Embrace change, take risks, and disrupt yourself

Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.

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China: Emergence of a Tech and Innovation Superpower

The debate about what city is the fintech capital of the world continues, as more players enter the market and more money is invested into the very active fintech ecosystem. Is the fintech capital London, New York, the Silicon Valley or elsewhere? Should the title go to the city with the most players, the greatest fintech investment or the largest number of users of challenger bank or bank challenger services?

My perspective on a possible candidate for the fintech capital definitely changed when I visited Shenzhen, China recently. From the advancement of smart city technologies, to the deployment and use of digital technologies for payments, energy management, operational efficiency and even daily tasks like shopping and eating out, I have never experienced so many modern advancements than during my short week in China.

As part two of my review of my tour of Shenzhen, I am joined today by Brett King, author of many best selling books on the future of banking and the host of the number one fintech podcast, Breaking Banks. Brett and the president of Provoke Management, Jay Kemp, joined me for a VIP tour of Huawei Technologies. With a history steeped in manufacturing, Huawei now is the hub of new technologies that impact every Chinese citizen, from the phones they use to the services they use. They also are an example of how the combination of data, advanced analytics, digital technologies and a culture of innovation and R&D can propel a company into the future.

Jim Marous: Hey, it's so great to have you on the show today, Brett. You are my first two-time guest. I thought it was important for us to take time to discuss all that we saw last week in Shenzhen.

Brett King: It was a phenomenal visit. As I said on my podcast when I was talking about this with you, Jim, my first visit to Shenzhen was in 2001. Even though it was your first visit there, every time I go back there, I see it with new eyes because it's just growing so incredibly.

Jim Marous: Well, you're obviously, as you said, no stranger to the region. Why is it so important for people in our industry to go to China, but even more importantly, specifically Shenzhen?

Brett King: Even in the FinTech space, you hear people talking about, for example, talking about the fact that like... I saw it with the Plaid and the Visa acquisition of Plaid this week, people talking about how this is going to supercharge Visa's business, and cards are back, and the QR codes of the Chinese system can't compete. That's a fair view from four years ago, but today when you go to China, people aren't using QR codes. They're paying with their face. They're using artificial intelligence and facial recognition to pay for stuff.

Brett King: The view that most of the West, particularly the UK and the US, Europe and US has of China is that it's this economy that made its power by being the factory of the world, and copying everybody, and ripping off Louis Vuitton handbags and things. Yet when you go there today, they are the world's leading economy and artificial intelligence, technology development, innovation.

Brett King: They are an economy that's super competitive, far more competitive at a local and regional level than what we're used to seeing in the United States, and this drives incredible forces of innovation. The entire city has a culture of innovation that we just don't see in the Western world. You can't really absorb that by, with respect, listening to a podcast or reading a tech news article. When you go there, it's a much more acute awareness of the fact that, oh, well, we are seeing the economy of the future here.

Jim Marous: Well, it's interesting because, as you said, you get into the city, it's only 40 years old. I think it's right around the age of Epcot. As I think about Epcot, I remember that, when you go in, you see the geodesic dome, and it's like the city of tomorrow. We had the opportunity, the privilege of actually being invited to visit Huawei on a form of a VIP tour, a media tour where we were able to see some of the innovations and advancements that the company has made. I'll tell you what. Our perception of even the city of tomorrow pales by comparison to what we saw at Huawei, wasn't it?

Brett King: Absolutely. Huawei built from scratch, in five years, this four-square-mile tech campus that has, between the two areas of the campus, the sort of R&D labs and the actual manufacturing facility, what, some 40,000 employees. They have accommodation for people.

Brett King: As you said on my podcast when I interviewed you, or maybe it was Jay, that it was like taking a visit to Disneyland because you have these different regions of Europe from a design perspective with these brand-new buildings that were meticulously built and the build quality very high. Everything's super clean. You feel like you're in Italy or Bulgaria or something like this visiting these cities. You go through these different zones, and it feels like you're sort of on this hybrid between a Disneyland European Disney tour and this technology organization. It's quite, quite unique. As a young person in Shenzhen, what an amazing environment to be living and working in. Yeah.

