When the COVID-19 pandemic hit, many in Asian banking players assumed the sector would take a devastating knock. But two years on, it’s apparent that banks have mostly come through in good shape, with relatively minor losses. Still, the financial ecosystem has changed irrevocably in this time. With rising interest rates, and the rapid uptake of digital tech, traditional banks and specialists alike face new challenges and opportunities—even as their operations diverge. For more conversations on Future of Asia, subscribe to our podcast.
Gautam Kumra: I am Gautam Kumra, Chairman of McKinsey Asia, and you’re listening to the Future of Asia Podcast series. The Asian century has begun. The region is now the world’s largest economy. As Asia’s economies evolve further, the region has the potential to fuel and shape the next normal. In each episode, we are going to feature conversations with leaders from across the region to discuss what Asia’s rise means for businesses across the globe. Join us.
Joydeep Sengupta: Welcome to the Future of Asia Podcast. My name is Joydeep Sengupta and I lead knowledge for the global banking practice. In this podcast, we’ll focus on the Asian banking sector and how we see it emerging from the pandemic. It’s been quite interesting, as we have looked at the performance of banks and seen that they have done much better than most expected. Two years into the pandemic, and there have been much lower credit losses than expected. But at the same time, we’ve seen a lot more well-capitalized banks, which have had an impact on returns. We’ve also seen the pandemic accelerating trends in the banking sector. Digital banking has been one, in particular, that we’ve seen truly accelerate. Of course, more recently, rising inflation continues to present. I’d be interested as we go through this to consider, “Is it an opportunity? Is it a challenge? Is it going to be beneficial for the banks?”
One of the big themes, though, that I’d love to dwell on today is what we are seeing and what we call the “great divergence”—the divergence in value creation between a few banks and the non-banks or the specialists. And as we go through it, I’ll share a few numbers that we’ve seen, which are quite startling. So we’ll keep this really focused around these few themes; maybe starting with how do you see the banking sector recovering from the pandemic? What are some of the big shifts that you’re seeing? Who’s accelerating ahead, and why? And then as we look at the continuing battle between the neo-banks and the traditional banks, where do you see that going? What do you see as the endgame?
Joining me to tackle these themes are two very senior journalists who keep a close watch on developments in the financial sector across the region. Our guests, Joyce Moullakis, senior banking reporter at The Australian newspaper, and Chris Wright, the Asia editor of Euromoney. Thank you both for joining us and a very warm welcome to both of you.
Chris Wright: Thank you for having us.
Joyce Moullakis: Thank you.
Joydeep Sengupta: Thank you, Joyce, Chris. Maybe I’ll kick off with Joyce, with somewhat of a benign but important question—how do you see the banks two years into the pandemic? How do you see the banking sector today versus where we started off?
Joyce Moullakis: Well, if I give a little bit of an Australian perspective, which I think is reflected similarly in the region, the banks, as you said, have fared remarkably well. They took billions of dollars of provisions leading into the pandemic in 2020 and they’re writing those back as we go through the transition out, if you like, of COVID-19. The digitization theme has been huge in Australia, as consumers have taken up the digital channels they’ve had to, and that’s really accelerated. So I think banks have fared reasonably well. We had caps around dividends; those have come off now and dividends have resumed. It really has been an interesting time for the banks. But interest rates being at record lows has obviously been a big headwind in Australia and the region, and for the banks’ net interest margins which have been under a lot of pressure over these last two years.
Joydeep Sengupta: Thank you, Joyce. Chris, how do you see that play out in the rest of the region? Do you see a similar view?
