The Ponnappan / Jai's Bucket list for the Next Decade ;) ~ MIT's top 10 picks for the world's next fintech leader

As the shock waves from the affirmative Brexit vote start to dissipate, there has been an increasing chatter concerning the fate of London as not only Europe's financial services hub but also a hub for startups as well. While Dublin, Berlin and Madrid are all strong contenders in the race for startup ecosystem supremacy, London by far is one of the strongest, particularly in the fin-tech sector.

Billions of capital continues to be pumped into the FinTech phenomenon with its soaring popularity an attractive proposition to investors. Companies continue to develop the industry through innovative ideas providing a wide variety of cost-effective services to customers and increasing efficiency and flexibility within the financial business.

Although we recognize the need for empowerment through connectivity worldwide, we view the Financial Technology application as one that goes beyond any brick and mortar institution and any country, but is malevolent to reinvigorate and lead the banking sector. 

We look forward to playing our part in catching this industry as it continues to expand into the mainstream financial sector in the midst of both calm and choppy weather.

FinTech visionaries are trying to remove the middle-man or intermediary and question conventional corporations who are less comfortable with software. 

FinTech start-ups are demonstrating that momentum is firmly with them; the speed with which they can develop in comparison to the world’s leading organizations is remarkable. The prolonged success of companies is testimony to this ascendancy.

Why Beautiful Brexit Makes Perfect Sense to Jai (& The Ponnappans)

Thank You, David (@DavidShrier at MIT)

A brief comment/Analysis of the Fin-tech Sector to date:

This is evident from the Innovate Finance 2020 Summit 2016 held in April where over 1400 people attended, including many power global leaders, technological experts and data analysts celebrating this new era of finance.

Friedrich Nietsche, German philosopher, once said this, 

"Want is not an proven reality, but rather an interpretation" 

The methodology: 

"In other words, it's all about making processes simpler and life easier."

When Jai throws a punch(Agility). 

I am always going for the bull's Eye(Accuracy).

It will hurt!(Seasoned)

Away from its prosperity and magnetism, just how sustainable is FinTech? 

There is a fear that Fin-tech may interfere too heavily with traditional business models, even though it provides a flexible and alternative crossing point for customers and businesses. 

(root cause/empowerment)

For years one has to mold and tend to those boulder shoulders. To design, strengthen, size and shape them just like a sledge hammer.

Financial services will always be in popular demand providing the worldwide economy is flourishing. Sending money, storing it, spending it, securing it - the functions are endless. 

Despite all that they have to offer, Fin-tech businesses still trail banks in terms of their market dominance even though the disparity is becoming less and less each year. For fin-tech companies, a relationship with a major bank is often a game-changer — for both sides of the equation. 

Becoming Agile(or hybrid) takes many years and many seasons of rigorous and relentless training, trying, testing, failing, experimenting and succeeding.

My source of inspiration & strength:

"Boxing agility drills are designed to help improve your speed and quickness while in the ring. Although many boxers develop their speed and agility to improve their punch accuracy and effectiveness, many boxing agility drills will also help you improve your defense skills."

Taking into consideration the speed with which the technological revolution and digital interference overwhelmed traditional industries, it seems outlandish for professional services giant Deloitte to recommend that it is unlikely that Fin-tech companies will have more than 6% of the market by 2025. Save for Santander, most banks are unhurried in their approach to utilizing financial technology. Because of this they are being caught up by Fin Tech companies who must now be considered as serious rivals.

Soon enough, the wealth management industry will have to contend with the widespread adoption of block-chain and artificial intelligence. We hope to be in a position to help the industry grapple with those future challenges -- which is why we are taking a full-time research role in studying global financial technology.

I've been focusing my thoughts, research and studies about our industry as a whole, To understand what's changing at the core of the economy, where one thing disconnected from another can impact in a Butterfly effect how people buy investments and move money.

Enterprise is a whole different bag of hammers, with much greater levels of complexity and product demands than what comes in dealing with consumers. The question whether some of these guys are up to that -- from my experience, firms that are consumer and try to pivot into the enterprise space, it usually doesn’t work out well.

Banks continue to use their supremacy to command high remittance fees and long-winded transaction times, but ultimately they will need to look into forming partnerships allowing them to apply FinTech services into their systems.

The technological landscape continues to progress as does the attitude towards money and the handling of it. Is it realistic to think that in the future our planet will be restricted to mobile and cashless payments as our inclination moves away from using cash frequently, if at all?

