Fintech - The Forces Driving Change

foreign thank you for that introduction good morning everyone uh my name is John Whitaker I'm a senior editor at investment Monitor and I am delighted to be moderating this panel on the driving change in investing we have a fantastic panel here with us today uh I'll introduce them each in turn uh first of all we have oiichu CEO of Alex we have Simon Goodman CEO of peregrine limited and Maddie fishtali founder and CEO of finna maze welcome to you all um so as the intro said there's been huge amounts of change uh in uh financial markets over the last decade and we're lucky enough to have some speakers here who are really at The Cutting Edge of some of that change so without further Ado I want to turn to uh Oye and ask you to tell us a little bit about addicts and how you're seeing uh fintech driving change and introducing efficiency uh in the work that you do thanks John uh it's really great to be here and feel the excitement in this room about the future of fintech and what we do so my name is oi I'm the CEO of addicts addicts is a Singapore based platform and we do token tokenization for Securities and funds and our mission is to democratize private Market investing for the mass affluent and individuals and so we've taken a whole series of PE funds VC funds hedge funds credit and tokenized that we've been able to fractionalize that using blockchain and of course this panel is here to talk a lot more about what tokenization and blockchain is doing to the well space and democratization is you know one of our key themes here okay great Simon Goodman uh I head up Peregrine limited and it's a pleasure to be here today um Peregrine is a digital asset Marketplace which essentially brings asset managers and asset owners together with investors in bringing through tokenization on the blockchain and bringing liquidity to a lot of the private asset Marketplace right and Maddie introduction I'm the CEO and founder of final maze find a maze is a proudly based here in adg app you have a category 3A license and asset management and what we do is we offer to our clients to each of our clients the solution that is the most suitable to him think of it as a discretionary managed portfolio but that starts for a few thousand dollars instead of a few million dollars this solution allows each client to have the mic the the portfolio that you allow him to have the Investments that are related to his risk profile brilliant and we should probably address the elephant in the room there's been a lot of um Market volatility to say the least uh in recent weeks so I just wanted to ask each of you how you're seeing um the uh expansion of tokenization in the market um and uh particularly in the secondary market and how that is being affected I guess by by recent volatility or well that's a big question and obviously a lot of subtopics below that but I think what's happened in the last year or so has really shown that public markets can be extremely volatile and I think what it's doing is accelerating the thinking about how private markets could be added onto an individual's portfolio to manage some of that volatility so portfolio diversification into private markets I think the real question there became but how does an average individual access private markets right the PE fund or the VC funds all start at one million dollar subscription sizes so it's almost impossible for Mass affluent let alone retail access that right so even the world says today the rule is 80 20 public private there really has been no mechanism for that to express itself in its full form and you know platforms like ourselves and and Simon here would would be thinking about how do we democratize that break that down so that the average individual has access so there's the private markets piece obviously what's complicating the idea of tokenization today is what's happening in the crypto markets and I think all of us here want to understand the difference between cryptocurrency and blockchain and we ourselves for example we don't have cryptocurrencies traded on our platform even though we use blockchain to really create efficiency around threadfy products so the way we're set up is a bit more serving traditional Finance products but opening up a different Market so I think the volatility in the crypto space is probably distracting a little bit from the whole blockchain and financial Innovation conversation because a large part of the wealth actually is still in private markets and public markets and crypto is to sort of another sleeve that but a much slave yeah I mean and someone you would uh you would agree with that I guess in terms of what you do it's it's a distraction it's slightly separate to yeah I mean conversation to be perfect I mean I agree with uh what what IE said I think um you know I personally am a huge uh advocate for crypto um the the first fund that we put on Peregrine and the adgm was actually the first regulated fund which we tokenized here which was a crypto digital asset strategy um and clearly what's happened in the short term is not helpful um you know let's assume that it's uh yeah it's criminal it's fraud and that shouldn't that that is a distraction from what we're doing from a kind of blockchain tokenization effort I think from a crypto perspective um I think it's good and bad in a sense that uh the it will delay the on-ramp of Institutions coming into the space um education efforts need to be doubled down uh regulatory uh Focus will will clearly be at the center of attention um and uh that's going to take time the flip side is that I think it forces the lens to really look at the crypto space to look at well-regulated platforms and institutions and how assets can be safeguarded and some of the kind of security and controls to prevent uh some of those fraudulent activities will be very much under the microscope and will actually you know Propel advancements in the technology and in adoption in the longer term absolutely and Mary your your thoughts on that I guess particularly around education and and wiring and the understanding of the the products on the market I mean what's what's what's your view there about how that's likely to evolve and has been impacted by policy and recent volatility in the market yeah sure it's a very good question and actually Beyond allowing the average investor to understand how the market works the idea is also to bring the markets to him or to her so let me say it differently in the current Asset Management industry what do we have we have an asset manager that manages a fund let's say of a one billion dollar and