Today’s guest is Hong Kong-based FinTech expert, Henri Arslanian. Henri is the PricewaterhouseCoopers FinTech and RegTech Lead for Hong Kong and China. He’s also an adjunct associate professor at the University of Hong Kong where he teaches graduate-level courses on entrepreneurship and finance, as well as the very first FinTech university course in Asia.

Henri’s an impressive guy. Before joining PwC, he was working at a FinTech’s startup, and before that, he spent many years with UBS Investment Bank in Hong Kong. Henri started his career as a financial markets and funds lawyer in Canada and Hong Kong. Henri’s a TEDx speaker, a published author, a member of the Milken Institute Young Leaders Circle, and was named one of the hundred most influential individuals in FinTech in Asia.

FinTech is a very hot topic these days in the startup world, and in today’s interview, Henri talks about some of the trends he sees going forward in this space.

Jay: Henri, thank you so much for joining us today on the show. We have a very exciting week coming up here for the Start Me Up Hong Kong 2017 festival, and again, we appreciate your time. For our audience that perhaps hasn’t heard of you, you’re obviously quite well-known here within the Hong Kong ecosystem and community, but for our audience perhaps outside listening in from Southeast Asia, from overseas, please give us a little bit of a rundown on what do you do for a living, and just give us some background please.

Henri: Absolutely. Well Jay, thanks for having me. I’m very excited to be here and also very excited for the week ahead in Hong Kong as well with the ASEAN, from an AFF to the Start Me Up week, because we have quite an exciting week. My name is Henri Arslanian and my passion is really the future of the banking and legal industries. I’m just a lucky guy that gets paid for doing what I actually am quite passionate about. In my day job, I’m the FinTech and RegTech leader for China and Hong Kong, for PwC based out of Hong Kong.

Really, my focus is really on closing the gap between the financial services [incumbence 00:02:53] and the FinTech and technology firms, and really trying to foresee some of the banking models of the future.

Jay: Very interesting. Maybe you can just run as through … A lot of the entrepreneurs and thought leaders that I have on the show, I like to just get a little bit of background of how they got to where they are in their career, because I think that people always like to enjoy to hear a little bit about the personal background, and if they … What could led them down to this path to success if you will?

Henri: Sure Jay, I’m happy to share. I’m actually from Montreal, Canada, so the french-speaking part of Canada and I am a lawyer by background. Actually, I started my career as a financial markets in a corporate lawyer in Canada, and then about 10 years ago, I moved to China. I moved to Beijing, learned Chinese and I did this masters in Chinese law at Tsinghua University. It was really one of my first … This is how I really … Brought me to Asia, Jay. Subsequently, I came to Hong Kong, I started working as a, again, I was a financial markets regulatory and funds lawyer, before making the move to banking. Then I joined UBS and that was really something … Beautiful years at UBS where I was part of the investment bank, really covering the head funds industry in Hong Kong.

Really what happened was I would say with FinTech was about, I would say maybe three years ago or a bit more, three, four years ago, I really started getting into FinTech and following what was the early days of FinTech what was happening globally. I still remember when it really started in Hong Kong. I used to organize some … In the very early days, I used to organize some of the first FinTech dinners in Hong Kong, and I kid you not Jay, I couldn’t even get eight or ten people together to discuss FinTech. I would say it’s kind of how things have changed since then, but I started being very involved.

Also, one of things I do apart of my job at PwC, I’m going to jump to associate professor at the University of Hong Kong where I teach courses on entrepreneurship and finance. I started also teaching the first FinTech university course in Asia, a 36-hour course on FinTech. So really, I started really getting into FinTech and teaching it, and for me the day I realized I have to leave banking was that I was starting to take annual leave to go to FinTech conferences. For me that was a time, I think it was time to leave the bank and join the FinTech startup. Then afterwards, I recently joined the PwC in my current role which is really where I try to be really become the bridge between the startup and the banking world by connecting the financial institutions with the latest FinTech, RegTech, Insurtech startup innovations. This really allows normally financial institutions to use this latest innovation to reduce costs or enhance their offering, but in may cases actually to transform their businesses for the better. I think it’s quite a very interesting world that I have for right now I’m quite grateful for it as well.