For a long period, the intent of Fin-tech has been to deliver speedy transactions at a reduced cost for the back and middle office of financial institutions, while the office facade develops relationships with clients and remain very much person-driven. 

Fin-tech businesses are moving away from offering a wealth of services and instead are providing precise dispensation specific to the customer. 

I see a change in that: from offering many to many to offering one service to a very specific niche and really focusing on providing superior product experience in that niche.

What FinTech has captured is a growing trend and grasped the current habitual climate around how we access and use money. It is going against the conformist who follows regulations which relies on banks developing their services and providing customers with an option not in place during its fabrication.

In today’s society, it is customers who require flexible models to correspond with the fast pace of life – suitably tailored for the constantly changing needs of individuals and organisations.

Digital platforms continue to advance with it now possible to take a loan from Paypal or get inventory financing from Amazon – further substantiation that FinTech is identifying ways to boost core financial communications and enhance the customer experience.

FinTech is going to continue shaping the landscape of the financial sector: My vision is that there’s going to be a lot of value for the consumer out of finance and FinTech going forward because of this change. Long-term it is difficult to gauge how much potential there is for further growth, but there is no doubt FinTech will continue to make a significant impact on the industry – watch this space. 

The Race.. Is On... 

With Europe still reeling from the implications of the Brexit, London’s supremacy in fintech (already under pressure from other conurbations) is now in question.  Who will take the leading role as the world’s fintech capital? We’ll examine the contenders…

Lead horses:

Singapore: We pick Singapore as our #1 contender to displace London as fintech capital of the world.  With a significant government effort to support fintech innovators (the Monetary Authority of Singapore even has a “Chief Fintech Officer”), dynamic incumbent banks like DBS and UOB, and a location that accesses the broader ASEAN region, we feel Singapore’s moment is at hand – if London isn’t able to maintain focus in the face of disruption, and if Singapore can fight off the sharp competition coming up immediately behind...

NYC: New York has unseated Boston as the #2 overall venture capital cluster in the U.S., with a heavy fintech spin thanks to the robust financial services industry coupled to a vibrant entrepreneurial ecosystem.  However, the local regulatory environment hobbles the Big Apple’s efforts to claim the top fintech spot (see: BitLicense). 

Hong Kong: Long a center of entrepreneurship and financial innovation, Hong Kong has maintained position in the shift to the new generation of fintech companies.  Ernst & Young places Hong Kong at 29% fintech adoption, the most anywhere in the world1. Its more liberal set of corporate regulations make it the natural interface between mainland China and the rest of the world – and China barely missed beating the U.S. for total venture capital activity in 2Q 2016 according to Preqin2. 

London: The Square Mile may be down, but she isn’t out.  London remains one of the largest innovation clusters in the world, retaining a sharp focus on fintech innovation with progressive government (in terms of fintech regulation and policy initiatives), a world-class set of universities, and a dynamic workforce with some of the best drawn from across Europe and around the world.  Goldman Sachs and Morgan Stanley announced intentions to remain engaged, but JP Morgan threatened moving “a few thousand” jobs3.If growth-oriented leaders can stave off isolationists, London will continue to reign.

Credible contenders:

Shanghai: It should come as no surprise that the top of our “contender“ list is the financial capital of mainland China.  Fiercely competitive, housing one of two independent exchanges, Shanghai is core to China’s drive to make the RMB a reserve currency. 

Zurich, Geneva & Zug: 12% of Switzerland’s economy is financial services, and the Swiss people and government have embraced the fintech revolution.  Swiss venture capital activity is consistently top-ranked, if not as energetic as London or New York and hindered by restrictive immigration policies. Although perhaps unfair to aggregate three municipalities into a single “Swiss cluster”, for our purposes they are equivalent to others in their peer group, and reasonably well coordinated. 

​Frankfurt: Germany is Continental Europe’s startup leader and Frankfurt is where the action’s at for German financial services. The sociopolitical environment limits labor market liquidity, and limited risk tolerance is a handicap, but flawless execution can catapult Frankfurt to the fore. 

Shenzhen: Also strong on the list is Shenzhen, home to a new generation of Chinese entrepreneurs with a dynamic, vibrant ecosystem in the making, as well as the other independent exchange in China (besides Shanghai).  If Shenzhen and Hong Kong were able to more closely coordinate activities, they could create a dominant “supercluster”.

Dubai: Dubai’s economy is built on diversifying beyond oil to a broader set of industries, and its position as a congenial environment for foreigners coupled to enlightened government policy makes for a legitimate position as a contender. Weather, economic volatility and other agitations surrounding the region are downsides.