Chris Wright: Yeah, I think the themes Joyce sees there in Australia are playing out across the region. It was a curious pandemic from a banking perspective. It was as if everything that you would have expected to destroy banks, frankly, simply never happened. And there was a simple reason for that, which is the intervention of central banks and governments in creating as much support for both consumers and companies to such an extraordinary degree that the expected losses simply never reached the banks. A hit was taken earlier. It never got to bank balance sheets. So banks provisioned enormously here as they did in Australia and the rest of the world. The question throughout the crisis was, “How much bad news is this disguising? When all of these programs are rolled away, just how bad is the pain going to be?” We can now see that the pain hasn’t been that bad at all. Principally, because interest rates were so low that nobody got into a huge amount of trouble with their borrowing, they were able to service that debt, and banks are coming out of it in very good shape.
But what’s weird is that as we now emerge into what should be a bright new dawn of economic largesse for the banking sector, in some ways, the threats are greater in these good times than they were in what should have been the bad times. And this is something we’ll talk about more, I’m sure. I’m thinking about themes of inflation and the way that inflation will wash through at a time of uncertainty and supply chain disruption. So, the picture in some ways is just as interesting now as is it was a year-and-a-half ago. Opportunities for sure, but threats as well.
Joydeep Sengupta: Thank you, Chris. Maybe I’ll pick up a little on the point made around inflation. Is it a blessing? Is it a curse for the banks? Many banks that I have talked to, especially those that are deposit rich, particularly with Current Account Savings Account balances, are somewhat salivating as the prospect of higher net interest margins coming through. Yet there is a possibility, as you said, that as interest rates rise, the spectre of bad debts—which may not have fully gone away—is coming back. So, where do you guys stand on this?
Chris Wright: Ordinarily, of course, rising interest rates and inflation are good for banks. As Joyce said, net interest margins have been under pressure for two years, making a greater and easier return when interest rates are higher. That’s fine, if all economies are growing in a good predictable manner and the rising tide lifts all boats, and all of those things. But I still don’t think these are quite normal economic conditions in which we’re operating today. So, once you start raising rates, not all businesses have come through COVID-19 in the same condition that they entered it. As I mentioned earlier, they’ve been protected by low interest rates; their borrowings have not been hard to surface. But if you find yourself in a position where, as a corporate borrower, you are now paying a lot more interest on your debt, the truth is you’re not doing so in beautiful, clear economic skies.
You’re doing so with supply chain challenges and vastly increased energy costs. You’re doing so at a time where mobility is still massively restricted, particularly here in Asia, which as you know, Joydeep—it’s just not the same as it is in Europe or the States. You can’t just move across borders for free. We’re not there yet. And there’s a war. So, there’s an awful lot happening, which means you could end up in the very difficult double situation of rising rates and costs at the same time as economic growth actually being impeded. Which brings us towards concerns of stagflation, and so forth. A truism, of course, is that if conditions are bad for borrowers, they’re not great for banks either, because then you stop worrying about the focus in a way that you haven’t really had to for the last couple of years.
Joydeep Sengupta: Thank you, Chris. Please go ahead, Joyce.
Joyce Moullakis: I completely agree with Chris. Basically, it is almost a double whammy, if you like. You do have improving economic conditions and talk of cash rates being tightened and interest rates rising. But inflation brings other supply challenges, such as petrol prices being higher, and companies still struggling to get stock in the time that they require it. So, as banks go through their lending books and assess this, there will be different pockets of difficulty as some of these factors flush through their loan books. I think there will be positives from rising interest rates on the net interest margin side, but there are all these other inflationary pressures that are feeding through and potentially harming some of their business customers. So, it’s a watch-and-see situation, particularly—as Chris said—with energy prices going even higher because of the conflict we’re seeing in Ukraine.
Joydeep Sengupta: Going back to the performance of banks where we started, I think we are all agreed that, clearly, banks have come out quite strong and much less impacted from the pandemic than we perhaps had originally thought two years ago as we were getting into it. But it’s equally true that, around the world I think the vast majority of banks still don’t return their cost of capital, despite it being probably the best of times. And for the first time, I think we are seeing this being reflected quite strongly in a market valuation, or at least in what I call the divergence in market valuations. You have seen this in the analysis we did in our annual banking report, that of the $2 trillion or so of value that was created in the last 18 months or so, almost 90 percent went to non-banks and less than 10 percent went to individual banks. In fact, 65 institutions accounted for almost all of that. So the question I guess that begs being asked is, “Banking is clearly important, but are universal banks important anymore? Or are we seeing a move towards the end?”
