:27:45.840 let's say, digital and and cyber resilience 442 00:27:45.980 --> 00:27:49.740 is becoming more and more important. The same 443 00:27:49.740 --> 00:27:53.420 is true for everything around team money 444 00:27:53.420 --> 00:27:56.835 laundering, and let's say, know your 445 00:27:56.835 --> 00:27:59.255 customer exercises and compliance, 446 00:28:00.515 --> 00:28:03.815 the requirements grow tread 447 00:28:04.995 --> 00:28:08.535 grow steadily. And what you have seen with some of the 448 00:28:09.940 --> 00:28:13.240 well known neobanks, so not only 449 00:28:13.700 --> 00:28:17.320 established traditional banks, but also the neobanks and Fintechs. 450 00:28:18.340 --> 00:28:22.179 They have faced significant fines on 451 00:28:22.179 --> 00:28:23.559 being not compliant. 452 00:28:26.155 --> 00:28:29.995 Therefore, let's say, regulation is 453 00:28:29.995 --> 00:28:33.675 becoming a key competence for 454 00:28:33.675 --> 00:28:36.655 every player in the banking and the Fintech scene. 455 00:28:37.320 --> 00:28:40.840 If because if not, compliance will make 456 00:28:40.840 --> 00:28:44.200 sure that they cannot, let's 457 00:28:44.200 --> 00:28:48.039 say, create and increase their 458 00:28:48.039 --> 00:28:51.505 business as we have seen with n 26. 459 00:28:52.525 --> 00:28:56.125 They were not allowed to onboard new customers for quite some 460 00:28:56.125 --> 00:28:59.664 time. And but but they are not alone. 461 00:29:00.365 --> 00:29:03.725 Other players, not only the traditional banks, 462 00:29:03.725 --> 00:29:07.539 they they got, let's say, their problems as well as 463 00:29:07.539 --> 00:29:11.380 they grow significantly, and not complying with 464 00:29:11.380 --> 00:29:15.140 all regulations. So so and and long message 465 00:29:15.140 --> 00:29:18.360 short, going forward, regulations will increase 466 00:29:19.215 --> 00:29:22.895 and increase and increase. And you need to 467 00:29:22.895 --> 00:29:26.255 generate strategies that you can fulfill 468 00:29:26.255 --> 00:29:29.775 them efficiently and effectively. What 469 00:29:29.775 --> 00:29:33.395 strategies should Fintech startups adopt 470 00:29:34.039 --> 00:29:37.580 to remain competitive against traditional financial institutions 471 00:29:38.600 --> 00:29:41.740 and the other way around? If you also have an answer for that. 472 00:29:42.760 --> 00:29:46.440 I did a Fintech too. Okay. I tell you what 473 00:29:46.440 --> 00:29:49.855 happens, And I really tell you what happens. I saw it coming, then the 474 00:29:49.855 --> 00:29:53.535 pandemic sort of delayed it. But most of the 475 00:29:53.535 --> 00:29:56.835 competition in fintech applied to the very symmetrical 476 00:29:56.975 --> 00:30:00.690 businesses like payments. Okay? Because then you 477 00:30:00.690 --> 00:30:04.370 can get volumes or a retail where you can get 478 00:30:04.370 --> 00:30:08.070 simplifications around the way you deal with large 479 00:30:08.130 --> 00:30:11.890 courts of people. Yes. You can divide them into wealthy, not 480 00:30:11.890 --> 00:30:15.725 wealthy, older and younger, or maybe be more personalized. But largely 481 00:30:15.725 --> 00:30:19.485 speaking, it's a mass market that got commoditized. So 482 00:30:19.485 --> 00:30:23.105 now that happened. The commoditization happened. What is left out of these 483 00:30:23.325 --> 00:30:26.765 are large corporate, for example, that many can do that is strong 484 00:30:26.765 --> 00:30:30.300 relationship based. You You could do 30 finance, but strong relationship 485 00:30:30.300 --> 00:30:33.680 based wealth management, which is still a bit difficult and complex 486 00:30:33.980 --> 00:30:37.500 to digitalize because of, if you like, the 487 00:30:37.500 --> 00:30:41.340 distances that always discuss between what people need and what 488 00:30:41.340 --> 00:30:45.065 banks offer and the relationship in between. Remember, the iPhone 489 00:30:45.065 --> 00:30:48.585 is a technology that demand most of these, instead of 490 00:30:48.585 --> 00:30:51.865 businesses, operate as an offer industry. So you need to put an offer in this 491 00:30:51.865 --> 00:30:55.565 on demand technology. Possible, not easy. But there's a big 492 00:30:55.945 --> 00:30:59.680 segment which is super important that banks forgot like 493 00:30:59.680 --> 00:31:03.280 a forgotten child. And the reason is because it is too 494 00:31:03.280 --> 00:31:06.960 varied for them to systematize easily, and that's the 495 00:31:06.960 --> 00:31:09.300 small and medium enterprise 496 00:31:10.640 --> 00:31:14.265 market. Those of the Mittelstand in Germany would be. 497 00:31:14.585 --> 00:31:17.965 Now guess what? 90% 498 00:31:18.585 --> 00:31:21.805 of firms worldwide are SMEs. In Japan, 499 00:31:21.945 --> 00:31:25.785 99.7%. Just to say it's not just an emerging 500 00:31:25.785 --> 00:31:29.490 market. 