Jim Marous: Well, it's interesting because it's a fully functioning city of R&D people, which again, the scope of this is hard to believe. At Huawei they have, I think it's room for 25,000 R&D employees there, but more importantly, it's a city in and of itself. You have the living quarters. If you want to live there, they have living quarters for 10,000 people and their families. They have eating facilities within the buildings.

Jim Marous: I think the one thing that caught us right off guard is it's just all just a facade because we went a long way before we found another human being more than just one or two walking the streets. Then we realized that, in Shenzhen and almost everywhere in China, you have a 996 working environment, 9:00 to 9:00 during the day, six days a week, and that with all the environmental things that go well for them, the cafeterias that even go as far as serving wine to the employees and the kind of foods, and it's all subsidized to some degree, there's no reason for these people to leave the buildings til the end of the day. We were there in midday, and I think, in fact, I know the only Shenzhen or the only Huawei employees we saw where the trainees that were going through the streets of-

Brett King: That are walking around, and they're getting orientation. Yeah.

Jim Marous: Yeah. It was an environment that you think about. We asked them, "Why does this even exist?" Very quickly, they said, "It's to basically encourage employees to work here and to live here." There's such a competitive environment, globally, around trying to find R&D employees, but at Huawei, what's interesting is I found it very unique in that, my whole tour of China, everybody related to the number of employees they had in R&D as percentages as opposed to, "Oh, we have 150 people in R&D." No. They have 40% of their people at Huawei, corporately, are in the R&D area. Wasn't it something like very close to approaching 100,000 people? Wasn't it?

Brett King: 96,000, yeah. Let's take Apple. Apple outsources a lot of R&D to China and certainly outsource production to China. If you went to the Apple campus in Cupertino, and I don't know this for a fact, but my guess is you would probably not find similar ratios. You'd probably find more people that are involved in the brand of Apple and product... maybe product development and... but I could be completely wrong on that. Certainly, if you went to JPMorgan Chase, you wouldn't find 40% of their staff in R&D. This is a company that is building a structure to create the future and create future growth, and it was really impressive.

Jim Marous: Well, also it was interesting because not only do they have the R&D teams and working together and all that, but when you looked at it overall, they also had, on-campus, what's called the Huawei University. What we have there is a situation where they have, I guess it's 5,000 training classes that they put on regularly for employees to continually upgrade their skills. Really, what they're doing, very much like Amazon is doing in the States, they're investing in their own teams to keep them on board. This is obviously not only recruitment capability but a retention capability.

Brett King: No, absolutely. I can find some R&D expenses for Apple, but I haven't found the number of employees working on it, but no, I think Huawei, as a company, this illustrates the advantage China really has over the United States. You'd find the same with Ant Financial. You'd find the same with Alibaba. You'd find the same with Tencent.

Brett King: The one challenge that these companies have is they've come from a market that, while being super competitive and incredible development over the last 10, 20 years, has not being very outwardly focused. They're not being very global focused. That's what's happening right now is you're starting to see these Chinese companies try to export themselves off shore, build brands offshore. That's where they have a learning curve right now, but not on the technology development R&D side. It was truly phenomenal to see that.

Brett King: It was interesting that, when we spoke to the Huawei teams, there are still challenges in getting R&D staff. Part of that was, as you say, the university, from the ground up, creating the skills that they need, but also Shenzhen, as a city, was very critical because it's the third-largest city in terms of GDP now in China. Attracting young people to Shenzhen is a big part of Huawei's success and Shenzhen's success. Shenzhen has become the cool, innovative city if you want a future as a... If you're a student and you want a future in the technology space, you're not going to go to Shanghai or Beijing. You're going to go to Shenzhen. That's also a key part of the success of Shenzhen's story.

Jim Marous: Well, it's great because when we went to China, this was my first two day of a four-day tour to China and went from Huawei then to organizations that are in the FinTech space. I have another show that I've done on that visit. I think what was interesting is, at Huawei and in all the places we visited, you got the sense that the culture of the organizations kind of was built from the culture of China and of Shenzhen by itself from the standpoint of, as you mentioned, the focus on innovation and on technology and on the acceptance of change.

Jim Marous: I wonder is this a foundation that gives Chinese companies, maybe, a very heavy competitive advantage in the marketplace globally where they're not having to completely convert mindsets into being change agents and being innovative and having a research and development background? This really is, for lack of a better term, born into the family, is it not?