Chris Wright: Well, I can make a couple of points on that. With regards to the universal banking model, I think it was instructive to see Citi wish to sell its consumer assets across the entire region. And that speaks to a view among the major multinationals that trying to be absolutely everything is not necessarily desirable. Retail, in particular just sucks up an enormous amount of risk-weighted assets at a time when you really need them to be delivering for you. In Citi’s case, they’ve gone absolutely full pelt on wealth management. And on institutional; they believe that’s where the money is.. But at the same time, it’s not like there weren’t buyers for those assets. Institutions across Asia perceived that there was really good business in expanding their operations and having perhaps a broader suite of services, or at least a broader client base. So, you can make both cases.
I think this takes us, of course, into the fintech and digital bank arguments. I think it’s a really striking and interesting time to be looking at that because, in China in particular—which in Asia really did lead in terms of fintech utility, taking on the low-hanging fruit of easy banking services—that picture has changed beyond recognition over the last year. It has done so, of course, because of regulation. I might speak just a moment about this because I think there is a broader point that comes from it. China used to be the absolute leader in highly profitable fintech services, including those that evolved as the e-commerce models, chiefly Tencent and Alibaba. China’s regulatory position made it perfect for them to exist. It was not restrictive. There was a huge population that was comfortable with smartphones to do their banking. They were underserved by the major banks in China. It couldn’t have been better. But they got too big, clearly, and China’s regulators became deeply uncomfortable, I think, with both the scale of their power and perhaps their interconnection of broader financial services. The last year, since the Ant IPO was abandoned, has been just one hit after another of tightening regulation.
You might think this is just a China story and that it impedes the ability of Chinese fintechs to compete with the big banks, that it just seems to be an endless one-way street. But I’d argue it’s bigger than that for two reasons. One is the fact that Ant and Tencent own chunks in so many of the fintech players across Asia; it’s almost everyone you can think of—Mynt in the Philippines or Paytm in India; there are so many examples. They’ve all got Alibaba or Tencent either as a shareholder or, in many cases, much more than that. They are, in practical terms, injecting the tech into the back of a local enterprise and letting the local house have the front-end licenses, and marketing, and so forth. So, there is a knock-on effect when those guys get stymied at home.
Secondly, I think the whole world has been looking around and thinking, “Well, how do we regulate these guys? What is the right position to take to both foster innovation and improve the customer experience, but not necessarily wreck an existing 200-year-old banking system, which had been doing pretty much fine and serves some sort of social use?” And of course, there is also consumer protection to consider, and every regulator is looking for that correct balance. And when a very big market like China takes a drastic step, it gets noticed. You can’t imagine that it won’t have an influence on the way that others think. So, I think we’ve seen a slight recalculation in the endless stratospheric rise of the fintechs for non-banks. I think that it has been checked slightly over the last year.
Joyce Moullakis: Definitely, we’ve seen a lot of this sort of neo-banking, digital bank, non-bank models, and the startups come under a lot more pressure this year, in terms of needing a trajectory to profitability. With interest rates on the rise, these valuations aren’t going to be sustained indefinitely. And I think, following on from Chris’ point, banking is going one of two ways. There’s the whole commoditization theme around banking as a service. Westpac down this way has teamed up with Anthony Jenkins’ 10X to provide banking services to the likes of Afterpay, which is now of course owned by Block (formerly Square). You’re seeing retailers like Walmart and IKEA looking at banking as a service. So, that’s one development, if you like, as banks think, “We’ve got to be part of the equation.” Then you’ve got other banks that are thinking, “Well, we’ve got to keep up with these fintechs, create our own ecosystem, make sure our apps are diverse and engaging enough that we’re not losing customers to some of these compelling startups.”