then you have 10 000 investors investing to this fund the fund manager takes decision on what to put and what to rebalance want to change in his fund depending on some metrics for him that are suitable to him in order to maximize the performance of the fund but while doing so all his decision will trickle down to each of the 10 000 investor in our example the same way and the real question is should they all have the same exact same allocation of the Securities and that particular fund aren't we put in too much pressure on the individual investor so as he should be the one who will take the risk or mitigate the risk of investing that much in fund a that much in fund with that much in fantasy isn't there a better way that will allow any investor of a fund do what she wants to do but at the same time having his decisions translated into each client depending on him on his risk profile the answer exists it existed since the 1980s it is called discretionary managed portfolios whereby an investor would come to a private bank and the private Mac will dedicate an asset manager for that particular client for all his Investments and that particular fund manager will allocate the the portfolio of that Collide accordingly guess what is the ticket size millions of dollars very easy Gucci Private Bank tell them that you want to open an account they will tell you seven figures or we will not be banking with you so how can we do it to lower scale and this is an important question because it takes time to allocate or to build the portfolio for each client regardless of the size twenty thousand dollars or Twenty now how can the technology how can Tech help solve this problem and here this is our thesis is hybrid Asset Management so how does it work you keep on having the current model where you will have a fund manager building his portfolio in the way he wants basically choosing the Securities at allocation at Target weight for each of the Securities what you will ask him to do is to widen the weight of its security into a range and then we let the machine thanks to the phenomenal computation power adapt and choose the weight of each security for that given client in other words the fund manager with the same effort will not be managing one billion dollar fund he will be managing 10 000 independent and unique microphones a microphones per client and this is doable today why because the AI is the one that will translate the Strategic level decisions of the fund manager and for us we consider that the Strategic decisions can be well taken only by human beings but when it comes to slashing them to transcend to translating them into small micro portfolios the mesh that requires a lot of computation and the Machine is much better than us so humans for strategy and the Machine for the tactics the human for the Strategic allocation and the Machine for the Tactical allocation so as each client will have his micro portfolio and therefore you lower the level of knowledge the level of Education that each client needs to have because the machine is taken care of bringing the micro ports for you that he requires given his risk profile it's it's true democratizing of investment well that's that's the aim that people talk about that being an ultimate get uh aim of fintech and I think when people think about that they typically think about cryptos right but I mean what you're talking about is the ways in which AI can actually uh wind the pool of investors lower the barriers for intervening individual investors and I guess you you see this just as the start of something that could be correct fintech will break not only access but will give personalization who among the investors wants to have his fund mingled with another billion dollars people are looking for personalization and today we can deliver it thanks to technology across asset classes crypto that's just an asset class but still forget it for the moment but you are talking here also about public stocks who are talking about Diversified strategies about long short strategies about hedge fund strategies and on our platform we also offer private Equity starting only from ten thousand dollars and here perhaps the link with the with the with my fellow panelists on the tokenization but when you took a nice a private Equity that means that you can do it at a fractional level and therefore when you have a client who tells you I want to invest in private Equity instead of telling him one million ticket size from fund a one million minimum size for for fund B what you will give in them here is the ability to basically choose a token for a small byte here on the small byte there and that's basically a portfolio of a few thousand thousand dollars and this is how the the future of investing could work particularly with the tokenization yeah and yeah want to ask uh the other two panelists about that obviously that's from more the retail side but from Asset Management uh want to uh go back to the debate we're having uh backstage about whether this tokenization is illiquid or a liquid asset and some interesting views on that um I don't know who wants to pick up well I'll go first I think when we when we looked at the challenge we looked at a particularly difficult challenge which is how do you take a PE fund or VC fund and make that applicable to the average mass affluent investor or you know at some point the mass retail investor and therefore we looked at the technology to solve that because traditionally these funds were designed for institutional Capital which had different decision making which have a different obviously pocket sizes but also different thinking around timelines right and so tokenization by itself self changes that and and in a very Market way I would say you know the and it's created a space which nobody has really gone in before until today with the Advent of Technology if you were to set up take tokenization and try and change for example the existing stock exchanges or I think that's where you start to run into a lot of issues because the incumbent system in the traditional Stock Exchange world was really designed about 40 years ago right I mean the very e stock trading electronic trading came into being in sort of you know in the 1970s 1980s depending on on where you lived and that thinking hasn't really changed because what was happening was that it was just building on the system of the system it wasn't redesigned so to break through that incumbent infrastructure would have taken I think a lot of effort and a lot of time and maybe without much success it really requires the exchanges to think about um how