INNOVATION SPECIAL: ARK's TOP 14 Big Ideas, China a Bigger Innovator Than the US; A Multipolar Currency World; China's Banks Innovate or Die!
Richard Turrin
Helping you make sense of going Cashless | Best-selling author of "Cashless" and "Innovation Lab Excellence" | Consultant | Speaker | Top media source on China's CBDC, the digital yuan | China AI and tech
Five stories show how innovation is changing our world!
1. ARK’s Top 14 Big Ideas: BUYER BEWARE
2. China Overtakes the US in Innovation
3. Top 5 Trends in our new multipolar currency world brought by fintech
4. China’s Banks Innovate or Die!
5. EU Cash Use is dying; LONG LIVE CASH!
Art: Dall-e’s view of a multipolar currency world as the dollar goes up in flames.
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1. ARK’s Top 14 Big Ideas: BUYER BEWARE
ARK Invest’s 12 BIG IDEAS for 2023 is FANTASTIC, but buyer beware!
ARK’s report does something no other does, it is visionary in showing how the 12 big ideas are interconnected! Instead of looking at tech, for example, digital wallets, in isolation, ARK distinguishes itself by showing how things like AI and wallets interconnect!
Download: here
ARK Invest needs little introduction as founder Cathie Wood became the “high priestess” for the high-tech boom. Still, ARK's ETFs falling 70% hit hard with assets under management falling by $50bn!
WARNING: ARK is selling itself and its funds, so this is a sales document! Enjoy its vision of the future, but beware that some of the numbers seem a bit exaggerated, like a used car salesperson's!
I break down only the report’s fintech topics into the good, bad, and ugly!
?? The good:
Digital Wallets: I LOVE ARK’s coverage! They absolutely get the disruptive power of digital wallets and do a fabulous job of showing their importance in our future. ARK's global view is second to none, and recent moves by Twitter into payments and banks in the US to build new wallets are clear indicators of how important this sector will be. Wallets will “cut out the middlemen!”
Public blockchain & Smart Contracts: Ignore the sh*tcoins and crypto insanity, public blockchain is real and a positive development that will gain traction. That incumbent banks are building on Ethereum shows that it shouldn’t be dismissed. A public blockchain is a specialized tool, perhaps not for everything, but it has great potential.
?? The bad:
Bitcoin: ARK’s overall view is that bitcoin is going to the moon! Sorry, I don’t buy that, even if I don’t predict or wish for its demise. It is impossible to ignore the regulatory tidal wave that is about to hit bitcoin. If ARK is so smart, why don’t they see this coming? ARK also promotes BTC’s use in financial inclusion, ignoring UNDP and other warnings.
?? The ugly:
DeFi and Smart Contracts: ARK wrote one of the worst sentences ever: “DeFi lending protocols functioned as designed.” Are you kidding me? ARK needs to read the BIS’s detailed account of how DeFi contributed to the crypto crash! DeFi was hacked for over $3.2 bn in 2022! Everything is fine? Shame on ARK for saying that DeFi lending promotes inclusion. DeFi lending REQUIRES collateral that the excluded don’t have!
Takeaways:
2. China Overtakes the US in Innovation
??CHINA SURPASSES THE US IN ABSOLUTE INNOVATION.??
The US-based ITIF drops a BOMB: In 2020, China’s innovation and advanced-industry capabilities increased to 139 percent of the US’s in absolute terms, increasing from 78% in 2010!
Download: here
Ringing the alarm that the US’s innovation capabilities are faltering and China is overtaking the US has become almost a ritual for me. This report is probably the most alarming yet, and its title: "Wake up, America," says it all.
What readers may be thinking….
The response from readers on this topic are now predictable:
1) China “can’t innovate and only copies,”
2) I am a communist,
3) a growing majority tells me I’m right.
Here are my responses to all three groups in advance:
1?? "China can’t innovate and only copies," the ITIF wrote the best sentences I ever read on this:
“Many U.S. elites comfort themselves with the narrative that China, at least under the leadership of Xi Jinping, cannot truly innovate and that the U.S., therefore, has little to worry about. But this view is premised on too-narrow a view of innovation, largely one referring to the development of science-based, new-to-the-world products. Not only is this definition too narrow for assessing advanced-industry strength, but it is also not clear that this still even rings true given China’s recent gains in areas such as space exploration, genomics, AI, and quantum computing.”