Brett King: Yeah. Look, I think absolutely. Look, over the last 10 years, 60% of spend, globally, on artificial intelligence has come out of China. You can see children being trained at a primary school level on basic artificial intelligence. The running joke when we were there is you walk into the KFCs that are all over the place, and you can pay with your face. You can enter the border using facial recognition and biometrics.

Brett King: This feels like the future when you visit there, but it's a grassroots movement that's happening in an economy level. You would not get, in China, the skepticism towards science and technology that we see, for example, in some of the Western nations today. You would not get an argument over whether or not we should be using facial recognition for things like security and for payments and things like that because of civil rights.

Brett King: Now, it's obviously, from a governance perspective, it's a very different environment, but there's much less resistance to technology adoption and innovation than we see in the US, as an example. That, by its virtue, is just going to push the gap between these two economies harder and further.

Brett King: China also is investing massively in retraining citizens for these new jobs, as you mentioned. Huawei is contributing to that themselves as is the government overall. We don't see a lot of preparation or forethought, in that respect, in the United States. We know, for example, autonomous vehicles are going to dramatically disrupt transcontinental truck drivers in the United States, taxi drivers in the United States. We don't see a systemic approach to retraining these drivers to give them skills that are going to allow them to transition out of jobs driving vehicles into other industries. In China, we see that sort of investment in society.

Jim Marous: Yeah. It's interesting because, as you said, the cities are modern. The average age of Shenzhen is 29, I think our tour guide told us, and the average age of a lot of the companies we visited was even younger, so it's a very different environment. I mean I went to the tallest building in Shenzhen at Ping An Tower. We were coming in at lunchtime, and everybody was checking out, going through the turnstiles using their face. When you saw people come down the escalators, I joked with Matt [Dooley 00:13:49], who you know very well, and said, "Oh, my gosh. We are twice the age of every single person we're seeing in this company."

Jim Marous: It was interesting because when we went and saw the... what I'll call the European campus, which was stunning in of itself in that it's in the middle of... I won't call it nowhere, but pretty doggone close to nowhere. We then went from the European-feeling campus with a built-in university to do training of their own employees to the manufacturing plant. That was a very different feel, not a European countryside feel, but much more of a manufacturing facility. Boy, what an opportunity to go and actually see mobile phones being manufactured on a production line that doesn't look like the production lines of the past, does it?

Brett King: No. Again, from the ground up, there is a culture of improvement, and so you have, as we were discussing on Breaking Banks, they went from, on one single production line, I think it was 80 employees down to 65 then now 16 or 13 depending on which model of phone that they're developing. You can watch these phones spit out the end of this production line every 28 seconds.

Brett King: You see, on the wall, these innovation awards given to individual staff members, and there's dozens of them up on the wall, where they've improved the process by one second or two second or three seconds on a net basis for an individual phone. It's that cumulative approach to innovation that's a company mission that has revolutionized that factory floor.

Brett King: Some of it is really smart use of technology like introducing robots to transport phones from one station to another using image recognition to check the glue that's put on the printed circuit board and things like that. Other elements of it, as you mentioned in the chat, were gravity driven to move at the speed of the employee, how quickly they could respond to the production line and things like that. It was everybody's mission to create these improvements.

Brett King: While people knew that, by making that improvement, it may end up in them losing their job on the production line, they had no fear that the company wouldn't look after them in that scenario. As I say, that's a systemic approach at a company level and at a city level towards innovation that we just don't see here in the United States. You got a lot of the banks laying off big numbers of staff, tens of thousands of employees as a result of automation. There's almost zero effort to retrain these people for different roles within the organization. This is chalk and cheese from what we see in the West right now.

Jim Marous: Well, and on our first day, we visited the legacy Huawei campus where there's a number of buildings, a lot of executives reside there, little bit older, average age. What was interesting is the first stop we made was to the innovation exposition center that they built to show off the different things they've done. Our first stop was to see the inner workings of the smart city, which basically is Shenzhen. What was interesting and what was pointed out from the very beginning is it really was a combination of technology, innovation, personal view, the use of the cameras, but also partnerships of a number of companies, many of them from the West, to make this all work.

