Name: Balancing the Ledger: Brainstorm Finance 2019 Recap
Uploaded: 2019-07-01
Duration: 12 min 31 s
Description: The co-hosts breakdown the best moments from Fortune’s inaugural Brainstorm Finance conference.

[ MUSIC ] Welcome to Balancing The Ledger where tech and finance intersect. I'm Jen Wieczner. I'm Jeff Roberts. And I'm Robert Hacket. And today we have a very special edition of Balancing The Ledger for you for two reasons. One is that our colleague and co- host Jeff Roberts will be moving to Colorado soon and thus won't be joining us on the show. It's true. It's true. I will be a guest though. Thank you Jeff. And the second reason is that we'd recently just wrapped up our Innurgoral Fortune Brainstorm finance conference out in Montauk New York in the Hamptons. It was a great time for everyone who was there but it was also especially newsworthy because Facebook had just announced its big cryptocurrency Libra project right the day before the conference. It just gave us even more to talk about. Bob, what did you learn about Libra at the conference? I mean, we could not have asked for better timing. It was fantastic. But there were a number of things that came out of the conference that were really interesting Tori Reiss of trust token he mentioned that, because Libra is cryptocurrency is not exactly a currency, it's backed by a basket of other currencies and it's not gonna be having a fixed price. It could potentially fluctuate in price. He said it's gonna face some challenges when it comes to regulators. That if the price goes up and down, you might have to realize gains on it or do some capitals gains calculations. And that's if it doesn't get classified as a currency, so they're really going to have to figure out the legal challenges with this thing. Yeah, we also had Katie Haughn, who is a partner at Andrice and Horrowitz and Andrice and Horrowitz is one of the partners in the Libra Project. And she was talking a little bit about Governance and how that's gonna play out. We're on of 28 founding members and as a council now, Libra Association has 28 members and were onne of the 28 members. We will have a vote equal to the other 27 members. In terms of important governance decision that are going to be made over the next few months. Over the next few months, and so Facebook has just one vote in that- They have one- In that 28? That's correct. Are you gonna get together in a room and have a physical meeting? I believe we will. Has one happened yet? Not yet. We have spoken with partners but not in a meeting context because Let me tell you why each of the partners had to, you know, wasn't clear who all of the partners were going to be Intel the announcement yesterday. [ BLANK_AUDIO ] She's pushing this line that it's like a constitutional convention and all these companies are going to come together and build a new model for this new world currency, which on one hand is kind of amazing. But also I think it got some backlash. We had a reader who said, wait a minute, this almost sounds treasonous. You know, a bunch of companies came together to replace the US dollar. And you know, I think there's something to that it's it's such a bold move. But what one of my takeaways from that from speaking to all these crypto experts was this can be a lot harder to pull off than Facebook. Thanks. I think it's a It's a interesting idea, it's ambitious, it's innovative. But my goodness, 27 companies, dozens of regulators, dozens of countries, I'm not sure it's gonna get off the ground. And on the sidelines of the conference, we actually had a chance to talk with Jeremy Allaire, the CEO of Circle, Barry Silbert, the CEO of Digital Currency Group. And Adam White, who is the COO of Bakkt, and got their thoughts on Libra project, let's take a look. Libra is a very exciting moment when it launches. Certainly the question is to if and when it'll launch Libra. You know, from what I've read in the press and you know, skim read the white paper. It's kind of a supranational currency that takes a basket of many other fiat currencies as well as other financial Germans and kind of creates a low volatility or quasi stable token. I would include the Labor project in the category of stable coins global digital currency tokens that are baskets are very compelling but I think that's something that both individuals businesses and governments will have to ultimately get comfortable with. So it will be interesting to see if Libra is able to launch and how that's perceived. I think ultimately we believe there will be multiple competing global currency basket tokens as well. So, I think this is the beginning New global digital currency tokens along these lines. I do think Facebook with having a few billion customers is a real advantage. Now that doesn't mean that that whatever product that builds necessarily gonna be Successful we've seen your Facebook credits and you know even Facebook pay not necessarily you know rocket ship off to be super successful ,>> not to suggest that Libra in and of itself is going to be a successful currency not too soon. suggests that Facebook is going to be the main beneficiary. But what I am confident about is from an awareness perspective and education perspective, from a technology infrastructure perspective, Facebook and Libra is going to be the the cattle [ MUSIC ] List that makes all of that happen at an accelerated pace. We saw regulators immediately respond same day with calls to learn more about it and even hold a congressional hearing. What we need to see is continued interest, continued development from some of the folks that are building applications and services that I spoke to. They all said they intend to build on labor as well. Whether the product funds product market fit. List that makes all of that happen at an accelerated pace. We saw regulators immediately respond same day with calls to learn more about it and even hold a congressional hearing. What we need to see is continued interest continued development from some of the folks that are building applications and services that I spoke to. They all said they intend to build on labor as well. Whether the product funds product market fit. That's always an unknown, but there's a pretty good team working on it. I think David, Marcus and Bertrand and others kind of know that space pretty darm well. So I'm cautiously optimistic that we're gonna see Libra kind of help lead the space into the next wave of growth. Grown. I think very few have really anticipated the concept that there could be global different currencies that operate at scale that billions of people can interact with, that become forms of programmable money and that you reinvent financial services, or render for everyone everywhere. So this is a major moment where That comes into focus [ MUSIC ] You know there's a lot of challenge of banks now, we were trying to circumvents the big banks going you know not having branches going directly to consumer, even government stocks with their marketers now gotten into the consumer banking side