The conference, running yesterday and today, is organised jointly by the Federal Reserve Bank of Philadelphia and by the Journal of Business & Economics.

It features papers on:

·   Fintech Lending: Financial Inclusion, Risk Pricing, and Alternative Information    

·   Fintech, Regulatory Arbitrage, and the Rise of Shadow Banks

·    “The Law of One Bitcoin Price?

·   Blockchain Disruption and Smart Contracts

·   The Price of a Digital Currency

·   The Economics of Distributed Ledger Technology for Securities Settlement” 

·   Competition in the Financial Advisory Market: Robo versus Traditional Advisors

·   Does FinTech Affect Household Saving Behavior?

·   Integrating the Troublemakers: A Taxonomy for Cooperation between Banks and Fintechs

·    “Financial Regulatory Implications of Artificial Intelligence

·   Market Design with Blockchain Technology

·   Between the Lines: Decipher the Firms’ Fundamentals with Artificial Intelligence

   “Law, Trust, and the Development of Crowdfunding

·   Profit Sharing: A Contracting Solution to Harness the Wisdom of the Crowd

·   Financing Efficiency of Securities-Based Crowdfunding

The speakers are from universities, companies and other institutions from (in no particular order) the US, Canada, the UK, France, Germany, Australia, China and India – and perhaps other countries.


An analysis of data regarding investors’ internet usage suggests that machine analysts and human analysts are competitors.

Also that human analysts’ are losing.

That raises the question of whether it is in response to this development that human analysts are producing more optimistic, less accurate analysis of FinTechs and associated matters.

“The change in reporting quality is greatest for stocks where analysts’ conflicts of interest are strongest”.

All that is to be found in a paper presented to a conference, running yesterday and today, organised jointly by the Federal Reserve Bank of Philadelphia and by the Journal of Business & Economics.

The authors are Jillian P. Grennan and Roni Michaely, respectively of Duke University, and of Cornell University.




Australia, Canada and the EU seem to want to toughen rules.

Japan’s FSA is to start systematic monitoring of crypto-exchanges from next week.

America’s SEC is creating a cyber unit to tackle apparently wide misconduct in digital currencies.

China is not yet strangling crypto-mining but has been killing off cryptocurrencies for some weeks now.

So: what future for Bitcoin and other cryptocurrencies?

Frankly, I don’t know.  Clearly, this is not the time to start investing in them – and, if you are already invested, you need to review your portfolio pretty frequently.

However, I am confident of the future of blockchain-platforms for the present.  Though I fear they will also come under scrutiny and eventually be regulated, they serve a different and rather more useful function.

Many companies have been started with the objective of creating a single secure “verified digital identity” which could have multiple applicability.

Indeed, some claim to have such a technology already.

But it may be sobering to consider the largest such effort in the world: India’s programme (“Aadhar”) to provide all its 1.2 billion citizens with verified digital identities.

That programme has been a disaster – though not only for technical reasons.

Further, it may be instructive to consider the following:

I don’t know if you have the problem of a burgeoning, if not bursting, pocket because of the number of cards for banking and other business purposes that have to be carried nowadays.

I certainly have that problem.

In addition to the several “verified digital identities” that I carry most days, I have to carry, every time I travel internationally, the “most verified” of these (my Passport).

So the problem is merely that my many verified digital identities don’t talk to each other.

Could someone please start working on that?

Perhaps someone is working on that already?

Perhaps even on the possibility of using my “most verified digital identity” (my Passport) for all banking and other business purposes?

But halt a moment!

In such an ideal world, what if my “most verified digital identity” was lost or stolen?

Would I then have, in addition to the headache of getting a new Passport in order to be able to return home or travel out, also the problem of obtaining a new identity for all banking and business purposes (or getting my new identity/ Passport accepted for each of these )?!

In that case, might it be better, after all, to continue to have multiple verified digital identities, however inconvenient that is?

If one of my digital identities is lost or stolen, I can, in the immediate aftermath, still continue to function, to a greater or lesser extent, on the basis of the other (unrelated) identities that still remain with me..

Perhaps there is something to be said for a small amount of bother and inefficiency every day, in order to prevent a huge bother and complete paralysis at any unexpected point.

It used to be called, in technical circles, “redundancy”.

Non-geeks used to call it “insurance”.

The words, and the legalities (indeed, the underlying concepts) are different.

The attitude is the same: there is such a thing as too much short-term efficiency, too much leanness.

That also has a name.

In medical science, it is called anorexia.

So how much redundancy should one have?

The rule of thumb used to be: as much as might be necessary to overcome the worst disaster that you can foresee.

