The Seoul Asia Financial Forum Finance 4.0: Bets the Financial Digitalization and Globalization on the Future April 17 2019

1. The Impact of Financial
Digitalization and
Globalization
Prof David LEE Kuo Chuen
李国权
The Seoul Asian Financial Forum
Finance 4.0: Bets the Financial Digitalization and
Globalization on the Future
April 17 2019

2. Min (Cost of
Production)
Min (Cost of
Information)
1980’s
AUTOMATION
Components Manufacturing
and Assembly
Proposition: Cheaper, Better,
Faster
Driven by: Assembly
Engineering Automation
1990’s
INTERNET
Email, Data Storage, Data
Tracking, High Precision
Proposition: Free, Fast and
Frictionless
Driven by: High Precision &
Internet Engineering
Automation

3. Min (Cost of
Flow)
Min (Cost of
Trust)
• Digital Payments & Transactions, Digital Assets, AI
Algorithms, Machine Learning
• Proposition: Service-based businesses, Operation
Tracking and Visibility, Fractional Sharing, AI
Rating, Economies of Scales, Economies of Scopes
• Driven by: Digitalization and Globalization
2000’s DIGITAL DEVICES
• Tokens, Smart Contracts, Oracles, Peer
Collaboration of Untrusted Parties
• Propositions: Provenance & Authentication, Data
Monetization, Peer-to-Peer, Machine-to-Machine,
Borderless, Decentralisation, Secured Privacy,
Distribution of Trust, Autonomous, Convergence of
Technology, Convergence of Industry
• Driven by: Tokenization
2015’s BLOCKCHAIN

4. Direct Impact:
Definitions
Outdated Models
Outdated
Measurements
Outdated Policies
Definitions: Taxation, Foreign Direct Investment, GDP
versus GNI, Transfer Pricing
Business Models: Platform, Sharing, Geek Economy
Measurements: Productivity Continues to Decline
Fund Raising: IPO, ICO (Initial Crypto-Token Offering), IEO
(Initial Exchange Offerings), STO (Security Token Offering)
Listing Rules: Profits, Turnover
Job Creation: Balancing Disruption with Innovation
Education and Skills Future: Lifelong Learning, Living Lab
Digitalization & Globalization

5. Source: Schulte Research Estimates, Zenith
A Whole New Digitalization For Finance Dominated by Chinese Players:
Alibaba way ahead. Ping An and Tencent dominate
Company Payment Insurance Personal
Loans
SME
Loans
Credit
Rating
Money
Market
Wealth
Mgmt
Crowd-
Funding
Currency
Exchange
Alibaba AliPay
(400mn)
(51.8%
ms)
Ant
Zhong An
Personal
loans -
Ant
SME
loans –
Ant
SME
Service
Zhima
Credit
Yue’bao
(CNY1.2t
n)
Ant
Financial,
AliPay
ANTSDAQ AliPay
Tencent WePay
(300mn)
(38.3%
ms)
Zhong An Weilidai Weilidai WeBank / WeBank JD.com /
Ping An Ping An
Bank
Ping An
Insurance
Ping An
Bank
Ping An
Bank
Ping An
Insurance
Ping An
Asset
Mgmt
Ping An
Asset
Mgmt
/ Ping An
Bank
Baidu Baidu
Wallet
(100mn)
/ / / Yes / Yes / /
Source: Schulte Research Estimates, Zenith

6. Source: Schulte Research Estimates, Zenith
AI Digitalized Financial Services Comparison:
The Rest of the Technology Giants Are Way Behind!
Company Payment Insurance Personal
Loans
SME Loans Credit
Rating
Money
Market
Wealth
Mgmt
Crowd-
Funding
Currency
Exchange
Amazon / Electronic
Damage
Insurance
(UK)
/ USD$3bn
SME loans
(Amazon
Lending)
/ / / / /
Microsoft MSFT
Wallet
/ / / / / / / /
Google Google
Wallet,
Android Pay
/ / / / / / / /
Apple Apply Pay
(85mn,
450%YOY)
/ / / / / / / /
Facebook Messenger
Pay
/ / / / / / / /