Jay: Wow. What a ride you’ve had. It’s interesting, you were saying how … Several years ago, you can’t even pull together five, six, seven, eight people to a FinTech dinner, and now FinTech seems to be … It’s just the hardest thing and the buzz is everywhere. I don’t think I go two weeks without seeing some sort of event in the city or in the region regarding FinTech. Why don’t we just take a step back, you obviously have a banking background and that perhaps help usher your way into FinTech, so for our listeners who perhaps haven’t been exposed to FinTech in the past, what exactly is FinTech from a very high level? Maybe just very basic on what is FinTech and how has FinTech evolved from when you started following it at the very beginning to now?

Henri: Absolutely Jay. FinTech is short for financial technology. I would say it’s really the innovative use of technology and delivery of financial services. It’s really transforming finance through a broad range of uses and technologies anything from peer to peer lending, Artificial Intelligence, Blockchain, Big Data, crowdfunding, digital payments and robo-advisors just to name a few.

The thing that’s important for the audience to understand especially our listeners who are not really familiar with FinTech, that historically as the technology was evolving, the financial services industry was relatively quick to adapt these new innovations and integrate them into their business in order to better serve customers. But really what happened was all of these really changed during the global financial crisis of 2008. What happened during that financial crisis Jay was that banks were really focused on complying with the numerous new rules, regulatory requirements, and fines imposed on them. Innovation became a very very decent priority. But what happened at the same time, some of the most game-changing technology called innovations that have transformed the way that we live, it became part of our daily lives.

If you think about the iPhone, Airbnb, Uber, WhatsApp, WeChat for example, and what happened was that a big gap was created between what banks were able to offer and what you as a customer came to expect. Especially from a convenience and user experience perspective, and that’s the gap that the FinTech industry is tackling right now.

Jay: I see. Wow. FinTech seems like … Okay, let’s just take for example, in this upcoming conference week, FinTech has taken two full days. There’s only five days in the conference, and two out of five is dedicated to FinTech, so it’s a huge, huge vertical that obviously is very … There’s a lot of interest, people coming in from all over the region and the world for this conference, right? Is there a certain part of FinTech that you started off with interest and you started really digging deep into? Or was it just the entire umbrella of FinTech that was interesting to you that caused you to just research it further?

Henri: It’s a good question, Jay. I think FinTech has come a long way from the early days. I’ll be very very honest, I always tell audiences that anybody who tells you they’re a FinTech expert, you should probably run away. At the same way nobody can be at finance or a law expert. In the early days I would say … Two or three years ago, really FinTech was obviously the catchy term. But what happened is actually FinTech has evolved so much over the last couple of years. That basically all the different pillars of FinTech had become a full-fledged discipline on its own. If you look at Big Data or the P2P sector for example. Really the industry has evolved quite a lot.

I think what’s really interesting is that, I think the mass market has now, over the last year or two, started to realize the impact that FinTech will have, and also technological change will have on financial services. There’s obviously some very positive outcomes from this, some negative ones as well. For example, if you’re working in a bank right now and you have a very manual repetitive job in an operational role for example, I think it is likely that those jobs will disappear over the coming years. However on the flip side, I think one of the biggest benefits of FinTech right now is actually financial inclusion.

We have currently two billion people around the world who are completely unbanked. For the first time in modern history, we are able to offer these individuals financial services and we’re succeeding at it. Over the last five years, the world bank estimates that 700 million people have gone from being unbanked to being banked. I think this is one of the greatest benefits of FinTech, the one that we don’t mention a lot. It’s actually a big transformation. To be honest, the FinTech revolution, if we can call it like this, is happening way way way quicker than I actually expected it. I can tell you very honestly Jay, if you tell me what’s going to happen in FinTech in six months and one year, I absolutely have no idea. Pretty much, I can give you a high level of guidance, but it’s very very … The industry is moving so quickly that it’s actually quite impressive.

Jay: It’s a very exciting time right now as you said with the banking shift to online. I read an article just recently about sort of the state of … Basically, the article is saying between the years of 2016 and 2020, there’s an estimated three to five billion people that will be online that previously were not, and obviously, majority is going to come from this region, India, China, right? We are sitting basically at the forefront, the front seats if you will of this shift, this transformation.

Henri: Absolutely.