And a little extra, in order to cover even worse disasters that one can’t foresee at present.


How could it possibly be that some thought processes from pre-digital ages might have some validity in our VUCA world?!

The last couple of weeks have been pretty damaging for blockchain adoption.  No one knows if the Chinese government’s ban on all ICOs is *temporary* (the cryptocurrency craze needs to cool), or *strategic* (would China like to have its own national blockchain system, not some foreign one that could eventually undermine the Communist Party’s rule)?

The other possibility is that the Chinese ban is going to be in place till there is a *global agreement* regarding how all cryptocurrencies and related financial mechanisms should be supervised. 

Here is the thinking behind the Chinese move, according to Li Lihui, a senior official at the National Internet Finance Association of China and a former president of the Bank of China: Digital tokens, like bitcoin and ethereum, are stateless, do not have sovereign endorsement, and do not have a qualified issuing body or a country’s trust.  Such tokens are not legal currencies.  They should not even be spoken of as digital “currencies”.  In addition, such tokens have been a tool for fund flows and investment deals that China considers illegal. In other words, China has now defined and institutionalised a distinction between digital currencies which may eventually be created by national authorities, and digital tokens such as bitcoin.  Digital tokens should be banned, while digital currencies (created and supervised by national or global authorities) could be used for good, if there is the right global regulatory framework.  Till the time that such a global regulatory framework is put in place, all blockchain activity in the financial sector should be halted.  And it is accordingly being be brought to a halt in China by the end of this month.  This is particularly significant, given that China has been hotter than almost any other country for blockchain activity.

So are we likely to get a global agreement regarding supervision of blockchains? 

In my view, it is inevitable.  And it will be agreed relatively quickly.

That will have the advantage of stabilising and embedding blockchain in global financial systems.

Simultaneously, the Chinese position removes the basis for the idealisation of blockchain by people who have anarchistic or libertarian illusions.


A contributor on a particular Fintech discussion forum made the following statement:

“Had an interesting presentation from one of the world’s largest banks today. I quote: ‘fintech adoption has been overestimated’. They didn’t say what their estimations actually were, but I’d be interested to know if they expected digital challengers like XX to have 400k users (equating to an estimated 0.6% of the UK current account market) whilst still in Beta, not to mention companies like YY now processing £800m in transactions a month.”

Well, if one of the world’s largest banks says something, ought that not to be taken seriously rather than being challenged in this kind of superficial fashion?:

While 400K users while in Beta is impressive, it doesn’t amount to much in the financial services industry which is by its very nature global.  So 0.6% of the UK, fine, but what percentage is that of the global current account market in terms of participants?

More important, in terms of trade volume, £800m in a month might sound as if it is worth taking seriously, but that is only just over £26m a day, and compares with *daily* global financial flows of USD 5 TRILLION each day.

Fintech does have huge promise, but also huge dangers – as recognised by the Chinese and Korean governments last week.

As always, what we need is not just enthusiasm and hype, which are of course good things to have.  But we also need rationality, proportionality, and perspective.

The Digital Evolution Index 2017 ranks countries ( into four categories:


– Countries that are strangely titled “Stall Out” (i.e. the top scoring countries — e.g. Norway, Sweden, Switzerland, Denmark, and Finland – which “enjoy a high state of digital advancement” but which are considered to have “slowing momentum” – whatever that means); this categorisation echoes the economic category of “developed countries”


– Countries that are titled (also strangely) “Stand Out” – i.e. countries are reasonably digitally advanced but exhibit “high momentum”. These can be considered the equivalent of “countries that have some chance of catching up with developed economies, provided they keep up their current speed of development and provided also that countries which are further ahead keep a slowed down pace of development”


– Countries that are titled “Break Out” (i.e., low-scoring in their current states of digitalization but are “evolving rapidly”). In terms of traditional economic terminology, these countries can be considered the equivalent of “emerging economies that never emerge”, primarily because they are “held back by relatively weak infrastructure and poor institutional quality” – in other words, they are held back by their culture and consequent political structure. Examples of such countries include China, Malaysia, Bolivia, Kenya, and Russia. India is included in this category, though it comes in even lower than Mexico, Colombia, Indonesia, Kenya, Philippines and Morocco.


– Lastly there is the category of “Watch Out countries” (i.e. with low state of digitalization and low momentum; in some cases, even “moving backward”). These are the equivalent of Least Developed Countries.


The Index prioritises speed over achievement, which is an interesting way to look at things – but current speed can be a deceptive criterion as the primary measure, because everyone slows down sometimes and everyone speeds up sometimes.  The distance between the different categories, as well as the distance between the various countries within the categories, is an equally important criterion – and that is underplayed here.

