Name: Fintech Insights - Escalation in geopolitical risk
Uploaded: 2024-03-18T17:21:00.465Z
Duration: 500.56

Fintech Insights - Escalation of geopolitical risk_2.mp4

Fintech Insights - Escalation of geopolitical risk_2.vtt

ENGLISH

{{00:00:17}}
2024 is a year of record
geopolitical volatility.

{{00:00:20}}
In fact, I think what we have
is a geopolitical super cycle.

{{00:00:24}}
A year where geopolitical
risk is consistently high for

{{00:00:27}}
a prolonged period of time.

{{00:00:29}}
But that's because of multiple systemic
vulnerabilities converging on each

{{00:00:33}}
other, compounding on each other.

{{00:00:36}}
And some of these sort of trade
tensions and geopolitical tensions

{{00:00:39}}
are a result of ongoing conflicts.

{{00:00:41}}
What worries me most is
basically three wars, right?

{{00:00:43}}
The war in Ukraine, which has become
a war of attrition, and continues

{{00:00:49}}
to threaten European security,
particularly if Russia continues to

{{00:00:52}}
control the 18 percent of Ukrainian
territory that it currently does.

{{00:00:57}}
The second is the war in Gaza an
absolute humanitarian catastrophe, but

{{00:01:01}}
one that's having knock on effects.

{{00:01:04}}
It's empowering Houthi rebels
based in Yemen that are attacking.

{{00:01:10}}
Ships that are a key part of the global
supply chain going through the Suez Canal.

{{00:01:14}}
But the third is, something
that most people don't really

{{00:01:16}}
think of as a war that I do.

{{00:01:18}}
Which is the upcoming American elections.

{{00:01:20}}
It's really the United
States war against itself.

{{00:01:23}}
And here you have a year where
Donald Trump is very well on his way

{{00:01:27}}
to winning the Republican primary.

{{00:01:30}}
Where if you believe the pollsters, he's
increasingly likely to come into office.

{{00:01:34}}
Which will hand Putin a massive victory
in Ukraine, but also, if we see anything

{{00:01:40}}
close to the 60 percent tariffs, and
we're talking about trade tensions that

{{00:01:44}}
Trump's proposed to apply to China that
instantly thrusts the United States

{{00:01:48}}
and its allies into economic recession,
certainly geopolitical recession.

{{00:01:52}}
Those are some of the things that
worry me and the downstream effects

{{00:01:56}}
of that for financial services
and FinTechs in particular will

{{00:01:59}}
be particularly significant.

{{00:02:09}}
This is a really, key concern.

{{00:02:11}}
We're in a year where the world is finally
reckoning with artificial intelligence.

{{00:02:16}}
And that's playing a really key role, both
in government surveillance, we've seen

{{00:02:20}}
the applications of that in places like
Israel, in parts of Africa in particularly

{{00:02:25}}
the Chinese techno authoritarian states.

{{00:02:30}}
And those sort of effects
will only continue to compound

{{00:02:32}}
on top of another this year.

{{00:02:34}}
You also have evolving trends that have
been going on for the last few years that

{{00:02:37}}
are becoming really empowered in 2024.

{{00:02:40}}
You've got things like central
bank backed digital currencies.

{{00:02:43}}
Now these are mostly benevolent
and harmless in most countries,

{{00:02:48}}
especially as they're under
phases of development right now.

{{00:02:52}}
But for countries like China, where
there isn't a clear separation of powers,

{{00:02:55}}
where the Chinese Communist Party is
always trying to gain a better degree of

{{00:03:00}}
access into the sort of depths of Chinese
society through various surveillance

{{00:03:04}}
measures, currency becomes another tool.

{{00:03:07}}
To keep track of people, how they move
their money, but more importantly,

{{00:03:10}}
to sanction them when they do
something that doesn't necessarily

{{00:03:14}}
agree with the state apparatus.

{{00:03:16}}
And so that's something where I really
think FinTech companies will be cross,

{{00:03:19}}
will be caught in the crosshairs of
geopolitical tension, these broad macro

{{00:03:23}}
forces, because there will be downstream
effects, regulatory and compliance ones

{{00:03:28}}
for FinTechs, for instance, that are
operating in money lending spaces in that

{{00:03:32}}
central banking digital currency space.

{{00:03:35}}
So that's really
something to look out for.

{{00:03:45}}
Most people think of cyber security
threats as ones that are usually emanating

{{00:03:50}}
from a nefarious terrorist group,
a sort of hostile, non state actor,

{{00:03:56}}
where really the most important cyber
security threats often come from within.

{{00:04:00}}
They come from within vulnerabilities
in cyber vulnerabilities in political

{{00:04:06}}
systems, within key companies.