70% worldwide of the workforce 501 00:31:29.630 --> 00:31:33.230 work for an SME, and 50% of 502 00:31:33.230 --> 00:31:36.830 GDP worldwide is produced by SMEs. So that's a 503 00:31:36.830 --> 00:31:40.289 huge market for banks to serve. However, 504 00:31:40.429 --> 00:31:44.235 there's a high cost to serve because all of these are different. There's 505 00:31:44.235 --> 00:31:47.755 a lot of manualities. They are very risky. So banks 506 00:31:47.755 --> 00:31:51.215 transfer all of these risk management, if you like, 507 00:31:52.315 --> 00:31:55.995 less comfort and complexities in 508 00:31:55.995 --> 00:31:59.809 onboarding clients into cost that the SMEs have to pay. 509 00:31:59.809 --> 00:32:03.169 And so in the Western world, the SMEs pay up to 510 00:32:03.169 --> 00:32:06.850 3% more than large corporate when they borrow money and up to 511 00:32:06.850 --> 00:32:10.610 10% more in the emerging markets. Now after 10 years 512 00:32:10.610 --> 00:32:14.425 of innovation, especially with AI, we're at the point where banks can tackle the 513 00:32:14.425 --> 00:32:17.865 complexities of the SME market. And that's the reason 514 00:32:17.865 --> 00:32:21.625 why I'm seeing a lot of competition between banks and 515 00:32:21.625 --> 00:32:25.465 the neobanks in banking for SMEs. To give you 516 00:32:25.465 --> 00:32:28.970 an example, I just released a research from the IBM 517 00:32:28.970 --> 00:32:32.730 Institute for business value banking for small and medium enterprises. And I 518 00:32:32.730 --> 00:32:36.570 got not only large banks discussing the topic, but also 519 00:32:36.570 --> 00:32:40.375 unicorns like Nubank. Nubank is 100,000,000 520 00:32:40.995 --> 00:32:44.375 retail customers, a new bank in Brazil with 30% 521 00:32:44.755 --> 00:32:48.595 return on equity this year. And they're now stepping into the 522 00:32:48.595 --> 00:32:52.434 SME market, basically stepping up the competition with 523 00:32:52.434 --> 00:32:55.929 banks where there is more, if, like, 524 00:32:55.929 --> 00:32:58.429 presence because all of these manualities require, 525 00:32:59.850 --> 00:33:03.690 like, branches, back offices, and people. And so that is where the 526 00:33:03.690 --> 00:33:07.529 competition is intensifying in 2025 and for the next 5 527 00:33:07.529 --> 00:33:10.975 years. So all of the Fintech that listen to this, 528 00:33:11.535 --> 00:33:15.295 year end review get this one clear. SME 529 00:33:15.295 --> 00:33:18.975 Banking is the next battlefield of competition between banks 530 00:33:18.975 --> 00:33:21.970 and unicorns. Well, you know, 531 00:33:23.390 --> 00:33:26.430 it's the same as me. We we're like a I mean, I see myself as 532 00:33:26.430 --> 00:33:30.190 a mini Fintech, you know, start up, you know, 533 00:33:30.190 --> 00:33:32.895 also embracing crypto. So I think, 534 00:33:33.935 --> 00:33:36.515 there is a lot of opportunity. Number 1, 535 00:33:37.855 --> 00:33:41.615 I think you need to do niche targeting for, you know, fintechs. Now 536 00:33:41.615 --> 00:33:44.915 we we gotta find new niches. That that's a key aspect, 537 00:33:45.055 --> 00:33:48.450 definitely. Leveraging our technological 538 00:33:48.670 --> 00:33:52.190 benefit, you know, being a start up, you know, using the 539 00:33:52.190 --> 00:33:56.030 latest tech, but also open being open minded to the latest 540 00:33:56.030 --> 00:33:59.870 development. Like, I think, like, blockchain is a big part, and DeFi is a 541 00:33:59.870 --> 00:34:03.274 big part of it. Embracing that is gonna be big. 542 00:34:03.414 --> 00:34:06.855 And this can help, Fintech companies to compete against 543 00:34:06.855 --> 00:34:10.614 traditional organizations that might be not as open for it and not 544 00:34:10.614 --> 00:34:14.214 not as agile to those changes changes in trends. 545 00:34:14.214 --> 00:34:17.980 Right? So there's a lot of benefits coming with Blockchain, and it's gonna and it's 546 00:34:17.980 --> 00:34:20.639 very beneficial and especially for the Fintech space. 547 00:34:22.859 --> 00:34:26.699 And I would recommend, you know, the strategies for Fintech startups should be 548 00:34:26.699 --> 00:34:30.255 also trying to build partnerships either with additional other Fintech 549 00:34:30.255 --> 00:34:34.014 companies to, you know, together you're stronger. Right? Or 550 00:34:34.014 --> 00:34:37.855 with solution thinking, right, for the customers. But, also, 551 00:34:37.855 --> 00:34:41.600 I believe in this kind of hybrid models. If you can have an entry and 552 00:34:41.600 --> 00:34:45.280 leverage with a traditional bank, leverage their customer base, leverage 553 00:34:45.280 --> 00:34:49.040 that that experience that they have, and then benefit and have them 554 00:34:49.040 --> 00:34:52.500 benefit from your innovation, and your agility, 555 00:34:53.440 --> 00:34:56.705 that is, I think, the best combo. I mean, me as a Fintech starter, I 556 00:34:56.705 --> 00:35:00.305 would love to have, like, a UBS as my customer and offer, let's say, because 557 00:35:00.305 --> 00:35:03.905 of my product, my quant solution, their wealth management, my product to their 558 00:35:03.905 --> 00:35:07.745 customers. Imagine, that would make me fly. Right? So this kind of 559 00:35:07.745 --> 00:35:11.400 combination of having, the power of the traditional with the 560 00:35:11.400 --> 00:35:15.080 customer base, with the financial backup, and and then the innovation and 561 00:35:15.080 --> 00:35:18.920 Fintech startup startup on the other side, I think that would be beautiful. And 562 00:35:18.920 --> 00:35:21.015 I I would love to see more of that, by the way. 563 00:35:22.375 --> 00:35:25.914 And, of course, having customer centric approaches. 