2?? "I am a communist:"
Thirteen years in China have not made me a “collaborator.” It did make the study of innovation in China far more than an academic pursuit. I live it daily and see its impact first-hand. When an innovator with a book on innovation that lives in China tells you that they are “winning” I would hope that this would be seen as a “canary in a coal mine,” not someone with a political agenda.
One thing I did learn is that smart people get China wrong because of the media. The Western media's barrage of sensational articles proclaiming China's imminent doom makes understanding China nearly impossible.
3?? "I am right."
Thanks, but this doesn’t mean Chinese world domination. When innovation is measured “proportionally,” accounting for the size of the economy and population, China still lags behind the US at 75%, up from 58% in 2010.
So it's still "game-on," though China will likely catch the US in the next decade.
The problem is that in "geopolitical conflicts—military or civilian—it is total, not proportional, innovation that is likely the determining factor.”
Takeaways:
3. Top 5 Trends in our new multipolar currency world
The TOP 5 trends to watch as we switch to a multipolar currency world.
Our monetary system is changing, and this will likely be the biggest story of 2023. I intend to cover it regularly this year because it is so critically important.
Download: here
To explain this transition to multipolarity, I present an excellent paper from Credit Suisse and five examples from the recent news that prove this trend is real and unfolding before our eyes.
There will be no dollar collapse or sudden shock. This will be an imperceptible yet inexorable move to alternative currencies using fintech, including CBDCs, that are being built now.
Fintech, as I said two years ago, is now a pawn on the geopolitical chess board. The transformation to currency multipolarity fintech will bring will be slow, which is why many will miss it or deny its existence.
From Credit Suisse:
"We see a new – or rather adapted – more multipolar system resulting from three drivers:
??first, the trend increase in bilateral trade among many countries, which allows for returns to scale in the use of their respective currencies rather than the US dollar;
??second, the deepening of local capital markets in emerging markets; and,
??third, efforts (especially by leading emerging markets) to develop mutual insurance schemes against shocks resulting from shifts in US monetary policy."
The top five trends to follow:
1?? China’s push for the petroyuan:
Saudi Arabia is now “open to trade in currencies other than the USD” while China is pushing for yuan acceptance. This will happen in 2023.
领英推荐
2?? Brazil and Argentina’s common currency:
Both are friends of the US but share a desire to expand bilateral trade and decrease costs. Who can blame them?
3?? Iran and Russia:
This is the “pariahs club!” The two rogue nations just linked banking systems, and to overcome mutual currency distrust, are working on a gold stablecoin.
4?? India and Pakistan use yuan for Russian oil:
India is a US “friend” that is purchasing oil from Russia in CNY and wants to use its rupee in UAE trade. Is India a bad country? Pakistan now also plans to buy Russian oil in CNY.
5?? BRICS+ reserve currency and CBDC:
BRICS proposed a new joint currency basket though I expect this project to take a while. But watch as Egypt joined BRICS and Indonesia is applying! Also, watch carefully as this year, China, India, Russia, and Brazil will all launch CBDCs!
Takeaways:
-The dollar isn't dead, but it is wounded.
-Should you worry? NO! Should you be aware and prepare? YES!
-Multipolarity is a slow process, and many will point to USD usage figures and deny it exists.
-Fintech is making de-dollarization possible.
-De-dollarization is simply insurance against sanctions.
4. China’s Banks Innovate or Die!
The top 3 things Chinese consumers want from their banks have lessons for the West.
I don't believe that “what happens in China stays in China! This great report on China banks by Bain & Company shows what consumers want from the banks after they’ve used super-apps.
It’s very simple in China, banks either innovate or die! Banks in China have been disrupted more by digital competitors than anywhere else in the world!
Download: here
Bankers from the West could also learn from this report as their Chinese colleagues are years ahead of the West in fighting digital challengers!
The top three things Chinese bank customers want:
1?? An Omnichannel experience…. yes people still want branches!
Surprisingly, China banks are showing us that -despite- digital payment disruption by super apps WeChat and Alipay, most incumbent banks are well-liked by their customers!
China’s banks have a “Net Promoter Score” of 55% meaning most customers would recommend their bank. NPS scores are rising and appear to follow banks’ improving digital capabilities.
Banks can't rival the functionality of super apps but can rival their ease of use and expand services. My bank app does more and more every year!
Chinese still want nice branches! Mine is always empty now, so I am surprised by this finding, but I guess for some, it’s a deciding factor.