{{00:04:08}}
The key target in the U.

{{00:04:09}}
S.

{{00:04:09}}
market for the Russians, for instance.

{{00:04:11}}
has been the data infrastructures of
places like Amazon and Microsoft and

{{00:04:16}}
Google, where a lot of the confidential
information of the Department of

{{00:04:20}}
Defense and the Pentagon is stored.

{{00:04:22}}
And so that relationship between
private companies and nation states is

{{00:04:27}}
going to be an increasingly important
one, especially as private companies

{{00:04:30}}
gain access to responsibilities
that were traditionally only once

{{00:04:35}}
exclusive to nation states, right?

{{00:04:37}}
You have these companies,
the big five tech companies.

{{00:04:40}}
They're taking on public responsibilities
that are only privately accountable.

{{00:04:44}}
They're playing increasingly
important roles in war.

{{00:04:48}}
You think of Elon Musk and how he
invaded intervened in the Ukrainian

{{00:04:52}}
conflict with his Starlink terminals
that instantly gave Internet access

{{00:04:56}}
to millions of Ukrainians, but
particularly sort of military personnel.

{{00:05:00}}
That relationship, I think, between
private companies tech companies in

{{00:05:04}}
particular, and government is one that
needs to be managed, which we really

{{00:05:07}}
haven't found a framework for yet.

{{00:05:08}}
I

{{00:05:16}}
mean, in 2024, warfare is
everywhere and it's not necessarily

{{00:05:20}}
warfare on battlefields.

{{00:05:21}}
A lot of it is economic warfare.

{{00:05:24}}
It's warfare that's fought in forgerooms
and through companies and through

{{00:05:27}}
various sort of compliance, legal, and
regulatory mechanisms, and companies

{{00:05:33}}
saw this front and center when they
had to pull out of Russia, massive

{{00:05:37}}
operations that had been there for
often three decades plus that had to

{{00:05:41}}
get a way out of that in moments notice.

{{00:05:44}}
And currently there's an evolving
sort of economic framework where,

{{00:05:48}}
again, globalization isn't necessarily
the dominant economic force.

{{00:05:51}}
You've got a powerful forces
of mass polarization, populist

{{00:05:55}}
politics threatening that.

{{00:05:56}}
And there, economic warfare and sanctions
become an increasingly important tool

{{00:06:01}}
for countries to effectively suppress
other ones and use as a tool of conflict.

{{00:06:07}}
I think this will have really important
downstream effects, particularly

{{00:06:09}}
for financial services, given how
intertwined they are with a global

{{00:06:14}}
sort of complex web of companies
and institutions that we've got.

{{00:06:18}}
Fintech is playing a role there.

{{00:06:19}}
Neobanks are playing a role there.

{{00:06:21}}
They're effectively banks now, given
how big some of them have become.

{{00:06:25}}
And there's no often real clear framework
for FinTechs on how to navigate these

{{00:06:31}}
sort of regulatory and sanctioned spaces,
especially because the geopolitical

{{00:06:35}}
risks that are motivating them are often
entirely novel and ones that have not

{{00:06:39}}
been thought about in previous years.

{{00:06:40}}
So that'll definitely become a key sort
of attention issue for decision makers.

{{00:06:53}}
The number one thing that I think
all companies should do, particularly

{{00:06:57}}
financial services and definitely
FinTechs, It's to have a top down

{{00:07:01}}
geopolitical strategy it's to have
somebody in your board or C suite

{{00:07:04}}
whose exclusive job it is to look
at geopolitical risk and how that

{{00:07:08}}
impacts the company and its various
operations and the downstream

{{00:07:12}}
effects of these geopolitical events.

{{00:07:15}}
I think the second thing FinTechs
and financial institutions can

{{00:07:18}}
do is really use their sort of
on the ground knowledge, right?

{{00:07:20}}
You've got people in countries and people
in volatile zones that have natural

{{00:07:24}}
knowledge of these complex environments.

{{00:07:26}}
That's often something you really can't
accessibly get just off the internet

{{00:07:30}}
or just off of accessible reading.

{{00:07:33}}
Learning how to create a corporate
structure that integrates that sort

{{00:07:36}}
of expertise and knowledge into
the corporate hierarchy that goes

{{00:07:39}}
straight up to the boards and C suite
is increasingly really, important.

{{00:07:43}}
The last thing I'll mention
is horizon scanning.

{{00:07:46}}
All of the geopolitical risks I've talked
about today exist right now, but in six

{{00:07:50}}
months the picture might totally evolve.