FinTech and Digital Finance

Posted by Prabhu Guptara | Uncategorised
My sabbatical is over, and I have returned to the fray!

Though my blog was originally intended to range broadly over the all the fields of business, and may still do so, I find that at present the most interesting and significant developments are taking place in Digital Finance.

So, for the moment, that will be the focus.

Let me begin by saying that Digital Finance is having huge impact, but there are some some worrying factors to consider:

– Between 2013 and 2016, $62 billion had been invested from around the globe just in FinTech.  Clearly, many investors are betting on this sector, and on individual initiatives within it.  They foresee an opportunity to make money by helping the sector gain “efficiencies”

– However, every “efficiency” means a job lost for one or more humans

 – That means lower capacity to spend money by (ex-)employees, alongside the well-known chilling effect that lower spending by each group has on other groups, even if the latter have money to spend.

Or let’s look at another aspect of the matter.  Only *8* humans now own as much of the world’s resources as half the human population.  In January 2017, that was the report from Oxfam International.

However, just a year before that (2016), Oxfam had reported the number of people who had as much wealth as the bottom half of the world’s population was *62*!

And it was only a year earlier (2015) that Oxfam had reported the number of people who had as much wealth as the bottom half of the world’s population was *85* !!!

In other words, wealth concentration increased from 85 individuals in the 2015 report, down to 62 men in 2016, a huge drop!  And from those 62 individuals in 2016, down to only 8 individuals in the 2017 report.
If that incredibly swift trend continues, less than 10 individuals will end up owning perhaps as much as 80% of the world in a few years.
So what use are such “mass technologies” as Fintech when the men concerned can simply talk to each other to decide whatever they wish?
Yes, Fintech will allow their decisions to be implemented at speed, but will that really matter to these men?  Only if these men continue competing against each other – which is certainly possible! – but history also shows that small groups of individuals don’t always compete, they often form oligopolies or ruling cliques.

Whether that sort of consolidation continues is partly a matter of politics, and partly a matter of the choices made by these few individuals.

While we work for the best policies to be put in place and to be implemented, let us continue to admire the amazing inventiveness of everyone involved in the world of digital finance.

Speaking notes from the talk given by me on the 14th of June 2016 at the inaugural Horasis Global Meeting, in Liverpool, UK

I have three questions that I wish to raise with you for discussion:

  • What is causing freedom and democracy to decline – in the West, and in the Rest of the World?
  • What caused freedom and democracy to flourish increasingly in the world from the 16th century to the 1980s?
  • What can you and I do about it?

But, before I start, so that you know where I am coming from, allow me to tell you:

I was born and grew up in Independent India and did not know (let alone understand!) where the values of Independent India came from.  So when freedom and democracy starting falling apart in only the 2nd generation after Independence, and I was kicked out of the country by a certain rather powerful lady because I disagreed, I was puzzled at what I saw around me in the UK, where I arrived first, and then in Continental Europe, where I have lived since 1995.  From Europe, work has taken me around the world, not only to the so-called developed countries and the big cities, but also to some of the economically poorest countries and most remote areas of the world.

Over the years, I have begun to put the puzzles together – and they do require putting together, because very few people see the whole picture, and most of the elite actually don’t want anyone to see it.  Naturally we in this room may or may not be the elite, but we are not quite “the public” either.  So I expect that we have all at least begun to put the puzzles together in our own ways.  I am only sharing things that you know, but am putting them in my own words because that is my role here today.  And I am sharing the headlines only, due to the limited time –we can of course take any of these points up during the discussion time.


So here’s the first puzzle:

What is causing freedom and democracy in the West to decline?: let me make what I have learnt easy for us to discuss by putting it in a short word, PIS.

in the West, it is PIS that is responsible for the decline of freedom and democracy: PIS: Political correctness, indecision, and spinelessness.  As far as I can see, all three are rooted in the rejection, by the West’s elites, of the values that made the West great.  No doubt you will want to debate all that.  But let’s complete my first point  by mentioning what’s causing the decline of freedom and democracy in the Rest of the World.  Here, to make it easy to remember, I have the word TOIL.

In the Rest of the World, there is:

  • little freedom of thought (formal and/or informal censorship as by tribal societies, or by the Roman Catholic Church or by ISIS/ Taliban, or the Communist Party of China, or the Hindu ruling party in my own country, India)
  • heavy structures of oppression such as the neoliberal ideology which now rules the West and has infected also the ruling elites of the Rest of the World, or different kinds of racism (its finest and most sophisticated systematised expression being India’s caste system)
  • declining freedom of Information – for example in China and India.
  • not even the freedom to be literate (many countries have moved and are moving from complete illiteracy – lacking ABC – to the modern form of illiteracy – produced by a narrow and individualist or selfishness-producing educational agenda, followed by the rat race – accumulate as much as possible, I don’t know why or what for).