7. Source: Schulte Research Estimates, Zenith
When Is Being too Prudent not Prudent and Being too Careful Becomes Careless?
Company Payment Insurance Personal
Loans
SME Loans Credit
Rating
Money
Market
Wealth
Mgmt
Crowd-
Funding
Currency
Exchange
Alibaba AliPay (400mn)
(51.8% ms)
Ant
Zhong An
Personal
loans - Ant
SME loans –
Ant
SME Service
Zhima Credit Yue’bao
(CNY1.2tn)
Ant
Financial,
AliPay
ANTSDAQ AliPay
Tencent WePay (300mn)
(38.3% ms)
Zhong An Weilidai Weilidai WeBank / WeBank JD.com /
Ping An Ping An Bank Ping An
Insurance
Ping An Bank Ping An Bank Ping An
Insurance
Ping An
Asset Mgmt
Ping An
Asset Mgmt
/ Ping An Bank
Baidu Baidu Wallet
(100mn)
/ / / Yes / Yes / /
Amazon / Electronic
Damage
Insurance
(UK)
/ USD$3bn
SME loans
(Amazon
Lending)
/ / / / /
Microsoft MSFT Wallet / / / / / / / /
Google Google Wallet,
Android Pay
/ / / / / / / /
Apple Apply Pay
(85mn,
450%YOY)
/ / / / / / / /
Facebook Messenger Pay / / / / / / / /
MISSED
OPPORTUNITY?
Source: Schulte Research Estimates, Zenith

8. Redefining the Boundary of Digitized Finance!
B2B
C2C
B2C
Cloud Computing
IoT
Artificial Intelligence/ PAI 2.0
Source: Alibaba Website, Schulte Research
Investment
Management
Audio/Video
From
Economies of
Scale to
Economies of
Scope

9. Ping An has
made greater
strides into
becoming an
autonomous
financial
ecosystem
than any other
company!
Insurance
Golden Butler
Health
Management
Facial Recognition
DataAnalytics
Artificial Intelligence
Finance
Healthcare
Redefining the Boundary of Digitized Insurance!
Micro-
expression
and
Vein
Recognition
Source: Schulte Research Estimates, Zenith

10. Chinese firms have implemented with SPEED AFTER FAILURES!
US firms stopped their efforts.
Company Duds Successful Replacements
Alibaba Lai Wang, Alibaba.com (HK) Ant Financial, AliPay, Taobao, Tmall, Alibaba Cloud, PAI 2.0,
Zhima Credit, ANTSDAQ, Yue’bao, Youku, Weibo, etc.
Tencent Pai Pai, E-commerce WePay, Weilidai, WeBank, JD.com, WeChat, Didi, Tencent Cloud,
etc.
Ping An Ping An Good Car Ping An Bank, Ping An Insurance, Ping An Asset Mgmt, Ping An
Health, etc.
Baidu O2O Wai Mai Baidu Wallet
Microsoft Microsoft Wallet Skype
Google Google Hangout Android Pay
Facebook Messenger Pay /
Apple Apple Pay /
Amazon Amazon Lending
Amazon Insurance
/
*China had duds but morphed quickly and pivoted effectively
NO
REPLACEMENTS!
Source: Schulte Research Estimates, Zenith

11. The Path of
LEAST or EASY Compliance!
The Cloud is the foundation of AI strategy. Alibaba dominates in Asia. Amazon
dominates in US.
Cognitive Services are the foundation of AI development -> voice, image, face,
vein, video, language. However, there is a “me too” and, surprisingly, a feeling that
AI is already commoditized.
SMEs and corporates can access cheap AI tools which allow them to access new
forms of credit & offer new products. Underserved SMEs are new customers!
Firms, especially in China + other GEMS, are leap-frogging banks rapidly. They are
using AI to analyze vast amounts of integrated data in order to offer new
financial services to billions of Unbanked People and millions of unbanked SMEs.
Source: Schulte Research Estimates, Zenith