Jim Marous: A lot of them were companies that also are in the FinTech space, the Tencents of the world, the Alibabas of the world, the Ping Ans of the world that are feeding data to make this smart city work. You and I just looked at each other because you think it's almost like animation, that you thought it was maybe just staged for us, but then we realized this was real. This is happening right in front of us.

Brett King: Was happening in real time, yeah.

Jim Marous: Yeah. What impressed you? Because I know you visit a lot of places, but I think this was something new to you. What was your impression of that, even just the smart city and also the things they showed us around smart manufacturing and energy, things of this nature?

Brett King: Well, I write about smart cities extensively in Augmented, and so you're actually seeing the culmination of many of these technologies coming together here, but it was operational. That was the thing. You're not talking about technologies they might deploy in the future. These are technologies that were actually in operation day to day and savings people's lives.

Brett King: One of the examples was they're using image recognition on motor vehicles to see who wasn't wearing seatbelts. Now, they didn't fine these people. They just simply sent them a message using facial recognition technology again and said, "Yeah, we saw you weren't wearing your seat belt on this drive on this date. Could you please address this? Otherwise, we may have to take action in the future." Overnight, you see the number of people wearing seatbelts goes up 80%.

Brett King: You got some real things happening, Emergency services deployed in real time, being able to divert traffic using traffic lights, and detouring systems that are automated based on accidents, calling out emergency services like fire engines and ambulances on an automated basis. The resource management of that city is so efficient and so optimal based on these technologies, distributed energy grid systems where you have... We saw these rows.

Brett King: You remember one of the pictures I posted on Instagram, Jim, of rows and rows of factories with solar panels on their rooftops. That's part of this city-level energy schema where they have energy storage systems at a sort of a neighborhood level. They have solar panels and these renewable techs everywhere. The grid is able to manage demand on a sort of active basis using AI technology.

Brett King: We have data center infrastructure that, they want to deploy more a technology, they just drop in a shipping container with a data center into it. Now you can sort of modularize these and put these things together. You've got the Dubai airport now that uses a data center produced by Huawei where they just, essentially, dropped in 30 of these shipping containers to create this massive data center capability. It really is very impressive to see the way that they're using automation at a city level to create dramatically more efficient resource usage.

Brett King: In the world of today when, politically, big government and big spending on government isn't fashionable, there's a solution staring us in the face here. We can do much more for our citizens with more efficient use of resources by restructuring the way that we provide these services. In the end, you get where energy is essentially going to be almost free because we're just making a much more efficient usage of that resource at a state level.

Jim Marous: Well, interesting. At the foundation of everything we saw at Huawei was data and the analytics that that can use data to drive good solutions. Both you and I sat down with people from Huawei, and they were asking us about this. I think it was stunning that we, in the West, I think, view privacy in a very parochial way, which is not wrong, but I think what was interesting is I've always talked about the fact that privacy becomes an issue if there's not a good value transfer.

Jim Marous: I think that the thing we saw in the Huawei exposition center was the fact that the deployment of results and of solutions based on data and technology made it so. As you mentioned, there's a better lifestyle. In many cases, there's lower cost of services. We saw, when we visited the FinTech firms, that allowed for a whole different level of inclusion where, basically, almost everybody in the marketplace was included in being able to not only deposit services but lending services, borrowing, because of the use of deeper data and the analytics capability of applying that and, as we saw, the partnering of multiple organizations to make this all work.

Jim Marous: I mean the smart city is not about just driving traffic lights more efficiently or knowing about how strong your infrastructure is. We saw it making a difference in people's lives, saving people's lives, being able to deploy services, being able to make it more efficient, but really within the context of knowing it was China, so we're not blind to this, but you look and you say, "This is what can be done in the future if we put our resources toward it," and it doesn't come without a lot of investment, as we saw.

Brett King: No. That's where, if you spoke about that sort of level of investment in the United States, for example, or in my home country, Australia, you'd initially get a great deal of pushback at, "Well, why would we be deploying technology that could result in lower employment in government?" for example. There's a big debate over whether we should do this.

Brett King: China says, "This is the right thing for citizens," but they have a systemic approach also defining citizens' employment if they're disrupted by changes in the public sector, for example. They're trying, systemically to make this shift, but ultimately, China knows that it has to create a better environment for its citizens. When you see automation of cities like the smart city stuff we're talking about, this is part of their drive to reduce poverty, increase quality of life for the average citizen, improve the economy.