Jay: It’s very exciting. You mentioned that you’re sort of a general thought leader in this space. You’re obviously … You’re well-known within the circles here in Hong Kong, you are often quoted in media Bloomberg, Financial Times. I’ve seen you in the SCMP, China Daily, you also gave a very sort of evocative TEDx keynote speech, and you’re oftentimes a keynote speaker as well. What are usually the themes that you like to tackle when you give a public speech?

Henri: Oh, yeah. Of course first of all, I always tell people I’m not a thought leader, I’m just somebody who’s really passionate about this. Actually, I’m just lucky that what I do is actually quite interesting in these days. I guess the topics vary quite a lot on what people want to hear, and there’s always trends in the FinTech world. I would say over the last couple of years, we know we’re from … Blockchain was our point of big thematic, Artificial Intelligence was a big one, Big Data was one. I would say in the early days, three or four years ago, was probably more on P2P, and what we used to call at the time internet finance. I would say some of the new trends that I’m really really seeing come at the forefront right now, probably the one that I think is the most promising for the next year to come is really RegTech, which is Regulatory Technology, which is basically the use of some of the new technologies to really address some of the regulatory and compliance, [aburdence 00:12:52] not only more effectively, but also more efficiently.

This is really driven by a lot of the big banks where they try to really not only reduce cost, but actually try to transform certain parts of their business in a way that actually is more efficient and actually can give clients also a better user experience as well. If you think anything from being onboard with a bank from KYC or AML, which is Anti Money Laundering regulations, to anything for monitoring of staff, conduct monitoring, there’s a lot of different areas. They’re very very costly actually for banks, that we finally have the technology to actually address these in an efficient and effective way.

Jay: That’s very interesting. I have a financial background as well. As I see, the shift happened … You mentioned that Data point in 2008 and they’re after when some regulatory was all of a sudden very … Much more important and in the spotlight, and you have the shift of basically a lot of the processes that are being consolidated, a lot of the workforce in financial industries services are being consolidated. Banks, get more and more regulations coming down. On the flip side, you see this other side that is growing rapidly which is FinTech, RegTech. It’s quite exciting. I’m feeling very positive about that side of it, despite the potentially negative implications if you’re still working at a bank or have to deal with its regulations.

Henri: Yeah. But I think the reason or point of … To be honest, banks are not going to disappear. I’m actually at the view that actually banks will still be there. I think most of the banks you see today will be there in 10, 20, 50 years. Don’t forget that most of the banks that we deal with today, not only they have the experience, but also they have the expertise. I always mention at one of the large American banks, up to one third of their staff are programmers and developers. A lot of the banks are quite advanced when it comes to let’s say, one, it could transform themselves. There’s obviously a lot of issues and it’s actually quite difficult to transform a large organization and try to adapt, one of them is legacy systems. A lot of banks have systems that have been there for 10, 15, 20 years and it’s actually quite difficult to change all of the technology that an IT haven’t placed.

But I think what’s going to be really interesting is I don’t think that banks should be worried. Yes, there will be a lot of banking jobs that will disappear. A great example is the city bank predicts that over the next 10 years, 30% of banking jobs, one banking job out of three will disappear. Yes, some new jobs will be created in the FinTech industry, but these will be obviously in smaller numbers, but also the skillsets that will be required from bankers in the future will be very very different from the bankers today. You’ll probably not going to need as many compliance officers or traders, but you’ll probably need more programmers or actually designers. I think it’s just the nature of the task required and the skills required will change.

The other big transformation to be honest is that I always tell banks that is … I don’t think banks should be really worried about startups. Startups, there’s a lot of counterparty risk, a lot of the customers are not really … There’s still a getting to know each other with the startup world. I think some of the biggest threats for banks today, especially on the retail side and the wealth management side are probably large technology firms. The Facebook, there are Amazons, the tensions of this world, these are probably … These large technology firms are already in the financial services landscape in Asia and increasingly in Europe and in the U.S. I think the large tech firms will be part of our financial services landscape in the years to come.

I think that’s where the area … The main, the competitor, that some of the traditional banks should look out for.

Jay: Very interesting. Henri, you’ve been in Hong Kong for quite some time, number of years as of I, and you’ve always been quite involve and active in the ecosystem here both in the startup community, obviously in the FinTech ecosystem, what are some of the challenges that you see here in Hong Kong? I like to ask some of our local speakers, guest on the show that are speakers … As someone who myself has been actively involve in the ecosystem, I know that Hong Kong as a startup and innovation city, they have a lot of things going for them but it’s been very difficult. A lot of the verticals are very siloed, there’s not a lot of integration within the different mini-ecosystems if you will, so how do you view the ecosystem here in Hong Kong? What is the biggest challenge that we face moving forward, and then specifically within the FinTech ecosystem, how does Hong Kong look to you as a FinTech hub?