564 00:35:26.055 --> 00:35:29.894 We need to differentiate. I mean, this should be the strategy 565 00:35:29.894 --> 00:35:33.600 for Fintech startups. Making finance is complex. Take 566 00:35:33.600 --> 00:35:36.960 away complexity. Make it easy. Make the entry 567 00:35:36.960 --> 00:35:40.720 easy. Take away the complexity. That's the key thing. 568 00:35:40.720 --> 00:35:44.480 Make it user, like, user make the user experience as 569 00:35:44.480 --> 00:35:48.000 as simple as possible. And this could be our benefit for 570 00:35:48.000 --> 00:35:50.405 startups in and our advantage, 571 00:35:51.605 --> 00:35:54.965 towards those traditional institutes. Honestly, I 572 00:35:54.965 --> 00:35:57.785 think it's not really about being 573 00:35:59.925 --> 00:36:02.940 competitive or competing, between, you know, 574 00:36:03.500 --> 00:36:07.260 incumbents and Fintechs, I think the future really is going to 575 00:36:07.260 --> 00:36:10.940 lie more in cooperation, at least as far as, you 576 00:36:10.940 --> 00:36:14.780 know, lending is concerned. If you want to simplify it the 577 00:36:14.780 --> 00:36:18.605 way we look at it is, you know, incumbents, incumbents 578 00:36:18.665 --> 00:36:22.045 like banks, asset managers, and so on. They sit on a lot of assets. 579 00:36:22.425 --> 00:36:25.945 Fintechs have a great tech stack, but, ultimately, it's the 580 00:36:25.945 --> 00:36:28.925 combination of the 2 that is really yielding 581 00:36:29.750 --> 00:36:33.510 promising results and ultimately also attractive, you know, economics 582 00:36:33.510 --> 00:36:36.329 and attractive ways to actually generate revenue. 583 00:36:36.869 --> 00:36:40.470 So, we actually think that, you 584 00:36:40.470 --> 00:36:44.285 know, building out partnerships is going to be a name of 585 00:36:44.285 --> 00:36:47.825 the game, also going forward, especially in in lending 586 00:36:47.885 --> 00:36:51.345 verticals, just because, you know, 587 00:36:51.805 --> 00:36:55.645 having balance sheets or deep balance sheets is just really difficult to come by 588 00:36:55.645 --> 00:36:59.450 or, like, you know, building out a deposit base. It's just such a tricky thing 589 00:36:59.450 --> 00:37:03.290 to do for, for a lot of Fintech lenders. And so if you 590 00:37:03.290 --> 00:37:06.650 can partner up with a financial institution that can kind of give you the 591 00:37:06.650 --> 00:37:10.430 firepower so that you can, ultimately satisfy 592 00:37:10.490 --> 00:37:14.275 the borrower demand, then that's probably an important 593 00:37:14.275 --> 00:37:17.955 way to go. And I think one of the great examples here was, kind of 594 00:37:17.955 --> 00:37:21.555 the, unit credit slash and and banks were 595 00:37:21.555 --> 00:37:25.315 transaction, where you can definitely see, you know, you have, 596 00:37:25.715 --> 00:37:29.490 a digitally enabled player, fintech that is 597 00:37:29.490 --> 00:37:32.850 able to essentially create a lending product for smaller 598 00:37:32.850 --> 00:37:36.290 businesses, and they can lend with more attractive unit 599 00:37:36.290 --> 00:37:39.650 economics. And, ultimately, they have an institutional backer that 600 00:37:39.650 --> 00:37:43.484 provides access to the funding, and you can create a great partnership model 601 00:37:43.484 --> 00:37:47.325 out of that. So that will be kind of our expectation of, 602 00:37:47.724 --> 00:37:51.404 what's in store, also in in 2025 when we're talking 603 00:37:51.404 --> 00:37:55.244 about how is the landscape going to evolve and what's 604 00:37:55.244 --> 00:37:58.065 the dynamic going to be between, you know, incumbent 605 00:37:58.900 --> 00:38:02.660 institutions and and Fintechs going forward? So 606 00:38:02.660 --> 00:38:05.960 unless you are already a super large Fintech, 607 00:38:07.860 --> 00:38:11.595 we may we may remember PayPal at the beginning or 608 00:38:11.595 --> 00:38:15.355 10 years ago, which we call the Fintech. Right? So these 609 00:38:15.355 --> 00:38:19.135 super large players, they keep trust their strategy 610 00:38:19.275 --> 00:38:23.055 and grow. So for them, basically, 611 00:38:24.579 --> 00:38:27.560 I I believe, of course, they need to stay competitive, 612 00:38:28.660 --> 00:38:32.420 but with established business models, they just follow 613 00:38:32.420 --> 00:38:36.200 their strategy going forward. However, for 614 00:38:36.815 --> 00:38:40.494 small sized, medium sized vintage player in 615 00:38:40.494 --> 00:38:43.234 very crowded, markets, 616 00:38:44.174 --> 00:38:47.555 for me, it's very important that they 617 00:38:48.414 --> 00:38:52.020 solve a real problem. So