LFP055 – How Fintech Could Become Far Greater by Re-Forming FS with Professor John Kay

I am delighted to be joined this week by Professor John Kay – one of the UK’s leading economists and outstanding authority on Financial Services to discuss the truly vast potential that still exists for Fintech to disrupt FS. Fintech as we know it now has so far only put its toe into that ocean […]

I am delighted to be joined this week by Professor John Kay – one of the UK’s leading economists and outstanding authority on Financial Services to discuss the truly vast potential that still exists for Fintech to disrupt FS. Fintech as we know it now has so far only put its toe into that ocean of possibility.

Maybe Fintech as we know it now is as good as it gets. Or maybe it could be far far more. If the latter it really needs to get stuck into the areas we discuss on the show and in a far more radical way really support society at large and both re-form and reform FS.

John’s CV includes having written for the Financial Times for over 20yrs, being a successful author of at least 9 books, a fellow of St John’s college Oxford for some 46yrs, a visiting Professor at the LSE, being awarded the CBE, has been a director of well over a dozen FS companies, a successful businessman (Google tells me he has an investment in London Fintech Nutmeg), a member of the British Academy, the Royal Society of Edinburgh, establishing the IFS as one of Britain’s leading think tanks,  and in 2012 producing a review for the UK Government on equity markets and long term decision making. Post-Brexit he has been appointed to advise the Scottish Government on European Union issues.

So he knows a thing or two about FS. Not only this but as his website strapline is “accessible and relevant economics” he has the rare ability to take all that knowledge and experience and make it readily assimilable to the layman. Never more so than in his latest book “Other People’s Money: Masters of the Universe or Servants of the People?” (which currently gets 4.4*/5 from 32 reviews on amazon.co.uk).

If you want a taste of the book and an education (I learnt a lot and I know a little about FS myself) I recommend checking out John talking about the book at Google or at the LSE. And then buy the book

Anyway all this deep background serves for a very deep and vitally important issue.

Fintech would not be where it is today without the FS crisis of 2008. Leading authorities – John, the ex-governor of the Bank of England and the ex head of the FSA – have all written books saying that the fundamental dynamics behind that crisis have not been eliminated and that we will see a similar crisis again. I agree entirely.

In his Google Talk John mentioned that his book was in part educative but also in part so that when the next FS crisis breaks authorities will not be able to say (as they did last time) they had no forewarning and no policy prescriptions to reach for.

This made we wonder whether we couldn’t repurpose and leverage John’s work – inverting it as it were – turning problems into opportunities and showing what Fintech could do to both reform and re-form FS.

Now for sure it’s a rosy scenario to reform FS via Fintech – but hey “dreams take you in directions”.  Or vice versa if all Fintech is doing is making a few people a few quid most of us might as well pack our bags and go somewhere else more useful.

In recent episodes I have been focusing on rebooting the Fintech revolution. Fintech 1.0 is arguably running out of steam. It has made an impact but not that much of an impact in terms of what percentage of economic flows go via Fintech.

In this show we discuss how all that could be changed.

Where could Fintech go deeper and do differently?

As this show is about wisdom, creativity and not just information I won’t summarise the key points – as that would rather be like summarising Macbeth as “pushy wife, man’s vaulting ambition, all goes tits up” [or was that Shakespeare on Gove?]. Quite true but you miss a lot by not seeing the play.

So listen up folks and I hope our conversation, Johns tales and analyses prompts the more adventurous and creative of you out there to take arms against a sea of troubles and by opposing end them.

Oh yes and as always some laughs too.

Before I sign off I’ll add one pertinent stat that I hadn’t come across at the time. We talk about regulatory over-complexity. Just one example of which is that in 1992 there were 3,000pp of regulation of pension funds. Now there are 80,000pp (!!).

I also mention Johns Pension Deferral Calculator as an excellent example of hardcore Fintech advice on investment.

It’s a great episode and one of my personal favourites.

Share and enjoy

Live long and prosper.