12. AI + CLOUD IS THE GAME!
Amazon Big Winner. Alibaba Leader in Asia.
Source: Schulte Research Estimates, HostUCan, Skyhighnetworks
Company Market Share
(in respective markets)
Comments
Alibaba 41% Leader in Asia, >100 newly developed AI services
Services in storage, networking, healthcare, logistics, lifestyle, media,
business enhancements, and etc.
Tencent 7% #3 in Chinese Market, services in public/private storage for
personal/business use
Baidu 1% Small cloud service
Amazon 47% Amazon AWS: Global & US leader
Microsoft 10% Fastest Growth Rate, 97% YOY, Azure & Office 365
Google 4% Fast growing, 45 teraflops of data (45 trillion bytes/second)
Services include AI APIs’, storage, search history, e-mail, etc.
71,000 searches/second, New quantum computer
Apple 1% Small cloud service, primarily strong in private data collection
Services in location, storage, and security
sametechnology
Source: Schulte Research Estimates, Zenith

13. Global Cloud Market Trends: Great Increase of the Cloud Market
Source: Forbes, Gartner, Insight, 451 Research, Synergy Research Group, Schulte Research
• Cloud computing to
increase from $67
Billion in 2015 to $162
Billion in 2020 at
CAGR 19%.
• Infrastructure as a
Service (IaaS) to grow
36.6%, reaching $34.7
Billion
• SaaS revenue is
expected to grow 21%
reaching $58.6 Billion
by the end of this year.
Size of the Cloud Computing and Hosting Market
Worldwide, 2011-2019
(in billion US dollars)

14. Alibaba’s international presence spans seven key Asian countries:
MASSIVE DATA info driven by AI and cloud!
Source: Schulte Research
Payment Banking Insurance Ecommerce Media Food Lifestyle Logistics Cloud
China Alipay
Ant
Fortune
Mybank
Zhima
Credit
Zhong An
(12%)
Taobao
Tmall
1688.com
Youku
SCMP
Video++
CMC
UC Web
Ali Music
Ali Pictures
Sun Art
Tmall Supermarket
Hema
Ele.me
Alihealth
Tao Piao Piao
Damia.cn
Wandoujia
Cainiao
Alibaba
Cloud
India
Paytm
(45%)
Paytm Paytm
Paytm Mall
(~30%)
DailyHunt
(Planned)
Big Basket
Zomato
Paytm XpressBees
Indonesia
DANA,
Alipay
Tokopedia
Tokopedia
Lazada
(>83%)
Tokopedia
UCWeb
Lazada
Tokopedia
Lazada
Tokopedia
Thailand TrueMoneyTruemoney Truemoney Lazada Lazada Lazada
Bangladesh
bKash
(20%)
bKash bKash
Daraz
(100%)
Lazada Lazada
Philippines
Gcash,
Alipay
Gcash
Gcash Lazada Lazada Lazada
Singapore Alipay SingPost SingPost Lazada Lazada Lazada SingPost
Source: Schulte Research Estimates, Zenith

15. Is There
Something
More Than AI,
Data and Cloud?

16. 2017 Blockchain Patents by 15 global names.
70% of all blockchain patents in 2017 were from China.
Source: technode, IPR Daily, incoPat, Schulte Research
43
33 33
25
22 22
16
15 15 15
11
10
9
8 8
0
5
10
15
20
25
30
35
40
45
2017 Blockchain Patents