they really 618 00:38:52.020 --> 00:38:54.840 need to solve an urgent problem, 619 00:38:57.300 --> 00:39:01.140 where people suffer or where 620 00:39:01.140 --> 00:39:04.820 they enable something which was not before. And that 621 00:39:04.820 --> 00:39:08.204 basically, they need to follow a niche 622 00:39:08.204 --> 00:39:11.585 strategy. So having a very narrow 623 00:39:11.645 --> 00:39:15.405 product or very narrow service, which really 624 00:39:15.405 --> 00:39:18.765 solves a problem, or caters a 625 00:39:18.765 --> 00:39:22.589 need. And then they 626 00:39:22.589 --> 00:39:26.190 take it from there. And and, it's this 627 00:39:26.190 --> 00:39:29.869 famous 10 x. You you you somehow need to be 10 628 00:39:29.869 --> 00:39:33.570 x better or perceived as being 10 x better 629 00:39:34.030 --> 00:39:37.645 or 10 x cheaper, or promising 630 00:39:37.865 --> 00:39:41.165 something which is, let's say, very different from 631 00:39:41.705 --> 00:39:45.085 what it's already available into market. 632 00:39:46.825 --> 00:39:50.570 And ultimately, I think the biggest challenge is 633 00:39:50.570 --> 00:39:54.170 also to develop your business. So let's 634 00:39:54.170 --> 00:39:57.850 say, having a great product and service is 635 00:39:57.850 --> 00:40:01.690 good, but being able to sell it with, let's 636 00:40:01.690 --> 00:40:05.255 say, reasonable 637 00:40:05.474 --> 00:40:09.315 margin in order to generate at some point in time 638 00:40:09.315 --> 00:40:13.075 profits. I think that is that is the other side of 639 00:40:13.075 --> 00:40:16.694 the metal where you are with many, many 640 00:40:16.755 --> 00:40:18.535 Fintechs struggle. 641 00:40:20.260 --> 00:40:23.940 And but that's where they have to compete. How 642 00:40:23.940 --> 00:40:27.559 is decentralized finance, DeFi, impacting 643 00:40:28.019 --> 00:40:31.319 traditional financial models, and what's next for blockchain 644 00:40:31.380 --> 00:40:34.375 applications? Yeah. That's a 645 00:40:36.435 --> 00:40:39.735 pretty interesting question. You see the 646 00:40:39.795 --> 00:40:43.255 Bitcoin sign in my bet background. So I'm 647 00:40:43.795 --> 00:40:47.235 participating in that community from a very early stage 648 00:40:47.235 --> 00:40:48.650 since 2013. 649 00:40:51.510 --> 00:40:55.290 With respect to DeFi itself, 650 00:40:55.990 --> 00:40:59.770 I still believe there is a long, long way to go. 651 00:41:00.525 --> 00:41:04.145 So, what we are currently experiencing 652 00:41:05.005 --> 00:41:08.545 is that we have here and there, 653 00:41:09.164 --> 00:41:11.744 let's say, some early projects 654 00:41:14.780 --> 00:41:18.400 with if you look at top down very limited 655 00:41:19.980 --> 00:41:23.600 view, a reach with with with limited 656 00:41:23.740 --> 00:41:26.000 reach. So let's say tokenization 657 00:41:28.335 --> 00:41:32.035 of any kind of assets. Yeah. 658 00:41:32.175 --> 00:41:35.855 Projects are launched, but but 659 00:41:35.855 --> 00:41:39.235 volumes are still very, very low. 660 00:41:41.400 --> 00:41:44.859 Totally different to, let's say, the 661 00:41:45.320 --> 00:41:48.920 cryptocurrency space, where if you look 662 00:41:48.920 --> 00:41:52.380 at the, let's say, top 100 cryptocurrencies 663 00:41:53.240 --> 00:41:56.395 or blockchain projects, or 664 00:41:57.175 --> 00:42:00.474 platforms, they have 665 00:42:01.494 --> 00:42:05.035 at least reached a significant, market 666 00:42:05.255 --> 00:42:08.970 volume and market capitalization. You also 667 00:42:09.030 --> 00:42:12.330 see significant transaction 668 00:42:13.030 --> 00:42:16.230 volumes, whether it's for speculation or not, that 669 00:42:16.390 --> 00:42:19.850 that's something we can discuss, but, 670 00:42:20.630 --> 00:42:24.285 it's actually growing 671 00:42:24.285 --> 00:42:27.345 volumes and and and growing transactions, 672 00:42:29.244 --> 00:42:32.305 and more and more users and more and more wallets 673 00:42:32.685 --> 00:42:35.750 available beyond 674 00:42:36.290 --> 00:42:38.070 Bitcoin, Ethereum, Solana. 675 00:42:40.690 --> 00:42:44.150 Bitcoin, I would argue, it step established 676 00:42:44.610 --> 00:42:47.190 itself as a kind of 677 00:42:49.515 --> 00:42:52.255 universal digital asset accepted, 678 00:42:54.075 --> 00:42:57.535 across the world while at the same 679 00:42:58.875 --> 00:43:02.015 point in time, we see significant global shifts 680 00:43:02.954 --> 00:43:06.700 in terms of trade. So we 681 00:43:06.700 --> 00:43:10.400 see that trade actually is much more regional. 