Chris Wright: I might add one more thing, if I may. Here in Singapore, we’re about to enter something of a proving ground as the digital licensees gradually move towards operational status. And it’s going to be very interesting to see how they do. The environment they are going to enter is quite different from the one that existed when they applied for the licenses in the pre-COVID-19 days. I wonder if it’s as difficult as you might expect it to be, given the disruption, but it is certainly different. They have a particular business focus on the SME (small and medium enterprise) sector, some on ordinary consumers, the logic being that the existing banks don’t particularly want to play in those areas. Well, I think it’s going to be interesting to see if that’s true. From working in this market, you can’t have a conversation for very long with OCBC or DBS without it turning to the SME opportunity. So, there is still a competitive field. It’s not just a question of digital banks moving into areas that the existing banks don’t want anymore.
It’s going to be very interesting to watch what comes through. And there are good examples in the region of digital banks that have found their niche and really done very well. I would say South Korea is probably a standout for that. I’m thinking of Kakao, of course. In fact, that’s a better still example, because there’s two digital banks that came at the same time—one flourished and one didn’t. So that tells its own story; that you have to get it right both in terms of strategy, but also in your capital position and your backers. So, I think Kakao proves to us that there are real opportunities for a well-run digital bank, even in a heavily-banked market. But it’s not automatic, you’ve got to get it right.
Gautam Kumra: For years observers have talked about Asia’s massive future potential, but the future arrived even faster than expected. The question is no longer how quickly Asia will rise. It is how Asia will lead. Keep listening to the Future of Asia Podcasts.
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Joydeep Sengupta: Thank you, Chris. Go ahead, Joyce.
Joyce Moullakis: Yeah, Australia has seen some interesting dynamics around the digital banking space as well. We’ve had players like Judo, which listed on the stock market last year, and has done quite well in terms of a very targeted SME relationship strategy. Former National Australian Bank bankers set that bank up, and that’s done quite well in terms of its loan book growth, etc. But then you’ve had other players that were just getting going and gaining some momentum, and they’ve been taken over. National Australia Bank’s taken over 86 400. We’ve had another digital bank, Up, that was taken over by Bendigo Bank. So we’re already seeing some of these players disappear, if you like, as the banks think, “Well, I can just buy that technology rather than building my own digital proposition.” So, that’s probably the other theme. How many of the fintechs and the digital banks will still be around in five or ten years as this consolidation takes places in the next phase of where the sector heads?
Chris Wright: Australia is really interesting for that, I think, because you see all possible outcomes being realized. You have fintechs that thrive and list, you have fintechs that decide the greater option is to be overtaken by an entrenched legacy competitor and you have seen trends of exits where fintechs that just die away and fail completely. And I think it will be interesting to see what happens around the region. You might in Indonesia, for example, point towards the convergence between GoJek and Tokopedia. There’s a lot of jostling, a lot of repositioning still to come, I think, in the sector.
Joydeep Sengupta: Indeed. And I do think both of you touched upon something important—that it’s not necessarily fintechs winning or banks losing or banks winning and fintechs losing, but it’s really around which players have been able to achieve scale in business models. Which are the players that truly own the customer relationships and effectively bring the customer at the centre of their ecosystem? The battle for the customer is still being fought, I think it is fair to say. I think the valuations in some ways are a bet on who our investors think will actually win the battle for customers. Because one of the things we observe is that there are markets like Australia, where there are some universal banks that are being rewarded, and yet, there are high-growth markets like India and Indonesia, where existing universal banks are still being rewarded, because people believe that there is an opportunity to both get the benefit of growth and scale.