Brett King: Systemically, they approach this in quite a different way from the way we do in the West, but it certainly seems to be working. As you said, the responsiveness of emergency services to an incident like a motor vehicle accident, you're not going to find a better responsiveness anywhere in the world based on this use of technology, but it's a purposeful systemic shift.

Jim Marous: Well, this podcast is called Banking Transformed, so we will get into the financial services end because we met with a number of the executives that are in Huawei's financial services sector. It's a sector that, as they mentioned, it was their fastest growing sector. It's the area they want to make even more of an impact, but really, it's an area where they can deploy technology, their use of data and advanced analytics, and even their partnership with other companies to deploy solutions at financial institutions. This is where I think it was most evident that Huawei is shifting very quickly from what has traditionally been known as a manufacturing company to a solutions company. What was your takeaway from our meetings with the people that are involved in the financial services sector of Huawei?

Brett King: Well, so Jason Cao, who manages that and then the strategy team, we sat down and had a working session with these guys over a couple of hours. Included there was an assistant to the chairman of Huawei, the head of strategy, a new team member that had just joined from one of the top three banks in China. You had very senior people in the room. Unlike what we find in a lot of the West where there was an assumption that knew what was going to happen, these guys were very open and very willing to say, "Tell us what we don't know. Give us the perspective. Help us learn. Help us be better at exporting Huawei's technology for financial services to the rest of the world."

Brett King: That's quite impressive because they're sort of learning where they don't know stuff, whereas in the West, you will see incumbent bankers that have ignored the FinTech phenomenon. They said, "No, no. It's not going to change here." That's a fairly typical response that you see in most industries when they're faced with this sort of disruption. What we saw at Huawei was actually the opposite, a very openness to this and saying, "Help us understand the rate of change. Help us understand where there are opportunities, weaknesses in the system, where there are threats to the system. How can we help? How can we present this information offshore in such a way that will improve Huawei's brand?"

Brett King: Again, this seems to be a cultural shift or cultural advantage that we see, generally, in China. You also visited Ping An, and you visited WeBank, and I've been to both those organizations numerous times as well. One of the most amazing examples of this adaptability is WeBank's control room, which I've never-

Jim Marous: It was amazing, yeah.

Brett King: There is no other bank in the world that has, at the heart of their business, this technology-based control room that can deploy and measure and monitor what is going on with the bank in real time across the nation.

Brett King: Talking about the fact that they can see a data trend, they can see the way that people are utilizing their products and see an opportunity for a new product and, within 6 to 11 days, deploy an entirely new product from scratch built based on this emergent behavior. We can see them tweaking marketing campaigns in real time, location by location, because of responsiveness to certain messaging. You see cybersecurity threats being handled in real time, cloud load balancing in real time. It's insane to see this. You know?

Jim Marous: Well, and the way they deliver it. You walk into a conference room that looks like a bunch of whiteboards, and then they talk about their control center that you're seeing on the screen, all the different things they're monitoring, 206 million customers, even deeper than that when you take into effect all the relationships they have.

Jim Marous: Then, they push a button and two windows open up, and you see the control room in real time where you see these people, and there's a lot of empty desks. They said, "Oh, but wait." During the time of our meeting, there was something that happened in the system. Immediately, people come, fix it in real time and get it up. Their downtime, I think it was 99.99996% uptime. I think they said it was two minutes during last year.

Jim Marous: That is an insane capability, but it's also because they've invested. I think they have five different servers that back each other up, which also, as you mentioned, allows them to bring on new ideas, to bring on new updates in real time because they've already tested it on a server that serves their customers. They use one of the servers that's not being used at that time. They're able to test it in a real-time environment and, as you said, in 11 days, go from ideation to implementation where they do 20 to 30 product updates a month. I'd be challenged to know how many other financial institutions in the world have that robust of an innovation and deployment culture.

Jim Marous: What was interesting also when we we're meeting with the people at Huawei was that this is all brought together with many of the companies. They all interact and interrelate in such a way that data is served to each company, not on a personal level, but in a way that makes it so it's not only transportable but effective.