{{00:07:52}}
And to always be adapted and mitigating
those risks, you've got to be constantly

{{00:07:56}}
scanning your key operations, your
key vulnerabilities access to key

{{00:08:00}}
stakeholders, and figuring out where the
next wave of geopolitical risk is coming.

{{00:08:04}}
Those three things, I think,
are really, crucial for FinTechs

{{00:08:07}}
wanting to navigate the space.

2024 is a year of record
geopolitical volatility.

In fact, I think what we have
is a geopolitical super cycle.

A year where geopolitical
risk is consistently high for

But that's because of multiple systemic
vulnerabilities converging on each

And some of these sort of trade
tensions and geopolitical tensions

What worries me most is
basically three wars, right?

The war in Ukraine, which has become
a war of attrition, and continues

to threaten European security,
particularly if Russia continues to

control the 18 percent of Ukrainian
territory that it currently does.

The second is the war in Gaza an
absolute humanitarian catastrophe, but

It's empowering Houthi rebels
based in Yemen that are attacking.

Ships that are a key part of the global
supply chain going through the Suez Canal.

But the third is, something
that most people don't really

Which is the upcoming American elections.

It's really the United
States war against itself.

And here you have a year where
Donald Trump is very well on his way

Where if you believe the pollsters, he's
increasingly likely to come into office.

Which will hand Putin a massive victory
in Ukraine, but also, if we see anything

close to the 60 percent tariffs, and
we're talking about trade tensions that

Trump's proposed to apply to China that
instantly thrusts the United States

and its allies into economic recession,
certainly geopolitical recession.

Those are some of the things that
worry me and the downstream effects

of that for financial services
and FinTechs in particular will

We're in a year where the world is finally
reckoning with artificial intelligence.

And that's playing a really key role, both
in government surveillance, we've seen

the applications of that in places like
Israel, in parts of Africa in particularly

And those sort of effects
will only continue to compound

You also have evolving trends that have
been going on for the last few years that

You've got things like central
bank backed digital currencies.

Now these are mostly benevolent
and harmless in most countries,

especially as they're under
phases of development right now.

But for countries like China, where
there isn't a clear separation of powers,

where the Chinese Communist Party is
always trying to gain a better degree of

access into the sort of depths of Chinese
society through various surveillance

To keep track of people, how they move
their money, but more importantly,

to sanction them when they do
something that doesn't necessarily

And so that's something where I really
think FinTech companies will be cross,

will be caught in the crosshairs of
geopolitical tension, these broad macro

forces, because there will be downstream
effects, regulatory and compliance ones

for FinTechs, for instance, that are
operating in money lending spaces in that

So that's really
something to look out for.

Most people think of cyber security
threats as ones that are usually emanating

from a nefarious terrorist group,
a sort of hostile, non state actor,

where really the most important cyber
security threats often come from within.

They come from within vulnerabilities
in cyber vulnerabilities in political

has been the data infrastructures of
places like Amazon and Microsoft and

Google, where a lot of the confidential
information of the Department of

And so that relationship between
private companies and nation states is

going to be an increasingly important
one, especially as private companies

gain access to responsibilities
that were traditionally only once

You have these companies,
the big five tech companies.

They're taking on public responsibilities
that are only privately accountable.

They're playing increasingly
important roles in war.

You think of Elon Musk and how he
invaded intervened in the Ukrainian

conflict with his Starlink terminals
that instantly gave Internet access

to millions of Ukrainians, but
particularly sort of military personnel.

That relationship, I think, between
private companies tech companies in

particular, and government is one that
needs to be managed, which we really

mean, in 2024, warfare is
everywhere and it's not necessarily

It's warfare that's fought in forgerooms
and through companies and through

various sort of compliance, legal, and
regulatory mechanisms, and companies

saw this front and center when they
had to pull out of Russia, massive

operations that had been there for
often three decades plus that had to

And currently there's an evolving
sort of economic framework where,

again, globalization isn't necessarily
the dominant economic force.

You've got a powerful forces
of mass polarization, populist

And there, economic warfare and sanctions
become an increasingly important tool

for countries to effectively suppress
other ones and use as a tool of conflict.

I think this will have really important
downstream effects, particularly

for financial services, given how
intertwined they are with a global

sort of complex web of companies
and institutions that we've got.

They're effectively banks now, given
how big some of them have become.

Fintech Insights

Expert Insight

Fintech insights explores with Manas Chawla, CEO, London Politica at Finovate Europe a series of cascading crises which is bringing significant uncertainty, volatility, and fragility to geopolitics and markets. War in the Middle East, Russia’s invasion of Ukraine, and U.S.-China tensions have accelerated geopolitical fragmentation and contributed to economic uncertainty.

What do banks need to know to effectively steer through the current geopolitical rapids?