682 00:43:11.819 --> 00:43:15.039 We have from a politic political 683 00:43:15.900 --> 00:43:19.039 point of view, let's say globalization 684 00:43:20.055 --> 00:43:23.115 is at the point where we 685 00:43:24.055 --> 00:43:27.675 go back to some extent. It's from 686 00:43:28.135 --> 00:43:31.815 pure globalization back to regionalization and 687 00:43:31.815 --> 00:43:35.530 localization. And we also see a decrease 688 00:43:35.530 --> 00:43:38.890 of the dollar in terms of relevance when it comes to 689 00:43:38.890 --> 00:43:42.109 global trade. It's still the most relevant one. 690 00:43:42.650 --> 00:43:46.454 However, let's 691 00:43:46.454 --> 00:43:49.515 say the the the dominance reduces 692 00:43:50.295 --> 00:43:54.134 year by year. And, we 693 00:43:54.134 --> 00:43:55.835 may end up in a situation, 694 00:43:57.734 --> 00:44:01.170 where especially Bitcoin is, let's 695 00:44:01.170 --> 00:44:05.010 say, the only digital asset 696 00:44:05.010 --> 00:44:08.470 which is accepted by all parties 697 00:44:09.089 --> 00:44:12.930 from China, Russia to Europe and the US. And 698 00:44:12.930 --> 00:44:16.735 that's very interesting because if you would have argued something like 699 00:44:16.735 --> 00:44:20.495 that 15 years ago, people would have called you 700 00:44:20.495 --> 00:44:24.175 nuts. But if you now look at that China already 701 00:44:24.175 --> 00:44:27.809 has 0.9 of all 702 00:44:27.950 --> 00:44:31.789 the Bitcoin. The US has even 703 00:44:31.789 --> 00:44:35.410 before Trump, the US have 9.9 percent 704 00:44:36.589 --> 00:44:40.049 0.99 percent of all Bitcoin, 705 00:44:40.109 --> 00:44:43.945 basically 1% of all Bitcoin. And 706 00:44:43.945 --> 00:44:47.704 that other governments and central 707 00:44:47.704 --> 00:44:49.964 banks also starting discussing, 708 00:44:52.665 --> 00:44:54.605 the concept of a Bitcoin reserve, 709 00:44:57.510 --> 00:45:00.090 then we see a total different 710 00:45:00.870 --> 00:45:04.550 development. Right? So so if if if we count 711 00:45:04.550 --> 00:45:08.070 that also as part of being DeFi, then you see 712 00:45:08.070 --> 00:45:11.755 that Bitcoin as it's as an asset class 713 00:45:11.895 --> 00:45:15.275 somehow has established. Also, 714 00:45:15.895 --> 00:45:18.155 almost all banks globally, 715 00:45:20.535 --> 00:45:24.190 work on some kind of integration or have 716 00:45:24.190 --> 00:45:26.290 already done some kind of integration. 717 00:45:29.710 --> 00:45:33.090 And also companies by now. So it's not only, 718 00:45:33.950 --> 00:45:37.214 MicroStrategy, who, 719 00:45:37.675 --> 00:45:40.895 let's say, have a clear 720 00:45:41.675 --> 00:45:45.115 Bitcoin strategy as, let's say, in the 721 00:45:45.115 --> 00:45:48.575 treasury function, but also 722 00:45:48.635 --> 00:45:52.335 many other companies are currently discussing that. 723 00:45:52.850 --> 00:45:56.530 So so so that's basically for Bitcoin. But if you then 724 00:45:56.530 --> 00:45:59.750 look at the, let's say, classical 725 00:46:00.050 --> 00:46:03.810 platforms, like Solana, like, 726 00:46:03.810 --> 00:46:07.655 of course, Ethereum, We 727 00:46:07.655 --> 00:46:11.495 may even discuss, as being 728 00:46:11.495 --> 00:46:15.095 a platform. At 729 00:46:15.095 --> 00:46:18.535 least they have some traction also in the real 730 00:46:18.535 --> 00:46:21.890 world, with, let's say, 731 00:46:21.890 --> 00:46:24.790 providing a solution to selected, 732 00:46:26.130 --> 00:46:29.570 problems where, let's say, a blockchain platform is a 733 00:46:29.570 --> 00:46:30.630 proper solution. 734 00:46:33.105 --> 00:46:36.625 Still speculation significantly higher than real 735 00:46:36.625 --> 00:46:40.225 business, but real business comes. And I 736 00:46:40.225 --> 00:46:43.985 think if we if we look at what's happening 737 00:46:43.985 --> 00:46:47.810 now in that whole space, the focus 738 00:46:47.950 --> 00:46:51.790 will turn significantly more to 739 00:46:51.790 --> 00:46:54.930 providing applications and use cases, 740 00:46:56.430 --> 00:46:59.650 to leverage, let's say, the assets already 741 00:46:59.950 --> 00:47:02.765 generated in these different digital, 742 00:47:03.704 --> 00:47:07.385 currencies, asset class, you name 743 00:47:07.385 --> 00:47:11.085 it. So that that's something which I believe 744 00:47:11.224 --> 00:47:14.285 would will come next. So 745 00:47:15.385 --> 00:47:19.130 probably but not only next year, 746 00:47:19.130 --> 00:47:22.570 that's something that's a development over the next 3 to 747 00:47:22.570 --> 00:47:26.330 5 or 7 years, which basically means from 748 00:47:26.330 --> 00:47:29.150 concept, to implementation 749 00:47:30.010 --> 00:47:31.550 into, let's say, 750 00:47:33.515 --> 00:47:37.194 daily processes. So I really believe in 10 751 00:47:37.194 --> 00:47:40.954 years from now, we have a total different situation. And we 752 00:47:40.954 --> 00:47:44.555 are now at that turning point because there's so much money money, 753 00:47:44.555 --> 00:47:47.910 volume, and, assets into that, let's say, 754 00:47:47.910 --> 00:47:51.589 digital asset space that you now can actually start, 755 00:47:51.910 --> 00:47:55.450 leveraging on. And also the number of players increased 756 00:47:55.670 --> 00:47:59.369 significantly from, let's say, at the beginning, 757 00:47:59.750 --> 00:48:03.345 a million now to a couple of 100,000,000. So so 758 00:48:03.345 --> 00:48:07.125 that's the the a a pretty new dynamic, 759 00:48:08.385 --> 00:48:11.605 on all fronts. So I expect, 760 00:48:13.345 --> 00:48:17.109 that we are soon as on a turning point