Jim Marous: I think when we met with the financial services group, it's clear that what they're trying to do is really take the innovation and the R&D development, R&D space, deploy it in the financial services space out West. They would very much, as WeBank and others want to do, would love to be able to find solutions that the West will buy.

Jim Marous: One of the challenges, and we need to be completely transparent on this, is that Huawei is under pressure from the US and other Western allies around how this data is being used and the capabilities that the Chinese government may have if people buy technology from China. With that said, they asked us, "How can we deal with the issue of trust with the West?" I think you gave a couple examples of how that can be deployed. Can you give an example of what you thought they could do?

Brett King: I can't remember the examples.

Jim Marous: I think it was around the partnerships that they had.

Brett King: Oh, okay. Yeah, yeah.

Jim Marous: It's not like white labeling, but they may not be able to be the front-and-center company. Yeah.

Brett King: Yeah. No, so I think, yeah, joint operations and working with a respected partner, getting sort of a transferability of trust was one strategy. Again, they've been beaten on PR over most of this stuff. I actually don't believe that the monitoring issues and feedback to the Chinese system is an acute a problem as it's represented in Western media, but I do think that Huawei represents a significant threat on core technologies like 5G where they're clearly well ahead of most Western companies.

Brett King: I do think there's been a bit of PR to sort of try and balance the risk to Western companies in respect to that, but 5G is such a small part of their tech. As you learned, the smart city stuff they're doing, the smart energy grid stuff they're doing, the autonomous vehicle technologies, the dedicated chips like the Atlas AI chip that they have-

Jim Marous: Oh, my gosh, yeah.

Brett King: I think there is an element of the fact that they... Rest of the world sees they have phones, and they have some pretty impressive phones, but they don't necessarily understand the depth of Huawei's technology capability. They're much more like Apple in respect to the investment in technology changes that we see systemically or maybe sort of Google Moonshot-type projects there. The breadth of what they're involved in is pretty impressive. I do think that if people are able to understand this depth of capability and the potential social good from many of these Huawei investments in R&D, I think that would obviously serve them very well from a general PR perspective.

Jim Marous: Well, essentially, it was my final takeaway was that, while there may be issues with China, with Huawei, with all the companies we visited, the reality... If you look at them and what's actually happening as opposed to who's doing it, I don't think anywhere that I've seen in the world has the use of data being used in such a broad context with so much, so many solutions built off of this in such a way that, basically, it is very much, and we don't ever hear about this in the West, where there's so many good things that come out of this in this country.

Jim Marous: We can talk about the bad forever, but I think what was really interesting, and you keep on mentioning it, is that the deployment for the ability of the common good, for lowering costs, for certainly expanding the availability of things. We won't get into healthcare here, but the capabilities of using this data that's already being used in China for healthcare, for logistics, for delivery of fresh food, everything, the potential just is mind blowing.

Jim Marous: I think that's the takeaway that I had was that, yeah, I had a little bit of a perception of what I thought China was going to be, and a lot it was through you, the capabilities, but whatever capabilities I imagined, you can take that and make it exponential, the what we actually saw, and both at Huawei as well as all the FinTech companies. I think Huawei was a great place to start the week with you and Jay Kemp from our team at Provoke to be able to actually be exposed to what is possible.

Brett King: Yeah.

Jim Marous: Yes, just as, again, a clear disclosure is that Huawei did fund us as media members to see what's being done, but in no way, shape or form did they guide what we write, what we say.

Brett King: Right.

Jim Marous: They aren't editing your podcast, my podcast.

Brett King: No.

Jim Marous: They didn't edit my article for The Financial Brand that got a lot of great responses and a couple that were very negative about what's going on in China and what may be going on at Huawei. I think what's important is we've done this all on our own. Nobody gets any editing rights or they can't shut us down, but I think what was interesting is it opened our eyes to the possibility. You write about this continuously. You're working on a new book. You want to tell us a little bit about your new book you're working on?

Brett King: It leads in quite well because a lot of what you're talking about here is Shenzhen, in particular, but China's economy generally. They are approaching the innovation around technologies, the creation of new technologies, and the deployment of technologies for the social good of the Chinese nation and for the benefit of the economy.