Mumbai: Long a workhorse of the Indian entrepreneurial miracle, Mumbai continues to push the boundaries. The National Biometrics project is now spawning startups seeking to provide financial access and inclusion, leveraging cornerstone identity. 

Luxembourg: €3.5 trillion of assets are under management in Luxembourg4, and financial services comprise 27% of the economy5.  The government, academia and industry have banded together to pioneer the next wave of financial innovation, if they can move beyond the country’s traditionally conservative approach to business (disclosure: MIT has an agreement to advise on this effort). 

Dark horses:

Several jurisdictions are working to make themselves attractive to fintech entrepreneurs, including the Caymans, Barbados, Austin TX, Sao Paolo, Paris, Dublin, Moscow, Johannesburg, and Lagos in Nigeria.  Will one or more of these dark horses be able to carve out market share?  

And the winner is…

The next three to five years will see the outcome of the race unfold.  Where is the smart money going?  One thing’s for sure: Brexit uncertainty in London means greater opportunity for other regions around the world.

Entrepreneurship, Innovation and Corruption ~ Changing Scenarios that Define the Corrupt

      
          The Harvard Business Review is running a very interesting and insightful story on how money in politics is having a deleterious and increasingly eroding effect on U.S. innovation and the economic environment that fosters the same.


How Corruption Is Strangling U.S. Innovation
http://blogs.hbr.org/cs/2012/12/how_corruption_is_strangling_us_innovation.html

An excerpt from the original entry:

" If there's been one topic that has entirely dominated the post-election landscape, it's the fiscal cliff. Will taxes be raised? Which programs will be cut? Who will blink first in negotiations? For all the talk of the fiscal cliff, however, I believe the US is facing a much more serious problem, one that has simply not been talked about at all: corruption. But this isn't the overt, "bartering of government favors in return for private kickbacks" corruption. Instead, this type of corruption has actually been legalized. And it is strangling both US competitiveness, and the ability for US firms to innovate.

The corruption to which I am referring is the phenomenon of money in politics.

..Somehow, it seems that every time that [Mickey Mouse] is about to enter the public domain, Congress has passed a bill to extend the length of copyright. Congress has paid no heed to research or calls for reform; the only thing that matters to determining the appropriate length of copyright is how old Mickey is. Rather than create an incentive to innovate and develop new characters, the present system has created the perverse situation where it makes more sense for Big Content to make campaign contributions to extend protection for their old work.if you were in any doubt how deep inside the political system the system of contributions have allowed incumbents to insert their hands, take a look at what happened when the Republican Study Committee released a paper pointing out some of the problems with current copyright regime. The debate was stifled within 24 hours. And just for good measure, Rep Marsha Blackburn, whose district abuts Nashville and who received more money from the music industry than any other Republican congressional candidate, apparently had the author of the study, Derek Khanna, fired. Sure, debate around policy is important, but it's clearly not as important as raising campaign funds.

       ..Ars Technica reports that Derek Khanna is getting axed over his memo detailing the conflict between laissez-faire-oriented free market ideals and the regulatory monopoly that is copyright. 'The Republican Study Committee, a caucus of Republicans in the House of Representatives, has told staffer Derek Khanna that he will be out of a job when Congress re-convenes in January. The incoming chairman of the RSC, Steve Scalise (R-LA) was approached by several Republican members of Congress who were upset about a memo Khanna wrote advocating reform of copyright law. They asked that Khanna not be retained, and Scalise agreed to their request. "

“Greed & Power-lust is a weed that grows only in the vacant lots of an abandoned mind. ” ~Ayn Rand

           The multifaceted Intent and the efforts to control and curb corruption increases levels of trust in the ability of institutions to effectively enforce laws/rules of trade in a fair manner. With varied periods of time pervasive bureaucracy and increasing red tape also tends to create a stagnant climate where corruption can and will flourish, with officials often demanding bribes for the myriad permits needed to carry on business among several other things. Entities and groups with a political and financial upper hand often tend to dominate and predate in a market such as this. High handed corruption as a result continues to remain a major deterrent to distributed and diverse economic activity. Often a better control of corruption has been historically associated with rising levels of innovation and entrepreneurship. Absence of such a critical and defining trust, would invariably restrict the scale and scope of trade and inversely effect productivity and investment in innovation and entrepreneurship.