17. Commercial Banks vs. Blockchain: Functions and Analogies.
Absolutely feasible for BLOCKCHAIN TO REPLACE BANKS.
Banks are:
1. Store of value
2. Payment company
3. Credit providers
4. Income generators
HTTP
Steam
Retail banking
Yellow Pages
B&N, Sears
Tower Records
Blockchain can be:
1. Store of value
2. Payment company
3. Credit providers
4. Income generators
Blockchain
Electricity
Cyber banking
Google
Amazon
itunesSource: Schulte Research Estimates, Zenith

18. Are There More
Than ABCD?
AI, Blockchain,
Cloud and Data

19. 5G, Intent-Driven (AI-Embedded) Network, AI Chipsets!
WirelessNetworks AI Hardware
• 5G ($800m)
• Mobile Cloud service
• Wireless AI
• SingleRan Pro
• Intent – Driven
Network
• Enterprise
Intelligence
• TrafficBrain
(Shenzhen) and
Smart City initiative
• Kirin 970 chipset
• Huawei Mate 10
series
• Cloud servers
• Active data recovery
• Matebook X
$13.8
bn
Huawei spent $13.8 bn in
research and development in
2017, with plans to spend as
much as $20 bn in 2018
Huawei’s R&D spending is sig. greater than competitors (Apple & Qualcomm)
and spending more as percentage of revenue than most tech firms
Huawei
Spent
$13.8bn
in R&D
in 2017
Source: Schulte Research Estimates, Zenith

20. 1. 5G: KOREA LEADS
• SK Telecom: Both a telecommunications provider
and a lead in 5G R&D
• Successful in innovative 5G applications (AI)
• Acquired Quantum Computing cybersecurity
company QKD for 5G security
• Together with KT and LG U+, they hold 99% of
South Korean market share
• Korea is the first 5G country, with initial 5G
telecoms infrastructure worth ~$9bn
• Competition between Samsung and Huawei to
bring infrastructure SK Source: Schulte Research Estimates, Zenith

21. Huawei (28%) ahead of Samsung (3%) in telecoms
infrastructure, high possibility to work with SK
Samsung long dominate player in Korea
• Long standing partnership with SK telecom to develop 5G technology
• Has always dominated SK market
After turned away from US, Huawei looking to expand to SK
• SK Telecom & KT Corp. in talks with Huawei, Samsung, Qualcomm for 5G
contracts
• LG U+ has already signed MoU with Huawei for their bid
• Asserts Huawei growth and popularity in South Korea
Source: Reuters, Huawei
Asia Market is dominated by Asian Telecom Companies and
5G will be the next area of high growth!

22. Intent-Driven
Network is
Huawei’s flagship
networks
technology
2. Intent-Driven Network (IDN) –
introduces Big Data and AI
technologies into All-Cloud Networks.
Helps enterprises go digital.
Huawei – Ping An partnership to bring IDN
to the finance industry
• Ping An using Huawei’s SD-WAN intent-driven
interconnection to launch the first AI customer
service
• matching face recognition and voiceprint with
Big Data to remotely verify customer identity
information
• solves the pain points of traditional insurance
services, such as slow authentication and claim
settlementSource: Reuters, Huawei

23. 3. AI Chipset: Flagship SoC (system on a chip) comparison
• 6-core CPU – 2 Monsoon, 4 Mistral
• 3-core custom Apple GPU
• 600 billion operations per second (1/3 of
Huawei)
• 8-core CPU – 4 Cortex-A73@2.4GHz, 4 Cortex-
A53@1.8GHz
• 12-core Mali-G72 MP12 GPU
• 1.92 trillion operations per second
Huawei Kirin 970 Apple A11
Tensor processing speed: Huawei is three times faster than Apple
Floating-point operation speed is benchmark for AI capacity
• Faster chips enables better AI operations for the customer
• Both chips have dedicated AI Neural Engines, but Huawei’s is faster
• AI-powered products will be commercialized much faster for Huawei
Source: Schulte Research Estimates, Zenith