2?? Super app functionality, not gamification
Unsurprisingly, users want their bank apps to do more, and the push for banks to challenge the superapps is real.
Without payments, this would be impossible, but now with the onset of the digital yuan as a national payment system, some banks may just rise to the challenge!
Unsurprisingly bank users want rewards or loyalty points for their patronage. Why not? Coupled with digital yuan use this could be a killer combo!
Where I think there is a real lesson for the West is with gamification. Chinese consumers haven’t taken to gamification, chat, or discussion functions, which some Chinese banks tried. Perhaps gamification is overrated?
3?? Digital and HUMAN Wealth Services
The part that strikes me most about this is that wealth management is still such an emotionally charged decision that humans are still necessary. Robo-advisors in the West also found this out.
The inability to reach humans or having to switch to a different channel are killers with wealth products. Unsurprisingly, chatbots really fail in this use case!
Takeaways:
5. EU Cash Use is dying; LONG LIVE CASH!
While cash is still the most frequently used way to pay at 59% of transactions in 2022, its use plummeted 20 points from 79% in 2016 and 13 points from 72% in 2019. Download the ECB report: here
Long Live Cash
Many readers will be expecting the author of a book titled “Cashless” to be gleeful with these results. I'm neutral, as I see this as a natural evolution of payment.
In fact, I will hopefully surprise you all by focusing on why we will NEED cash for a long time to come.
If that sounds like a conflicted point of view, it isn’t, and it mirrors the sentiments of many EU consumers:
“60% of consumers considered the option to pay with cash to be important or very important. …. This contrasts with self-reported preferences for cash or cashless; 55% say they prefer cashless means of payments (up from 49% in 2019), while 22% prefer cash and 23% have no clear preference.”
So people want the convenience of going cashless while retaining the ability to use cash if they please!
Interestingly, this desire to keep cash even exists in the EU's leading cashless countries: Luxembourg, Netherlands, and Finland, where only 39%, 21%, and 19% of transactions are cash.
Why keep cash?
From a user perspective, the main reasons are:
(i) cash is considered to make one more aware of one’s own expenses;
(ii) cash is perceived as anonymous (and therefore protects privacy);
(iii) cash transactions are perceived to be immediately settled.
Now let's talk about anonymity which has become a much bigger topic due to big tech and digital surveillance. According to the survey, “anonymity has acquired a more prominent role in respondents’ opinions, rising from 13% in 2016 to over 40% in 2022.”
So let's face it, it isn't just drug dealers and thieves who love cash's anonymity, and that isn't going to change anytime soon. In fact, it is going to grow!
No surprise that cards trump cash for convenience, and a relatively large majority (62%) saw the key advantage as being that they don’t have to carry much cash with them.
So, long-term going cashless will win, but the opportunity to use cash should always be maintained.
Takeaways:
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Rich Turrin is the international best-selling author of "Cashless - China's Digital Currency Revolution" and "Innovation Lab Excellence." He is number 4 on Onalytica's prestigious Top 50 Fintech Influencer list and an award-winning executive previously heading fintech teams at IBM following a twenty-year career in investment banking. Living in Shanghai for the last decade, Rich experienced China going cashless first-hand. Rich is an independent consultant whose views on China's astounding fintech developments are widely sought by international media and private clients.
Please check out my books on Amazon:
Cashless: HERE
Innovation Lab Excellence: HERE
Diretore, divine justice law firm. India. Bsc. ((Hon) L. LB., M. B. A. Block Chain, D. E. and B. L. ***********
1 年Very very mindful. Like it. Thanks ???? for kind sharing .
Lead Future Tech with Human Impact| CEO & Founder, Top 100 Women of the Future | Award winning Fintech and Future Tech Influencer| Educator| Keynote Speaker | Advisor| Responsible AI, VR, Metaverse Web3
1 年All about innovation- thanks Richard Turrin- great collection of the landscape- interesting, but may be not surprising that China is overtaking the US- alone what they do in AI tech is far advanced.
Investor
1 年Thanks . I admire your energy to keep us updated with a wide range of insightful posts and comments.
uninterrupted innovation is key - even if too many hope to ignore innovation - I facilitate hands-on innovativeness with leading-edge champions in Europe as innovation facilitator and curator of (non-)knowledge inflows
1 年thank you for your explicit LONG LIVE CASH! Richard Turrin