where we 761 00:48:17.109 --> 00:48:20.410 say, okay. It's not only about the innovators 762 00:48:21.750 --> 00:48:24.970 or the early adapters. We go now early mass 763 00:48:25.350 --> 00:48:29.030 into that segment, and, basically, the 764 00:48:29.030 --> 00:48:32.755 the numbers confirm that that we have, in 765 00:48:32.755 --> 00:48:36.355 many developed and developing countries, 5 to 766 00:48:36.355 --> 00:48:39.415 10% of people who somehow own, 767 00:48:42.195 --> 00:48:45.655 let's say, cryptocurrencies or crypto 768 00:48:45.875 --> 00:48:49.410 assets. Even if it's 769 00:48:49.410 --> 00:48:51.990 now many for speculation reasons, 770 00:48:53.090 --> 00:48:56.230 it can be transformed into, let's say, 771 00:48:58.290 --> 00:49:01.349 more day to day relevant themes. 772 00:49:02.474 --> 00:49:06.174 Now that basically is my view on on that. 773 00:49:06.555 --> 00:49:09.535 Still also early days. 774 00:49:11.515 --> 00:49:15.035 However, the theme will find 775 00:49:15.035 --> 00:49:18.220 its place in the financial 776 00:49:19.559 --> 00:49:23.319 global system? So I'm gonna that that's 777 00:49:23.319 --> 00:49:26.540 such a vast field, so I'm gonna boil this down really to, 778 00:49:26.760 --> 00:49:30.224 again, our our area of expertise. We're 779 00:49:30.224 --> 00:49:34.065 big believers in in the tokenization of assets and and 780 00:49:34.065 --> 00:49:37.585 real assets. So we really think that in particular in 781 00:49:37.585 --> 00:49:41.365 in illiquid asset classes, private equity, private debt, 782 00:49:42.480 --> 00:49:46.240 There is so much, efficiency that can be gained when you 783 00:49:46.240 --> 00:49:50.000 create, like, you know, fungible wrappers around these assets in 784 00:49:50.000 --> 00:49:53.760 order to make it possible to, you know, reduce friction of 785 00:49:53.760 --> 00:49:57.365 of trading these assets, going forward. So 786 00:49:57.365 --> 00:50:00.885 tokenizing illiquid or real assets and and 787 00:50:00.885 --> 00:50:04.025 reducing or removing intermediaries in the process, 788 00:50:04.565 --> 00:50:08.244 that is going to add transparency, reduce cost, and so on. 789 00:50:08.244 --> 00:50:11.470 So we think that's really the areas where tokenization 790 00:50:12.410 --> 00:50:16.170 slash by extension DeFi, can add a 791 00:50:16.170 --> 00:50:19.470 lot of value or is going to impact kind of traditional 792 00:50:19.770 --> 00:50:23.505 traditional markets. And so, yeah, I mean, that's 793 00:50:23.505 --> 00:50:27.025 that's kind of the the focus area where we see kind of immediate 794 00:50:27.025 --> 00:50:30.865 impact as a low hanging fruit. So basically, you know, 795 00:50:30.865 --> 00:50:34.464 tokens kind of being the the next level of, of, 796 00:50:34.704 --> 00:50:38.490 of wrappers or next level of of securities. And 797 00:50:38.950 --> 00:50:42.710 we see them also over the medium term, you know, tokenization to 798 00:50:42.710 --> 00:50:46.470 replace traditional fund structures or maybe, you know, even being 799 00:50:46.470 --> 00:50:50.230 a more efficient wrapper for securitization. That's that's 800 00:50:50.230 --> 00:50:53.954 kind of what we would see is on the horizon, because there are 801 00:50:53.954 --> 00:50:57.555 definitely, benefits in terms of costs that can be 802 00:50:57.555 --> 00:51:01.394 reaped very efficiently. And ultimately, it's 803 00:51:01.394 --> 00:51:04.994 going to lead to a bit of a conversion or to a bit more seamless 804 00:51:04.994 --> 00:51:07.815 connection between between TradFi and DeFi. 805 00:51:09.020 --> 00:51:12.800 So, yeah, it's it's also essentially going to 806 00:51:13.100 --> 00:51:16.400 then enable, you know, more traditionally 807 00:51:16.700 --> 00:51:20.540 DeFi minded investors to access, you know, real world assets if you 808 00:51:20.540 --> 00:51:23.855 have a wrapper that kind of works for the new ecosystem. 809 00:51:24.875 --> 00:51:28.635 And yeah. So, ultimately, we think that's that's gonna lead to a bit 810 00:51:28.635 --> 00:51:32.335 more connectivity and more exchange between the 2 ecosystems. 811 00:51:33.915 --> 00:51:37.615 But, yeah, that will be pretty much the most imminent, kind of development 812 00:51:37.675 --> 00:51:41.170 that we see. I have a lot of friends working in the 813 00:51:41.170 --> 00:51:44.530 DeFi, and I know that I'm a bit of a contrarian here. First of 814 00:51:44.530 --> 00:51:47.970 all, DeFi doesn't necessarily change the 815 00:51:47.970 --> 00:51:51.595 business model for most financial institutions yet in the 816 00:51:51.595 --> 00:51:55.435 capital markets, maybe when they look at the professional businesses. But 817 00:51:55.435 --> 00:51:59.115 largely speaking, biggest bulk of banking is 818 00:51:59.115 --> 00:52:02.875 about relationship with clients. And the business model is 819 00:52:02.875 --> 00:52:06.540 about how you demonstrate the value and get clients to pay for that. So 820 00:52:06.620 --> 00:52:10.380 so DeFi has not yet clear understanding of what it 821 00:52:10.380 --> 00:52:13.740 means basically to justify the value for 822 00:52:13.740 --> 00:52:17.520 money, which is not the DeFi per se. However, DeFi can bring some transparency, 823 00:52:17.660 --> 00:52:21.225 which is clearly relevant for me because transparency will be, if you 824 00:52:21.225 --> 00:52:24.585 like, a key element and a competitive advantage going 825 00:52:24.585 --> 00:52:28.345 forward. However, what for me has happened 826 00:52:28.345 --> 00:52:31.645 in the recent years is that there is too much overengineering. 