24. Financial
Digitalization and
Globalization
ABCD + 5G + IDN
+ CHIPSET
Multi Dimension impact!
HUMAN BEHAVIOR
IS KEY!

25. The Most
Impactful
Change:
MINDSET
Mindset Change Led by Regulators, not by
Business Incumbents
Redefining Prudence in Public Policy
• Discarding the dismissive mindset
• Sandbox rather than outright ban
• Financial Inclusion rather than Financial Exclusion
Revisiting the Role of Government
• Facilitating
• As a Node rather than a Centre
• Bottom up social innovation – Nobel Laureate the Late
Elinor Ostrom

26. The Fourth
Industrial
Revolution：
TRUST
Cost of Production
Cost of Information
Cost of Flow
Cost of Trust

27. Cost of Trust –
The Real
Disruptor
• Tokenization Facilitates
• Untrusted Parties to
Collaborate
• Convergence of
Technology (Web 3.0: AI,
IoT and Blockchain)
• Convergence of Industry
• Secured Privacy Protection
• Accelerated Transactions
• Costs Reduction
• Increased Cost of Hacking

28. Humans
Virtual
World
Physical
World
The Chipsets have converged
the Physical and Virtual worlds
into the Life of Humans
The Chipsets have linked
Artificial Intelligence, Internet
of Things, and Blockchain
Once Full
Convergence has
been reached,
AI Robots will be
infinitely more
powerful than all
physical + human
intelligence
combined.
The Future cannot be
predicted but making
the right choice will
increase the chances
of a good outcome.
Inspired by https://medium.com/@lbildoy

29. Decentralized
Autonomous
Organization
Smart
Contracts
Token
Blockchain
Singularity
Convergence
Decentralization
Distributed
Technology
TOKENIZATION

30. Possible Bad
Outcomes
and Behavior
A Digital Empire: Centralized
Data and Wealth (Digital Assets)
Surveillance Capitalism: No
Privacy, Security and Safety
Skynet: Centralized AI or
Organized Crime

31. Who Are the
Players
Governments
Corporates
Startups
Cypherpunks

32. Live Use
Cases in
Shipping?
TRADELENS
DELIVER
(Samsung)
CALISTA
Shipping
Supply Chain
Trade
Trade Financing
Supply Chain Financing

33. Live Use
Cases in
Inclusive
FinTech
SENTINEL
AID:TECH
SMARTMESH
Livestock
Aids and Donations
Communication
Network (Decentralized)

34. Financial
Digitalization
Public Policy
and Strategy
Japan
Global Crypto Payment
Network
Singapore
Global Governance,
Shipping, Trade and FinTech
Network
Hong Kong
Global FinTrade and FinTech
Hub
China
Global FinTech, FinComm,
FinTrade, InsurTech, Supply
Chain Finance, Smart
FinCity Network
Malta/Gibraltar
Global ICO Hub
Swz/Estonia
Global Blockchain Hub

35. Future Impact: The Future is Already Here!
Market Structure
Regulation Protected: Open
Data, Open Hardware, Open API
Trust Agencies: New Form of
Licenses
Coded Governance: Enterprise
Blockchain Agreements
Executable Governance: Smart
Contract Agreements
Privacy Protection
User Agreement
Open Data Policy
Open Source Software:
Patents
Open Source Hardware
AI Ethics
Cyber Security
Licensing
Technology Risk
Management

