What better symbol than a conference to show Mauritius is embarking on its journey towards FinTech?
Lessons can be learnt from countries which have already trod this path. We can then execute, since all the key building blocks are in place. So says Nicole Anderson, CEO of FinTech Circle Innovate, who was the keynote speaker at the UK-Mauritius FinTech Conference organised, on Wednesday, by the British High Commission in Mauritius and the Financial Services Promotion Agency
You are participating in a conference on FinTech. The term has become a popular one during the last few years. What is FinTech all about? FinTech really defines a new economic sector. There is the misconception that it is a reinvention of technology and finance. That is wrong. FinTech is about technology creating new business models which are changing the finance products and services of today and the future. You are right. It is still a nascent industry, probably in essence not more than three or four years old. It really came about from the financial crisis of 2008. That was an early sign change was coming.
How can it fundamentally change the financial services industry, and the wider economy? Well, it is already changing finance. Almost every aspect of financial services felt some impact of FinTech innovation. Examples are using crypto currencies such as blockchain to move money, mobile money and mobile wallets are massively important for underdeveloped markets like Africa, where bank accounts are not necessary anymore. Most of the people in African countries do not have access to a bank account, and probably they don’t need to. So, payment is where it really started, and then it moved into lending. And because of the liquidity drying up after the financial crisis, it got harder for you and me to get loans. Along came models such as crowdfunding and peer-to-peer lending. It’s completely different. No one even thought of looking at investment in this way. It is changing the way insurers develop new policy structure, for example. It affected and continues to affect almost all the spectrum of financial services.
Globally, does it have any drawback or risk? There are plenty of risks. But innovation is about risk. You cannot separate FinTech and risk, but we do live in a world of risks. Every time we walk out in the streets, we may risk never being able to pay the loan back. This is why regulation and regulating this new business model is so important. Regulators all over the world are trying to figure out how they are going to do that. There have been some big lessons learnt already, specifically in the lending market, which is where most exposures happen. There have also been some minor issues around blockchain, whether it is safe or not. But, really, if you consider the benefit of the innovation versus the risks, it really is much swayed in terms of the overall benefits.
Does Mauritius lag behind, or are we keeping pace with FinTech development happening across the globe? You are just starting the journey. Such a conference is very much a symbol of that, and that’s alright. To be first does not always mean you are efficient. To be first does not always mean you are going to be successful. Some global finance investors that have embarked on this journey have wasted time and have invested in things that have not been valuable. London is included, by the way. There are lots of things which have cost a lot of money and have wasted people’s time. So, Mauritius can learn from all of these things. What you heard during the conference is basically how you are going to execute based on where Mauritius is, economically, and from an innovative economy perspective, and from a regulatory perspective. It has got all the key building blocks. Now, it is about executing.
The country aspires to become a FinTech hub in the region. How legitimate is this aspiration? Let’s assume a couple of things first. For example, that you are connected. Being a hub means that people come in and go out, capital comes in and goes out, investment coming in. So, the things that Mauritius has to pay attention to, especially if you want to become a hub, for instance, how does it secure free flow of investment into the innovation ecosystem, how does it attract knowledge, bring in knowledge, and how does it leverage trade relationships in FinTech or the new finance with other hubs around the world, such as London? What is more important is what its own identity is. What is very clear is FinTech is now mainly vertical. It’s not just one big mass. And I think Mauritius has a particular DNA, a particular quality about it.It is really a financial centre. It is really an asset management hub and what we call WealthTech. Those are the things one should consider when thinking about a hub.
Can FinTech lead to a slowdown in business activities for existing institutions and companies? It has created a lot of tension for traditional financial services to move very quickly, to consider their position and to consider what they do with FinTech. But it’s not black and white. The journey is a long one, and innovation is made up of many cycles as you go along. What works everywhere, and I think it will be the same for Mauritius, is that your traditional financial services run parallel to innovation, and eventually consumers like you and I will decide where we want to go, how we want to move money, for example through a FinTech company, cross-border payments or with a bank. In some parts of the world, there is no infrastructure, and FinTech represents the only way. But Mauritius is different.
Can we say that in the next few years, the world will be essentially driven by a wave of entrepreneurs, and that big companies will take a backseat? People love to be controversial. Two years ago, there was disruption. Some people said we are going to kill the banks. I mean, they used ridiculous language like that. If anyone studies economics and money markets, they will know that literally, this will never happen. But the evidence, now, of collaboration, is the biggest thing. You see established financial organisations seriously take a strategy in FinTech by building programmes, executing on funds and investments themselves to learn. So, it’s much more of a blend in the middle. I call it the ‘magic middle’.