827 00:52:32.585 --> 00:52:36.180 When something is overengineered, it never works. 828 00:52:36.180 --> 00:52:39.619 Even think about the rockets of Elon Musk. They look simple and 829 00:52:39.619 --> 00:52:43.460 neat. Right? So overengineering does not work, does 830 00:52:43.460 --> 00:52:47.220 not generate enough value. Now what does 831 00:52:47.220 --> 00:52:51.005 it mean? I give you an example. You can have a 832 00:52:51.005 --> 00:52:54.685 project for 1,000,000,000 to develop a central bank 833 00:52:54.685 --> 00:52:58.445 digital currency, which might generate some benefit and most likely is interesting 834 00:52:58.445 --> 00:53:02.225 and, you know, high value. But then you can spend less than 10,000,000 835 00:53:02.365 --> 00:53:06.070 like the Brazilian Central Bank to release the PIX, which 836 00:53:06.070 --> 00:53:09.290 is a framework for instant payment. They got adopted in 2 years 837 00:53:09.590 --> 00:53:12.330 by 160,000,000 Brazilians. 838 00:53:13.430 --> 00:53:16.810 So now simplicity add a lot more value 839 00:53:17.205 --> 00:53:20.805 to the world needs today compared to the complexity of 840 00:53:20.805 --> 00:53:24.425 some technology elements, which are, if you like, overwhelming 841 00:53:24.885 --> 00:53:28.345 in terms of, you know, the the cost of the effort and the result. 842 00:53:28.725 --> 00:53:32.300 So I think that in the DeFi world, I've passed the the crypto craze, which 843 00:53:32.300 --> 00:53:36.140 is something else. They have to really go back to principles. 1st 844 00:53:36.140 --> 00:53:39.980 principles to understand that if it's not simple, it will not 845 00:53:39.980 --> 00:53:40.480 fly. 846 00:53:48.315 --> 00:53:51.755 By the way, you know what? Even if let's talk 847 00:53:51.755 --> 00:53:55.454 about something a bit different than the 5 are still in banking. 848 00:53:57.220 --> 00:54:01.000 Talking to so many new banks and banks, when they offer 849 00:54:01.380 --> 00:54:05.060 products on mobile, those products needs to be simple 850 00:54:05.060 --> 00:54:08.840 for people to understand them, okay, and to basically get the value proposition 851 00:54:08.900 --> 00:54:12.145 right. I'll give you an example. There is this bank that told me recently 852 00:54:12.605 --> 00:54:15.825 they have 2 loans on the app, 853 00:54:16.045 --> 00:54:19.725 and that's the same loan, but one contains an 854 00:54:19.725 --> 00:54:23.300 option which basically is an insurance for the loan, which for the 855 00:54:23.300 --> 00:54:26.600 client is also good for the bank because they add extra revenues. Now 856 00:54:26.980 --> 00:54:30.660 when they sell these 2 products in the branches, 90% of 857 00:54:30.660 --> 00:54:34.119 people buy the one with the option inside with insurance. On the mobile, 858 00:54:34.260 --> 00:54:37.785 90% buy the one without. Because a 859 00:54:37.785 --> 00:54:41.385 mobile, like simplicity, convenience, is is what people get trapped into 860 00:54:41.385 --> 00:54:45.065 immediately. So so digital brings, in any case, 861 00:54:45.065 --> 00:54:48.585 the simplification of the product framework. The problem is 862 00:54:48.585 --> 00:54:52.110 that banks are used to prop up products with features 863 00:54:52.650 --> 00:54:56.410 in order to add fees around that, and that doesn't work well 864 00:54:56.410 --> 00:55:00.170 on digital. So the transformation of the business model is is is 865 00:55:00.170 --> 00:55:03.895 going around basically the way people perceive the value and 866 00:55:03.895 --> 00:55:06.875 therefore the way you get monetization out of that. 867 00:55:08.055 --> 00:55:11.735 That is that is the key element that everybody needs to consider. So 868 00:55:11.735 --> 00:55:15.415 simplification is a part of the digital framework. It is 869 00:55:15.415 --> 00:55:19.079 not bad per se as long as you throw 870 00:55:19.079 --> 00:55:22.760 away, you know, the unwanted features and keep those which are the most important for 871 00:55:22.760 --> 00:55:26.440 the customers, and you're capable of explaining them. So across the 872 00:55:26.440 --> 00:55:29.855 board, on the business model, in the technology stack, 873 00:55:29.995 --> 00:55:33.375 simplicity is a key principle, pairing transparency. 874 00:55:33.915 --> 00:55:37.675 I think decentralized science is is 875 00:55:37.835 --> 00:55:41.375 I think it's a it's a revolution coming. Right? And it's growing. 