36. NEAR Future
Impact
Supply Chain/Trade
Communication Network
Geopolitics: Chips, Raw
Materials

37. MAS Consults on Proposed Enhancements to Technology Risk
and Business Continuity Management Guidelines
– 7 March 2019
• 1. The Monetary Authority of Singapore (MAS) released two consultation papers on proposed changes to the
Technology Risk Management (TRM) Guidelines and the Business Continuity Management (BCM) Guidelines.
The changes will require financial institutions’ (FIs) to put in place enhanced measures to strengthen
operational resilience. These take into account the rapidly changing physical and cyber threat landscape.
• 2 MAS proposes to expand the TRM Guidelines to include guidance on effective cyber surveillance, secure
software development, adversarial attack simulation1, and management of cyber risks posed by the Internet
of Things. The proposals were developed in close partnership with the financial industry. The MAS Cyber
Security Advisory Panel (CSAP)2, which comprises international cyber security thought leaders, provided
valuable inputs in shaping the proposed TRM Guidelines.
• 3 MAS also proposes to update the BCM Guidelines to raise standards for FIs in the development of
business continuity plans that will better account for interdependencies across FIs’ operational units and
linkages with external service providers. FIs are encouraged to put in place an independent audit programme
to regularly review the effectiveness of their BCM efforts.
• 4 The two Guidelines continue to emphasize the importance of risk culture, and the roles of Board of
Directors and senior management in technology risk and business continuity management.
• The TRM Guidelines were issued in 2013 to provide financial institutions with guidance on the oversight of
technology risk management, security practices and controls to address technology risks and in March 2019,
MAS seeks response to new consultation paper.
http://www.mas.gov.sg/~/media/MAS/News%20and%20Publications/Consultatio
n%20Papers/Consultation%20Paper%20on%20Proposed%20Revisions%20to%20
Technology%20Risk%20Management%20Guidelines.pdf

38. Singapore’s initiatives in Artificial Intelligence (AI) Governance and
Ethics won the top award at the prestigious World Summit in Geneva,
Switzerland - 9 April 2019
Asia’s first Model AI
Governance
Framework released in
January 2019
An international and industry-
led Advisory Council on the
Ethical Use of AI and Data
formed in June 2018
A Research
Programme on the
Governance of AI and
Data Use
https://www.pdpc.gov.sg/-/media/Files/PDPC/PDF-
Files/Resource-for-Organisation/AI/A-Proposed-Model-AI-
Governance-Framework-January-2019.pdf

39. Ethics Governance
These initiatives advance
Singapore’s vision to be a
leading Digital Economy
and Smart Nation
through balancing
business innovation and
consumer trust and
confidence in adopting
AI.
“These are important
principles that will guide
businesses in
implementing AI
solutions that are
human-centric, while
spurring innovation in a
digital economy.”

40. Ethics!
• Australia launches consultation on AI
ethics – 10 April 2019
• https://consult.industry.gov.au/stra
tegic-policy/artificial-intelligence-
ethics-
framework/supporting_documents
/ArtificialIntelligenceethicsframewo
rkdiscussionpaper.pdf
• The Commonwealth Scientific and
Industrial Research Organization
(CSIRO)

41. https://consult.industry.gov.au/strat
egic-policy/artificial-intelligence-
ethics-
framework/supporting_documents/
ArtificialIntelligenceethicsframewor
kdiscussionpaper.pdf
NO ONE WANTS
TO MISS OUT !

43. Conclusion
HUMAN
CENTRIC
• Everyone makes mistakes and find the way back
to distribution of trust and privacy protection. To
Prevent Hacking and D Empires!
• The major impact of financial Digitization and
Globalization is an ecosystem that leads to
concentration of wealth and power and this
instills instability. That is not likely to be the final
destination.
• Instability will ensure the value of distributed
wealth and independence. Distributed Growth
may be the only way forward.
• Inclusive FinTech will likely be the most promising
growth area!
• Asia will probably be the most promising
Inclusive Growth area!

44. Further Reading
• https://medium.com/the-spartan-
group/demystifying-cosmos-atomic-swaps-
ethereum-polkadot-and-the-path-to-
blockchain-interoperability-d1a2d75c20d6
• https://www.worldscientific.com/worldscib
ooks/10.1142/11371
• https://medium.com/ai-quantum-
computing-for-finance-and-
insurance/preface-2aaf7ec5b840
• Slides 5-22 are taken from Schulte Research
.