        Yes, the puzzling relationship between entrepreneurship, innovation, and corruption suggests corruption is inversely correlated to economic growth, entrepreneurship and innovation. That is, beyond all debates and arguments several studies across the globe conclude that as corruption goes up, economic indicators go down. The scope/effects of corruption on business is mediated and outlined by several factors, all of which are related to the ability to reliably enforce rules that promote fair trade and transparency.

“Political corruption, social greed, and Americanized quasi-socialism can ruin even the most wonderful places. California proved that.” 

~Tiffany Madison

         Entrepreneurs and innovators are motivated by the portion of the value created by the venture that they are able to capture for themselves. As corruption increases, entrepreneurs face the risk of losing some of those profits to opportunists taking advantage of the corruption on the value chain. As a result, some potential entrepreneurs become discouraged and abstain from pursuing new business opportunities. The dampening effect of corruption has often been compared with that of taxes. Under this school of thought, corruption would differ from taxation only in the lack of public revenue generated. No matter the depth or potential of their innovations, all of their efforts to solve challenging industrial/social/economic problems could be stymied and nullified by corruption and unscrupulousness that favor the connections and short-term gain of a few over the long-term benefit of the industries they serve, the economy and the populace. Corruption is one of the most restrictive and intractable issues around the world, It is comparable to a wider and deplorable socio-economic disease that pervades and plagues entire cultures and economies  It inhibits the development of a stable and prosperous economy and the flourishing of an active democracy and citizen sector. Demanding transparency and fostering a culture in the public and private sector of accountability and  rule of law is perhaps the only real feasible approach to tackling this issue in the United States.

Sincerely,

Jai Krishna Ponnappan

------------P.S-------------

Blessed is The Fruitful Hand

“Among a people generally corrupt, liberty cannot long exist.” 
~Edmund Burke

“Evil is not just a theory of paradox, but an actual entity that exists only for itself. From its ether of manifestation that is garlanded in perpetual darkness, it not only influences and seeks the ruination and destruction of everything that resides in our universe, but rushes to embrace its own oblivion as well.

To accomplish this, however, it must hide within the shroud of lies and deceit it spins to manipulate the weak-minded as well as those who choose to ally themselves with it for their own personal gain. For evil must rely on the self-serving interests of the arrogant, the lustful, the power-hungry, the hateful, and the greedy to feed and proliferate. This then becomes the condition of evil’s existence: the baneful ideologies of those who wantonly chose to ignore the needs and rights of others, inducing oppression, fear, pain, and even death throughout the cosmos. And by these means, evil seeks to supplant the balance of the universe with its perverse nature. 

And once all that was good has been extinguished by corruption or annihilation, evil will then turn upon and consume what remains: particularly its immoral servants who have assisted its purpose so well … along with itself. And within that terrible instant of unimaginable exploding quantum fury, it will burn brighter than a trillion galaxies to herald its moment of ultimate triumph. But a moment is all that it shall be. And a micro-second later when the last amber burns and flickers out to the demise of dissolving ash, evil will leave its legacy of a totally devoid universe as its everlasting monument to eternal death.”
~ by Adam Turquine. The excerpt is taken from the sequel to 'Beyond Mars Crimson Fleet'

“When one gets in bed with government, one must expect the diseases it spreads.” ~ Ron Paul

CORRUPTION PERCEPTIONS INDEX 2012

            Looking at the Corruption Perceptions Index 2012, it's clear that corruption is a major threat facing humanity.


         
           Corruption destroys lives and communities, and undermines countries and institutions. It generates popular anger that threatens to further destabilize societies and exacerbate violent conflicts.

            The Corruption Perceptions Index scores countries on a scale from 0 (highly corrupt) to 100 (very clean). While no country has a perfect score, two-thirds of countries score below 50, indicating a serious corruption problem.

           Corruption translates into human suffering, with poor families being extorted for bribes to see doctors or to get access to clean drinking water. It leads to failure in the delivery of basic services like education or healthcare. It derails the building of essential infrastructure, as corrupt leaders skim funds.

          Corruption amounts to a dirty tax, and the poor and most vulnerable are its primary victims.

So, How do we Counter the Effects of Public Sector Corruption?

              *Governments need to integrate anti-corruption actions into all aspects of decision-making. 
              *They must prioritize better rules on lobbying and political financing. 
               *They must make public spending and contracting more transparent, and make public bodies more accountable.

              After a year with a global focus on corruption, we expected more governments to take a tougher stance against the abuse of power. The Corruption Perceptions Index results demonstrate that there are still many societies and governments that need to give a much higher priority to this issue.

~ Jai Krishna Ponnappan