On the other hand, in the lower-growth markets, I think we do get to a point where just the capital that banks have is weighing them down, with no line of sight to better returns. Investors are betting on an alternative form of financing, which could be a fintech, or could be a digital bank. And that’s why this prevalence of the number of digital licenses pretty much across all markets in Asia, I think, portends an interesting and somewhat volatile environment over the next few years. I don’t know if you would agree with that perspective or whether you’d violently disagree with anything I said.
Chris Wright: I do. You have obviously written widely on the divergence theme over recent years, and I think it’s very true. But if we talk about universal banking, you can perhaps sub-divide further. I think the approach of doing everything is not in itself inherently wrong, provided you do it in the right way. It depends how you bring digital ideas towards what appears to be a dull legacy business and transform something into being a perfectly vibrant operation. If you do it right and the range of things that you cover, then it’s not necessarily a bad thing, if you can do it universally. Although in practice, I think the market has tended to reward those that are very, very focused. Bank Central Asia in Indonesia had the highest market cap of any Southeast Asian bank for a while.. Of all institutions I cover, it’s the most single-minded in absolutely refusing to do new things if it thinks they’re the wrong call. Most obviously, it won’t leave Indonesia, ever. It said, “Why would we? We know this market; we know a particular segment of the consumer and corporate market. We do it exceptionally well, we’re going to keep doing it exceptionally well.” And that, I think, speaks to your point of focus and divergence of valuation towards those that do something very, very well, as opposed to those that attempt to do absolutely everything. The divergence and valuation, which I think was a lesson that played out through COVID-19, particularly in India, was a good place to watch it happen. And it was not just about actual share price or price-to-book, as it was about the availability of affordable funding at a time of particular stress.
I go back in time a little bit now, but I think it’s important, and you’ll remember it well. In the early days, when nobody really knew what they were dealing with in relation to COVID-19, the bifurcation between the likes of HDFC Bank and Kotak Mahindra, ICICI, (I consider these the strongest names in India among the established ones, so I’m going to offend people by missing someone else but I don’t want to spell out the ones who struggled to reach funding)—the good banks found it easier to get funding and they secured a greater competitive advantage purely based on their reputation and what that brought them in terms of funding costs. For the banks that were previously perceived to be struggling, things just got worse, without them actually doing anything else particularly right or wrong. And so, there was a real divergence in India in investor sentiment towards the houses that were perceived to be good and progressive, versus those that were perceived to be debt laden and archaic. In the end, it didn’t get so bad but that caused really lasting damage to many Indian banks. But I thought it was quite an instructive time, and I think it speaks to your point about divergence.
Joydeep Sengupta: Thank you, Chris. And maybe, Joyce, if I could come to you with something that Chris wrote. Chris, towards the end of last year, wrote a very interesting piece around the valuations between fintechs and banks. And he used a couple of examples to illustrate why some banks were thinking of splitting themselves into two companies, virtually saying that, “Look, we have a fintech within us and then we have a bank, and therefore you should value us differently for both.” I thought that was an interesting train of thought, which is going through the minds of many bankers at this point. I’d be curious to see what you think about it in the context of Australia, for sure, but more broadly, as well.
Joyce Moullakis: Last year that would have, from financial metrics, made a lot of sense. From a valuation perspective it’s talking about the divergence that you’d mentioned. In Australia, perhaps not so much. Banks are trying to simplify, get rid of additional layers of costs, become more like a technology company, more agile, and Australian banks are trading above price-to-book. I think for it to work from a regional perspective, you’d have to have a pretty meaningful fintech that could stand on its own two feet and add value to shareholders. A lot of these businesses perhaps aren’t there yet, but it really depends on the growth and the trajectory in the digital part of the business versus the incumbent, and whether that delivers enough to shareholders to be able to do a demerger or a spin off to make it viable. So, I think it is a very much on a case-by-case basis, but probably something that a lot of these institutions throughout the region will be thinking through over the next five to ten years.
Joydeep Sengupta: Chris, any follow up since you wrote the article? Any new perspectives that you learnt?