876 00:55:42.660 --> 00:55:46.339 It's been it's a bit it's been a bit slow during the crypto 877 00:55:46.339 --> 00:55:49.960 winter. But right now with the, you know, Bitcoin a 100,000 878 00:55:50.099 --> 00:55:53.715 with the euphoric like right now people being euphoric again 879 00:55:53.875 --> 00:55:57.015 with Trump coming into the leadership and being pro, 880 00:55:57.475 --> 00:56:01.155 crypto. I think crypto is gonna just roll into the 881 00:56:01.475 --> 00:56:05.075 it's gonna come. I mean, think about it. Decentralized finance 882 00:56:05.075 --> 00:56:08.920 takes away the immediate immediate intermediaries. It it is 883 00:56:08.980 --> 00:56:12.820 a beautiful and critical part especially for unbanked and the emerging 884 00:56:12.820 --> 00:56:16.500 markets. So, yes, if you live in the Western world, you might 885 00:56:16.500 --> 00:56:20.260 not see it. But if you're in the emerging market, decentralized finance might be 886 00:56:20.260 --> 00:56:23.585 already there. Right? It's the best way to, you know, offer, 887 00:56:23.965 --> 00:56:27.785 you know, to lend money, to borrow money, right, to invest, to trade. 888 00:56:28.005 --> 00:56:30.565 All this is possible with decentralized finance. So, 889 00:56:32.485 --> 00:56:36.110 there's and and and and there's there's this possibility to 890 00:56:36.110 --> 00:56:39.950 quickly get in because we have this kind of discriminatory, you 891 00:56:39.950 --> 00:56:43.310 know, set up that it's not easy. Not everybody can have a bank account. Right? 892 00:56:43.310 --> 00:56:46.670 So all these billions of unbanked right now with 893 00:56:46.670 --> 00:56:49.330 decentralized finance can, you know, it democratizes 894 00:56:50.454 --> 00:56:54.295 the financial system and lets them be part of it. Because now 895 00:56:54.295 --> 00:56:58.135 it's easy. On your smartphone, everybody has a smartphone. You have a wallet. Bam. You're 896 00:56:58.135 --> 00:57:01.734 a member of a financial community. You can now borrow money. You can lend money. 897 00:57:01.734 --> 00:57:05.540 You can, you can trade. You can even invest all on crypto. So 898 00:57:05.540 --> 00:57:09.240 I think decentralized finance needs to be watched for, and it's a good way, 899 00:57:09.700 --> 00:57:13.460 you know, to actually, you know, substitute banks and 900 00:57:13.460 --> 00:57:17.220 or, you know, the the basically, the traditional banking role is 901 00:57:17.220 --> 00:57:20.755 under attack, especially in emerging markets if they if they don't, 902 00:57:21.155 --> 00:57:23.815 watch in a and maybe embrace also, 903 00:57:24.675 --> 00:57:28.515 decentralized finance. Friends of celebrate. Io, as this year comes to a 904 00:57:28.515 --> 00:57:31.875 close, we want to take a moment to thank you for your 905 00:57:31.875 --> 00:57:35.420 incredible support throughout 2024. It's been 906 00:57:35.420 --> 00:57:38.960 an exciting journey, and we're truly grateful 907 00:57:38.980 --> 00:57:42.380 to have such an engaged and inspiring community of 908 00:57:42.380 --> 00:57:46.000 listeners, readers, and partners. We wish you joyful 909 00:57:46.060 --> 00:57:49.040 holiday season filled with love, laughter, and relaxation. 910 00:57:49.755 --> 00:57:51.535 Merry Christmas. Happy New Year. 911 00:58:00.154 --> 00:58:03.835 May 2025 bring you success, happiness, and plenty 912 00:58:03.835 --> 00:58:07.250 of exciting opportunities. We'll be taking a short 913 00:58:07.250 --> 00:58:10.869 break to recharge and reflect, but we'll be back in January 914 00:58:11.250 --> 00:58:14.930 with brand new episodes of starter break dot io packed 915 00:58:14.930 --> 00:58:18.725 with insights, stories, and updates from the startup world. Thank 916 00:58:18.725 --> 00:58:22.485 you for being a part of our journey. We can't wait to connect with you 917 00:58:22.485 --> 00:58:26.105 in the New Year. Thank you very much. Happy holidays. 918 00:58:26.565 --> 00:58:30.165 Enjoy your time off. And thank you for having me. 919 00:58:30.165 --> 00:58:33.820 And to all the audience out there, Merry Christmas and a 920 00:58:33.820 --> 00:58:37.620 happy and healthy New Year 2025. Appreciate 921 00:58:37.620 --> 00:58:41.280 it, Yeah. Thanks so much. You too. Have a lovely Christmas, 922 00:58:41.340 --> 00:58:45.020 happy holidays, and a happy New Year. Merry Christmas. Happy New Year. 923 00:58:45.020 --> 00:58:48.755 And look, always beat me with his Christmas jumper. 924 00:58:48.755 --> 00:58:51.734 I have a red one, but, you know, I can't compete. 925 00:58:52.275 --> 00:58:55.234 Okay. Merry Christmas. Happy New Year. 926 00:58:59.075 --> 00:59:01.020 I was just thinking of how do how does it 927 00:59:05.020 --> 00:59:08.700 say happy new year in, in Chinese. I forgot how to say it in, 928 00:59:08.940 --> 00:59:11.680 how to say happy Christmas in Chinese, but and 929 00:59:16.765 --> 00:59:18.065 in Spanish. So 930 00:59:20.605 --> 00:59:22.865 thank you very much. Greetings from Frankfurt. 931 00:59:28.605 --> 00:59:32.050 That's all, folks. Find more news, streams, 932 00:59:32.430 --> 00:59:35.250 events, and interviews at www.startuprad.i0. 933 00:59:38.190 --> 00:59:40.370 Remember, sharing is caring.