Where innovation will flourish, changing customer demand will be supported and exceeded, and ultimately life-dreams enabled. It is up to each of us to help build the foundations that will allow this to take place. This transformation involves many new actors, alongside the traditional banks. There are growing numbers of challenger banks as well as innovative payments services, Payment Service Providers (PSPs), and increased interest from the world of FinTech. Indeed, payment businesses currently make up 17% of the UK’s c2500 FinTech companies. Global household ‘bigtech’ names such as Facebook and Amazon are also breaking into this market. These competitive pressures are pushing existing market participants to invest and think more intensively about what the future world of payments should look like. And due to the pivotal nature of payments, the public sector is actively involved too, seeking both to enhance and strengthen the existing infrastructure but also assessing whether there is a more fundamental approach to complement it. New forms of digital money could contribute to faster, cheaper, and more efficient payments and have financial inclusion as a prominent design consideration. As innovation develops further in this space, it will be important that regulation follows suit. Our Governor Andrew Bailey noted in his recent speech, that it is crucial the regulatory framework adapts to innovation in a way that fulfil the Bank’s core mission to promote the good of the people of the UK.
Had countries turned their backs on foreign investments and exports, it would have impoverished them and weakened the region. Fortunately this has not happened. There have been understandable nationalistic sentiments against selling distressed companies at low prices to foreigners. But all ASEAN countries continue to seek foreign investments and trade. Their people are eager to learn English, and to exploit the internet. They know that plugging into the global economy is still the best way to sustain growth, and to create jobs and prosperity for their citizens. They also know that competition has become keener, and that they have to make their economies more attractive to foreign investments. As Malaysian Finance Minister Daim Zainuddin acknowledged in his recent Budget speech: “In a borderless world, large international conglomerates have greater choices in their investment decisions.” Accepting globalisation means progressively deregulating and liberalising ASEAN economies, easing rules on foreign ownership and participation, and opening up hitherto protected sectors. By exposing their economies to the winds of change and the pressures of global competition, countries will strengthen their own players, who will learn to hold their own without crutches or protection. Of course the process has to be managed. Sudden deregulation of a controlled economy may lead to chaos and collapse, as happened in Indonesia in 1998, when the IMF pressed the Suharto government to dismantle everything overnight. But properly implemented, opening up will lead to substantial long term benefits and prosperity, despite the short term social and economic costs.