they evolutionize themselves but what we saw was that tokenization potentially opened up a whole new space and an asset class that was traditionally for a different source of capital but technology could actually take that and bring it down the long tail of a different set of investors and I think that's where it's truly truly powerful and you've got to think we had this debate you don't need to fractionalize on blockchain right you can actually use a spreadsheet to do that it's not not that difficult but if you want to fractionalize and allow liquidity at scale for the many many ten thousand hundred thousand investors then you do need something more powerful than just an Excel spreadsheet yeah and some of you would agree with that it's the the power of it is what's built on top rather than the basic functionality yeah 100 and I think there are also you know other benefits um again I don't think I think we agree that it doesn't apply so much to the liquid space although I think it's extremely interesting that um you know Wisdom Tree recently uh you're tokenized some of the ETF products um with the support of the SEC which I think is pretty groundbreaking from our perspective we tend see it affecting much more of the illiquid you know part of the marketplace whether that's in hedge funds Venture private Equity Real assets real estate and so forth and for a variety of reasons I think some of that is just the you know once it's kind of digitized um the investor experience the onboarding is a lot more efficient I think that the ability to to gain access as I said you know in terms of fractionalizing it and making the denomination uh much lower creates much more accessibility for for um you know qualified investors I'm not sure you know we go to retail we don't personally go to retail directly but through intermediaries that can happen so I think you've got access and also something that's overlooked a little bit is collateralization so what I mean by that is if you have a portfolio of some hedge funds or some Venture Holdings the reality is getting credit on that good luck I mean yes it's doable but it's going to take time six months nine months number of kind of credit committees at the investment Banks and so on whereas through digitizing and holding these Assets in digital wallets the ability for a lender to get price transparency be able to kind of value them and therefore lend against them are probably a greater haircut I think it's really increased so it just provides a different set of opportunities to tap into so we're we're running a little bit shorter time and I knew this would happen there's so much to discuss in this in this topic and we're probably not going to have a chance to reflect on what regulations we think might be coming down the track I think we all see it on the horizon right but um I I particularly with the last couple of minutes that we have left um wanted to turn to the two panelists who have decided to invest in Abu Dhabi and set up business here just to find out why you've chosen this location why why for you know doing quite cutting-edge things in the in in a fintech space why is was here been the ideal location and then if maybe wants to yeah so uh we had several options in the region and elsewhere and we wanted so we were a startup that was exactly two years ago when we had our our license November 2020 so exactly two years today and we were looking for a center that we understand what a startup is that would understand the time frame of a startup so with a few analysis and we found that adgm is the right space for us our relationship with the regulator is great of course they are doing their job and but they are doing it in a constructive manner they helped us become better company by forcing on us some processes and some infrastructure and what we can see today especially with what is happening around the world regulation is good regulation protects the ecosystem the regulation allows the investor to trust the company that has got a license let's not forget that our business as Finance is a business of trust when you know that there is a policeman that makes sure that things are doing correctly when you know that investors money remains investor money at any situation that's what allows the system they're consistent to grow of course there will always be here and there's some small average or even large players who will not play by the book but let's hope that this will be the exception and what you are striving to look for here in adgm is that from what I have seen is the system is stable yeah I mean just to add to that I think um from a kind of digital perspective I think the adgm Abu Dhabi and the broader UAE it has a tremendous competitive Advantage uh I I know you know I have an inkling for what kind of Singapore doing and I think there's a similar kind of ethos um but really when I think about the kind of traditional marketplaces in the world you know New York London uh Switzerland Etc I I think um they're stealing a march here and so for us it makes real strategic sense to be at the Forefront of that wave to be working hand in hand with the regulatory bodies um with with the leadership and to really Propel and help develop the ecosystem with the full support of a group that doesn't have or isn't burdened by that Legacy which so many other jurisdictions have so I think it's a huge opportunity as well we sort of uh actually have the opportunity to speak to Regulators actually around the world the big the big Financial hubs and many Regulators are sort of trying to understand that combination of Regulation and Market development now obviously in Singapore we Mas prize itself on being one of the best at combining these two perspectives because it's not easy to be both the policeman and somebody who wants to grow a market and I think adgm seems to have that combination set up as well the understanding of what needs to happen from a regulatory and the policing and the enforcement side but at the same time the market development which obviously supports fintechs like ourselves because you know you you see that proliferation and the ability to think ahead of what needs to be a financial Global Financial Hub I think fintech plays a very large core part of that discussion so for the ad Jam guys I think it's a great a great combination well there you guys some price for adgm at the end there we have uh run out of time and we could talk for much longer but unfortunately we can't uh all that's left is for me to thank all of our panelists and and everyone uh out there who sat and listened to us thank you very much [Applause]