Chris Wright: Well, I suppose another perspective is that the ideal for bank chief executives, rather than having to be merged into anything, is that the market would value them on more of a tech metric than a banking metric. Now obviously, today, a tech metric is not quite the same as it was six months ago. But certainly, throughout that long period of time when tech valuations were going up, there was a sense of some disgruntlement among some of the banks. DBS has been the most public about it, saying, “We’re a tech company basically, which happens to lend. Why don’t you value us differently?” But the problem is, you can argue with the market till you’re blue in the face. Valuations are just what they are, you’re not really making a move by yourself, it’s really going to depend on how institutions see you, how analysts see you. Some will think you’re more a bank than a tech company. There’s not a whole lot you can do about it. But I think the holy grail for them is a re-evaluation based on an understanding that banks have understood digital opportunity and embraced it to the greatest extent that they can.
Joydeep Sengupta: Terrific. One question before I move on to the next topic, on which I really want both of your views—data. I think, increasingly, we find all banks talking about data and access to insights and analytics being the next holy grail. At the same time, there are many concerns around privacy and other things, as we’ve seen with some of the tech companies. So, the question to you is, if you look out, say three or five years, is data going to be the new oil as many proclaim? Or is it going to be water?
Chris Wright: I think it’s already been oil for some time. I don’t know—which is the more valuable commodity? Long term, I think we need the water more than the oil. But for some years now, banks have wanted data and the ability to mine it. I will point to UOB here in Singapore as an example of a traditional, old, family-run bank, which has over the last five years, I would say, come to a recognition of the enormous value that is there to be mined in data. And I would say their acquisition of Citi’s businesses in Southeast Asia was partly done because of the richness they perceive in that customer base and its data. So, I think it’s already been happening for some time, that people want to acquire and use as much data as they possibly can. One relevant point perhaps in Asia is that there is less squeamishness, by and large, about state or bank access to your data than there is in the West. The attitude in China or Singapore to data privacy is utterly different to what it might be in the UK or Australia or the US, and that actually helps banks, I think, in their desire to use data as best they can as an economic engine.
Joyce Moullakis: Yes, I’d agree. I think data is very valuable. I don’t know with water or oil, it’s hard to say, Joydeep. But data is obviously highly, highly valuable to banks. And in Australia, we’re into the second year now of open banking. So, that’s a bit of a proof around, firstly, customers getting more control of their data, but also banks making more personalized offers to customers, having to really finesse their use of data to be able to attract and keep customers, because as you know, there is a fair bit of inertia in Australia around switching, but that is starting to change. AI, obviously, is a big theme. Commonwealth Bank Australia (CBA) has partnered with a big global AI firm to make more use of AI. Obviously customer data and privacy concerns are top of mind as well. But I think data, if banks are harnessing it correctly, can be a big competitive advantage for them versus their peer group. If they’re harnessing data correctly, they’re able to do predictive analysis of someone’s ability to pay their bill or what-have-you. I think it’s certainly going to be another feather in their bow. But again, it’s something that needs to be executed well, and with the right sort of risk management lens around privacy, data storage, etc.
Joydeep Sengupta: Thank you. And also, I think the one other actor in this will be the regulators and governments. If you look at a market like India, I think it’s pretty sure the data is going to be like water, because it’s going to be owned largely and democratically accessed effectively. So no one individual institution will own data. At least that’s the intent at the moment but we’ll see how this plays out. But I know we have a few more minutes and it would be remiss not to touch on the other big theme, which is cryptocurrency. We could, again, do a full podcast on this topic, but maybe we’ll just do a teaser for today. And the question really is, I guess, that there are many ways to think about cryptocurrency. I think one is that it is something which is a store of value, it’s the next gold, it’s an asset class in itself. The other is that it’s a legal tender, which facilitates payments much more efficiently and effectively. Regulators seem to be all over the place at the moment on whether to ban it, regulate it, or do nothing about it. Can they do something about it? What is your view on it? Will this change the financial structure and the financial system fundamentally?