Now, to come to my second point, if we want to move beyond PIS and TOIL, we need to understand: What values *did* enable free and democratic societies to flourish increasingly from the 16th century to the 1980s?:

Here I have four words all beginning with the letter “L”:

  • Or increasing acceptance of the Rule of Law (which is neither the rule of the majority, nor the rule of the mob nor the rule of an individual such as a king or queen, nor the rule of a clique or elite group – rather, the Rule of God or Love or natural or human values – or some reaching after higher values.
  • LIFESTYLE: or The Protestant Lifestyle (work as hard and as perfectly as possible for six days, rest on the seventh; enjoy holidays; live as simply and modestly as possible so as to have enough to look after friends, relatives, and other poor people, and be responsible for nature)
  • LITERACY: or the duty of reading, learning, understanding, thinking, debating, coming to your own conclusions (that’s what the Protestant Reformation was about, versus what the authorities in every traditional society taught and still teach – blind obedience to authority)
  • LOVE: or the command to love your enemies – in other words: debate, dialogue, discuss – not dismiss – and not DISMISS FROM THIS LIFE either!! Democracy, a civil public square, is impossible without loving your political enemies.


So I come to my last point: what can you and I do about the decline of freedom and democracy in our time.  Two things, at least:

1st:  let’s follow in the footsteps of the Protestant Reformers: Let’s read!  Think!  Learn!  Understand!  Debate!  Make up our own minds!  Come to well-founded conclusions!


Well, WHAT shall we read, you ask? You no doubt have books and other resources that you find valuable, stimulating, challenging.  I will be happy to receive the references from you.  And I will be very happy to return the favour.  But if you would like to have one just one recommendation from my side, you might like to start with a book written by the Indian writer, Vishal Mangalwadi, titled “The Book that Made your World”.

2nd: Join in a movement such as Relational Thinking (  Though historically and even today the strongest support has come from people of Jewish and Protestant heritage, nowadays most modern people support these values, because modernity itself was and is the fruit of these values.  So we may be modern Hindus (such as myself), or other Christians or atheists, agnostics, Buddhists, Muslims, Confucians, or whatever – we can and should all be more active in supporting the values I’ve mentioned (the four “L”s).

The best way that I have found to do this is through the Relational Thinking movement, simply because it tries to link together all individuals and organisations that are committed to these values.

So, dear colleagues, Mr Chairman, I have shared my understanding of what is causing the decline of freedom and democracy – in the West (because of PIS), and in the Rest of the World (because of TOIL); I have shared my understanding of what caused freedom and democracy to flourish increasingly for some 500 years till the 1980s; and I have mentioned what I think you and I can do about it.

And the most important thing is what you and I choose to do.

Thank you.

Universities have been forced to examine the question of social engagement because of government attitudes and even rules in many countries.

Naturally, the question has arisen: how is ‘social engagement’ to be defined?

That is the question in my Inbox this morning from a colleague in another country.

Here is how I have responded:

“For what it is worth, my definition and thoughts are as follows:

‘Social engagement is the degree to which a university is engaged with society.  Universities can be more or less “engaged”:
– there is “engagement” in terms of communicating the results of the university’s research to the community around the university (or to ‘society’ more generally – rather than simply to academic peers);
– there is “engagement” in terms of whether the community around the university is involved in helping the university’s researchers to prioritise the subjects of their research;
– there is “engagement” in terms of how the research itself is done (i.e. does the methodology of the research involve the community around the university?);
– there is “engagement” in terms of the governance of the university (i.e. is the community around the university involved in the governance of the university?).

It is sometimes objected that particular universities are so remote that there is no wider “community” or “society” around them.

Such remoteness could be due to the newness of the university, could be due to the lack of impact of the university’s work (because, if the work was impactful, the mere existence of the university would soon build up a wider community or society around it), or could be due to the irrelevance of the university to real-world issues.

Naturally, no university is concerned only about real-world issues.  Every university, if it is to be a university, must have the liberty to be concerned about issues other than real-world issues.  However, if any university is totally unconcerned about real-world issues, it is in dereliction of at least one of its duties.”

If you wish to use this para in your research/ presentation, you could cite it as being from personal correspondence.

But happy to have your thoughts, questions and responses to the above.

Kind regards