Brett King: In the West, we spend a great amount of time debating whether or not technology is going to be good and then have a really hands-off approach to the way technology impacts the market. We let capitalism take care of that. In China, it's a very ordered, systemic approach to deploying technology for the benefit of their citizens. This leads, quite nicely, into the book.

Brett King: The new book I'm working on, it's book number seven. It should be out in June, July. It's called The Rise of Techno-Socialism, and it looks at three key very socially-disruptive constructs. That is massive inequality that we see developing or having developed in the West over the last few years, not just in the West, actually, but sort of globally in more developed economies. We see artificial intelligence and the potential of automation wreaking havoc on traditional employment structures and industries and so forth. We see, at the same time, the emerging issues around climate change like what we've seen in Australia with the bush fires recently that are going to increasingly create concern, potentially social unrest and so forth.

Brett King: You put all this together, and we have the potential for massive social disruption. If we just treat it like we do today and just leave it to chance to resolve or say, "Well, the market'll fix it," the reality is it's going to descend into chaos and potentially, based on historical sort of precedence, potentially revolution as a result of this unrest.

Brett King: If, though, we take a more structured approach to the future of society, we start designing society, we start factoring in artificial intelligence and the likelihood of it's going to... impacting jobs, for example, and start retraining people and looking after that, if we say the cost of leaving a person on the streets of Los Angeles or New York or San Francisco as a homeless person is dramatically more expensive than actually providing them with housing, which we can now 3D print a small apartment in 24 hours for the cost of about 3,000 or $4,000 instead of the 35 to $40,000 of annual servicing, policing and health care costs for a homeless individual, you've got a dramatic improvement to society by just saying that we need to be more socially conscious by designing policy that integrates this technology with minimal impact, or maximum positive impact is probably a better way to put it, in society is key.

Brett King: I think the increased social awareness that's come through social media, through increases, improvements in communication, through awareness to the risks around climate change and mobilization of forces around that, protests globally and things, this increased social awareness is going to put more and more pressure on governments to say, "We are governing for the people. We're doing something for the citizenship." I think these three forces will coalesce to produce significant political and policy change at a nation level. I think it's that the technology can solve an abundance of problems if used with purpose to address those issues.

Brett King: If we leave it to the free market, we just won't get there. The tragedy of the commons concept is that we are using resources that benefit us individually as companies or individual citizens working for these companies or in these economies, but we don't have a collective approach to what it means for the Earth, as a whole, on a long-term basis. We tend to be looking for those quarterly results and things like that rather than saying, "What sort of a world are we going to create for our grandchildren?"

Brett King: That's what I'm trying to address in the book. How do we bridge that gulf of understanding and behavior that has created the problems we have today, and how is technology going to be useful to solve those problems that are at global basis in terms of social responsibility and consciousness and how those three forces I mentioned, AI, climate, and inequality, are sort of forcing us to this point of real structural change at a societal level.

Jim Marous: Well, it's always great to talk to you. We could go on forever and usually do. It was also great to be able to travel with you for a couple of days in China and get your perspectives on what the environment's like and to understand more about what I didn't know before going there.

Brett King: You're a great traveling companion, Jim, yeah, because-

Jim Marous: Well, thank you. I'm certainly dying to go back again, I can tell you.

Brett King: Well, what I love about traveling with you is you're seeing the world anew. For someone of our vintage to have that excitement about learning new things, I think that's a great quality, Jim. I think more people should endeavor to encourage that.

Jim Marous: Well, as you know, that's one of my mantras is to disrupt yourself and continuous learning. I'm lucky enough that, with Provoke, that I schedule my speaking engagements across the world in old parts of countries and new parts of countries with four days to immerse myself in a culture. Certainly, it's not enough, but at every single stop I've made over the last four years with Provoke, it's been an enlightening experience that I always come away with a learning that's far beyond what I had before that. Something to be said for the US educational system for not giving me that upfront, but also, I hadn't pursued it in the past, but now I have the opportunity.

Jim Marous: Again, thank you very much for being on the show and recapping our China trip. We actually are doing a back-to-back podcast between what we saw at Huawei as well as what we saw at the financial technology companies we visited with Matt Dooley and and David [Wallace 00:00:44:12]. Again, it was great to travel with you and Jay and, hopefully, you'll do it again.

Brett King: Absolutely. Take care.

Jim Marous: Take it easy.

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