which you know for 100 years, the first 100 years in the history, something like that. They weren't even and they were just an investment. Then, how do Goldman executive we had on stage. Adam Dell who's not a. Brother of Michael Dell. Exactly. And his thesis was how did he put it? banks are screwed. There's two types of banks some that are screwed and some that don't know they're screwed or something like that. Yeah, you know, I don't think those bank CEOs necessarily agreed with him. Couple sessions ago. Adam Dell who's now with Marcus, the Goldman Sachs unit. He said there's only two kinds of banks those who are screwed and those who don't know that they're screwed. Which one is it? Well, it's a bit of a Hobson's choice but I think you're screwed if you're in denial And I would say as an institution, we're absolutely not in denial and to that soundbite that was just said that the next chapter of banking is being rewritten as we speak. The next chapter is digitally LED. The next chapter has a different set of expectations. And of course status quo. You know what? We are dead. But we're 200 year old institution that reimagined itself several times. And we are very much in that process today. Clearly he's trying to take advantage of innovation and pushes bank forward in the New age. But my takeaway from hearing the big banks are these guys aren't going anywhere. I mean, it's I think that in crypto land, we like the narrative of all disrupted and [ UNKNOWN ] Bank of America anymore, but They're continuing to open up branches but for new purposes and I think, I don't think anyone's dislodging them .>> Well, Brian, one hand, the CEO Bank of America, so he opened the conference. And one thing that I thought was interesting that came out of that well, not only has Bank of America laid off, you know, or cut About 100, 000 jobs since 2010 because of all the ways that technology has displaced them, but he also said that they have more blockchain patents than anybody else does right now? Yeah, there's been a lot of talk about disrupting the payment process. We know that retail payments, for instance, were expensive. Your credit card and rich and gets 97 % and the rest goes through a lot of intermediaries. Do you think that there's blockchain, Bitcoin adaptations that will reduce those costs. That's a big profit center obviously for banks But giving that money back to retailers on the other hand can lead to bigger discounts, etc. Where is that gonna go? Will the whole payments, retail payments process get disrupted? It's all the above. So what really goes on today, Bank of America's consumers through the end of May Actually through the first 10 days of June for year to date have moved at trillion three and money, checks written cash on the ATM cash with a tow line, debit and credit cards, Zell wires, other ACH etc 1, 000, 000, 000, 003. So it's not a small number That is up 5 and half percent last year to show you that consumers are still spending. But importantly 53 % of that by volume today is already digitalised, it is already digitaly moved. And that doesn't include sticking your card in a machine. So the business is moved digitaly and it will continue to move that way. What then happens is then to your side is sort of what's the institutional side of receiving that which is the merchandise Question around all of types of payment systems. And we are driving on that hard to keep producing that cost. And believe me, the toughest customer on world will ask you to do that. I mean, the big retailers, the big food retailers Jennifer [ UNKNOWN ] retailers, everybody is after to kind of drive down the medical payments from away that card. So we continue to reduce that. And so we have more blockchain patents, I think than anybody else does. Now. It's just figuring out where the value added actually changes something and actually enhances the capabilities. And where we seen it, add the most value of potentially or cross border activity with a lot of data and a lot of money and trying to figure that out. And then small balance payments across board or two at the other end. And those ideas are all out there and people [ UNKNOWN ] There's not like no activity going on today. It's a huge amount of what goes on every day, not only for us for the rest of the industry. One more theme I'd like to hit on is we had a couple of other big companies here. We had Amazon and Google and all the news was Facebook and its currency but you know that those other companies are looking at this closely and evaluating whether they're gonna do it too. I mean Amazon has all the ingredients to be a bank. They have the customer relationship They love anywhere they can shave a couple points of margin. Patrick Gauthier of Amazon Pay was quite cagey about this. You know, do you guys think in two or three years, Amazon will be there if [ UNKNOWN ] will be there? Well, it's interesting to me that Citi CEO Michael Corbat said that's a question that he gets all the time. You know, is Amazon coming for your business? Sounds like they are in many ways, you know, I wouldn't put it past Amazon to take on any of these guys. One thing that I was talking to a few of the CEOs of the challenger banks like Chime, as well as Wellfront which is a robo- advisor but potentially they're getting into more banking services as well And, you know, it seemed like almost like anybody can kind of get into the banking game now, which I'm sure it's a little bit harder than that there's a lot of regulations involved in a lot of hurdles. But you know, think of all the different companies that we had just at the conference, we're offering a health savings account and want to you know, to have you invest your money with them brokerage services, and trading and savings and checking, you know, it seems to become kind of becoming all Almost commoditized in a way across the industry. And I wouldn't be surprised if Amazon could do it too. I think it's only a matter of time before Amazon gets into this game. They're incredibly well poised, it only makes sense. They have so many sprawling arms. They go into all these different businesses and If you look at some of the consumer sentiment, people like Amazon way more than they like their banks. You know, this is just a green field opportunity for Amazon to get in. [ CROSSTALK ] Better than they like Facebook too. Absolutely. Well, thank you guiys so much for this special edition of Balancing the Ledger. This was fun and Jeff, we're definitel; y gonna miss you. I'll be back, don't know when but I'll be back. We'll be seeing you at Brainstorm [ UNKNOWN ] at Brainstorm Finance next year. Right, it's a deal. Yeah, we'll be there in Montauk and hope you'll drop in on the show every now and then. The Show. I'm John VHNow. I'm Jeff Roberts. And I'm Robert Hackett. For more balancing the ledger come to fortune calm. We'll see you next time. [ MUSIC ]

Balancing the Ledger: Brainstorm Finance 2019 Recap

Finance

The co-hosts breakdown the best moments from Fortune’s inaugural Brainstorm Finance conference.