May 02, 2021
Every now and then I do a podcast where I feel like I hit a vein of gold. This is one of them. It’s one of our shows where I think you’ll want to listen several times and take notes, or print out the transcript and mark it up.
My guest is Douglas Arner, who is the Kerry Holdings Professor in Law at Hong Kong University, and the Director and Cofounder of the Asian Institute of International Financial Law.
I’ve gotten to know Doug over the past year or so, and have been amazed by his kaleidoscopic grasp of the entire global landscape in fintech and regtech. So few people do work that is wide and deep at the same time -- especially in a field where things change at light speed. Douglas does this better than perhaps anyone I know. He’s authored 19 books, and at the same time has kept his finger on the pulse of change throughout the system. When you look at his biography -- and you really should, because it's extraordinary -- you’ll see he is a master integrator, connecting sectors, countries, technologies, professions -- everything. That silo-breaking, I have learned, is the secret to keeping up with how financial services are changing in today’s high-tech world.
So, I asked Doug to tell us what is happening in the world.
Not surprisingly, we started with COVID.
For financial systems, the COVID story is all about accelerating technology. Doug says the year’s frantic race to get money to locked down populations forced entirely new thinking about electronic payments. He says cryptocurrency has moved to “full-on normalization” (with the US starting to catch up with the world). He talks about the rising interest in CBDC’s -- central bank digital currencies. Doug describes regulatory bodies everywhere turning to regtech and suptech to replace face-to-face supervision models, and thinking deeply about better infrastructure, and massively accelerating technology enhancements for AML.
More fundamentally, he says regulators have realized that finance is about data, and that this calls for rethinking a wide spectrum of regulatory norms. He describes how these differ around the world, including on whether countries create new agencies dedicated to data regulation. He says data rights laws are rooted in deep cultural differences among countries, which cannot be, as he puts it, negotiated away. And he urges proactive thinking, focused sharply on desired outcomes.
Naturally, the data discussion took us to cloud computing -- how, pre-pandemic, most financial institutions were moving to the cloud slowly, and that they now are going fast. Doug says the cloud has hosted virtually all the big innovations in the past 5 years, and he has advice on how to transition to the cloud with smart security.
Maybe best of all, Doug shares his insights on China. He describes the Chinese government’s formula for launching experimentation, in which they watch digitized activities evolve in an unregulated environment, and then step in to regulate based on what emerges. He shares insights on when this experimentation has worked, and when it has failed, citing both P2P lending and the growth of the enormous Chinese payments platforms as examples. On the payment platforms, he cites particular success in lending to small enterprises, which as he says, is a grand challenge for every country. At the same time, he talks about the platforms raising huge risks of market concentration. He talks about emerging thinking that perhaps data should be treated as a public good.
Doug also incisively compares and contrasts the three distinctly different data regulation models in the world today -- the one in Europe, the one in the US, and the one in China. And he notes that, so far, they all raise problems.
More on Douglas
Douglas W. Arner is the Kerry Holdings Professor in Law and Director and co-founder of the Asian Institute of International Financial Law at the University of Hong Kong. He is also Associate Dean (Taught Postgraduate & Development) and Faculty Director and co-founder of the LLM in Compliance and Regulation, LLM in Corporate and Financial Law, and Law, Innovation, Technology and Entrepreneurship (LITE) Programmes. In 2020 he was awarded an inaugural Hong Kong Research Grants Council Senior Fellowship to study the role of digital finance in financial inclusion and the UN Sustainable Development Goals.
Douglas has published eighteen books and more than 200 articles, chapters and reports on international financial law and regulation, including most recently Reconceptualising Global Finance and its Regulation (Cambridge 2016) (with Ross Buckley and Emilios Avgouleas) and The RegTech Book (Wiley 2019 (Janos Barberis and Ross Buckley). His recent papers are available on SSRN at https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=524849 , where he is among the top 60 authors in the world by total downloads. Douglas led the development of Introduction to FinTech – launched with edX in May 2018 and now with over 90,000 learners spanning almost every country in the world – and the foundation of the edx-HKU Online Professional Certificate in FinTech.
In addition, he is Associate Director of the Standard Chartered Foundation-HKU FinTech Academy, a Senior Visiting Fellow of Melbourne Law School of the University of Melbourne, a non-executive director of NASDAQ and Euronext listed Aptorum Group, an Advisory Board Member of the Centre for Finance, Technology and Entrepreneurship (CFTE), and co-founder and an executive board member of the Asia Pacific Structured Finance Association. Douglas was an inaugural member of the Hong Kong Financial Services Development Council (2013-2019) and Director of the Duke-HKU Asia America Institute in Transnational Law (2005-2016) and has served as a consultant with, among others, the World Bank, Asian Development Bank, UN, APEC, Alliance for Financial Inclusion (AFI), and European Bank for Reconstruction and Development. He has lectured, co-organized conferences and seminars and been involved with financial sector reform projects around the world. Douglas has been a visiting professor or fellow at Duke, Harvard, the Hong Kong Institute for Monetary Research, IDC Herzliya, McGill, Melbourne, National University of Singapore, University of New South Wales, Shanghai University of Finance and Economics, and Zurich, among others.
More for our Listeners
There is still a little time to sign up for our next webinar! On May 3, AIR is partnering with Consumer Reports and the Consumer Federation of America to host a webinar called ‘Consumer Protection: Hot Topics in Digital Finance.’ This a virtual convening that will dive into three hot issues — data rights, new lending models, and cryptocurrency. Is innovation bad for consumers? Or good? Or both? You can learn here.
In case you missed it, my last podcast guest was Rob Nichols, CEO of the ABA, talking about community banks in the digital age. Coming up we’re really excited to have Paypal CEO Dan Schulman, as well as CSBS CEO John Ryan and Sultan Meghji, the new Chief Innovation Officer of the FDIC who, as you will see, is going to be changing the regulatory world as we know it in the US. You should also be sure to listen to the FDIC’s own podcast in which Sultan talks with the agency’s Chairman, Jelena McWilliams.
This month, I will be speaking at Compliance.ai’s Expert-in-the-Loop forum. David will speak at FinovateSpring — make sure to check out his session on ‘Financial Wellness: Providing Your Customers With Holistic Long Term Financial Planning.’
June will also be here before we know it, so make sure to register for Fintech South! And be sure to catch my keynote on financial regulation at the ABA’s Regulatory Compliance Conference — the one and only RCC.
Let’s all keep innovating!
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