Chris Wright: Well, my view is, for starters, that it’s not behaving like a store of value. That’s what it’s supposed to do. But speaking now, at the end of February, we have a war underway. The absolute last thing it is doing is behaving like some inflation hedge. It’s just a risk asset flying around with greater volatility than any tech stock you could name. Now does that change over time? That’s the utopian idea of it all. It is a great alternative to gold and money itself. But we’re some time away from it. I think this has been rather proven in recent months. That being said, there’s no question that there is greater institutional acceptance of crypto in a way that’s maybe begrudging, maybe opportunistic, but it is a change. A lot of houses that have been talking about tulips and bubbles and all of this stuff, have accepted that at the very least, “I need to find ways for clients to engage with crypto, otherwise they’re going to miss out.”
In this market, I think an interesting shift came from the move away from groups like BitMEX ( which was still pure play crypto-leverage-games based while regulated in the Seychelles, for example) to Sygnum—a newer arrival founded with a lot of backing by people who’ve worked in the GIC sovereign wealth fund, that chose to get regulated in Switzerland. Singapore actually wanted the big guys regulating them as a way to prove, “Look, we are like what you’d expect from a bank or a fund manager. We’ve got institutional credibility.” DBS launching its digital assets exchange is, of course, relevant, but it’s noticeable that they still won’t open that to retail. They don’t want the reputational risk of a load of people who can’t afford losing their ‘shirts’ on Bitcoin on a bad day. It’s essentially linked to their private banking platform. They’re sophisticated investors—people who ought to know enough to understand proper risk tolerance. And that’s what I think we’ll see more of. So, a gradual opening up by Asian banks, allowing their clients—if they know what they’re doing—to get the exposure they want through crypto without forming a judgment about whether that’s wise or not.
Joyce Moullakis: Yeah, I think the next year or two will show us one way or the other whether this is a huge inflection point or which direction it’s going in. But I certainly agree with what Chris said around some institutions taking steps to provide access to their customers. CBA, I think I mentioned earlier, has taken a stake in the crypto exchange Gemini. But, Joydeep, as you mentioned earlier, there has been a very thorough regulatory approval process for dealing with, I think, four different regulators. They’re into a second pilot phase of working with the regulators to get them comfortable with allowing CBA customers to buy, hold, and trade cryptocurrencies. I think they’ve got access to ten, including Bitcoin, obviously.
So CBA, our largest bank, is taking a very cautious approach to providing that access, not opening up its platforms and systems to criminal activity, etc., and making sure that regulators are on-site. Our central bank here in terms of crypto and central bank digital currencies is taking a cautious watch-and-see approach, which is different, again, to how other central banks across the Asia Pacific region are looking at it and investigating how this might work in the future. So, I think from an Australian perspective, it certainly is more of a five- to ten-year proposition. We will have to see how some of these issues are addressed globally by regulators and how our regulators get a bit more comfortable with some of these currencies and trading opportunities.
Joydeep Sengupta: Thank you, Joyce. I must say that I’ve been quite encouraged that there are a number of central banks that are now beginning to pilot the CBDC (central bank digital currency) or even issuance of that, because one of the things I do believe is that for things like getting cash out of the system and for enabling better financial inclusion, this form of digital currency can be incredibly valuable. At the same time, I think the risks of cryptocurrency in itself—as you mentioned, Chris—is the volatility. That is something which I guess is very hard for ordinary consumers or ordinary investors to live with. So, we will see. I think we are at the beginning of this chapter, and there is much more for us to learn. And then, I guess, we’ll see how it impacts our financial services players. But I think we’ve come to an end of what has been a truly fascinating conversation. And I must say, I really enjoyed hearing both your views. You provide a very interesting perspective on questions that often don’t have clear answers. So, thank you for doing that.
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