Henri: It’s a great question Jay. One that we get asked quite a bit. I would say from that perspective, first, Hong Kong is a financial center, and I know we have I think 74 of the world’s top 100 banks who are here. Naturally, I think of FinTech hub would generally happen in a financial center for one reason being that that’s where a lot of the clients are, especially mainly for the B2B segment of FinTech.

I think Hong Kong has a lot of advantages from the rule of law, the proximity to China, the existing customer-based financial institution customer-based, but like any other FinTech hub, it has its drawbacks. The one that I found personally very interesting in Hong Kong, I would say it’s really the mindset. I’ll give you one very simple example, like I mentioned, I teach a FinTech course at the University of Hong Kong. I actually think it’s the first FinTech university course in Asia that I teach at the University of Hong Kong. We had a student about, I would say one or two years ago probably, came to me and said, “Professor, I have two job offers. One of them is a tech firm in Shenzhen, the other one is actually in the back office role in one of the large retail banks here.” He was like, “I want to take the job, the startup job in Shenzhen, but my girlfriend’s mom wants me to take the job at the big bank.” It was very sad, he didn’t end up taking the back office job at a big bank.

I always say that Hong Kong will truly become a global FinTech center, the day tiger moms get piece of mind with the idea of their kids joining startups and taking the risks. I was called to this dinner table or dimsum table moment when your cousin has a job at a big bank with a nice business card, and you actually would’ve start up that mathematically will fail. That is more of a mindset. To be honest, we have come a long way. Honestly, I remember I’ve been in Hong Kong for nine years and I think entrepreneurship has really … Startups scene has really really come a long way from the early days.

There’s obviously, I think a lot or room for improvement, but I think generally, there’s a lot of people moving to the right direction. I would say one of the other drawbacks is there are no role models. For example, in mainland China, there’s a lot of … If you look at most of the successful or wealthiest people if you want to quote unquote, a lot of them are actually entrepreneurs. There’s Jack Moss, [Poeny Moss 00:19:53], and others that are in similar situation, whereas if you look at Hong Kong, the tycoons or the people you look up to are real estate tycoons in their 80s and the same people had been there for the last 20, 30 years.

I think it’s a bit of interesting side, and I really believe that we just need a couple of success stories in Hong Kong that young people can look up to, and that’s going to actually be a major catalyst. But I think we’re generally moving in the right direction, but like there’s always challenges ahead, and there’s always room for improvement.

Jay: I absolutely agree with you on this success story. When I think about Hong Kong, and let’s say there’s the category of startup investing, exactly as you said, the tycoons and the people that the public looks up to and the investing public looks up to are the people that have made money, maybe last generation, the generation before, and it’s all real estate. It’s either real estate that they’re comfortable with, or playing the stock market which could be just as risky perhaps as early stages of investing. The difference is that they just are not educated, there’s no role models like you said, there’s no big winds.

Hong Kong as a city doesn’t have any big winds. It doesn’t have a Facebook or a Waze like Israel, they just recently had a big exit, right? They kind of put them on the map, even though Israel end up itself is a startup nation. I think Hong Kong really needs, like you said, it needs role models and it needs a big wind I think. It needs people to invest in the ecosystem and it needs a big wind, and then it will put us on the map, and perhaps, people will start to get excited about it.

Henri: Absolutely Jay. I think there’s many ways of looking at it. For example, I think both Hong Kong and Singapore have a lot of advantages here, although there’s no big success stories luckily, I think there’s a big role that can play. One of them is actually what I call the landing pad model, which is what I find personally quite interesting is that actually, when you look at the financial institutions across Asia, you’re under very very intense pressure to innovate and change the way they do business. But at the same time, I would say the depth and the breath of startups in Asia is not what it could be. It’s getting better but it’s not what it could be.

Adversely, if you go to the U.S. where I spent quite a bit of my time, the banks are not under that much pressured to it and obviously they’re trying to, but it’s not that much pressure, but the quality of the startups is actually very very interesting. They’re all from the quality of startups and depth and the breath, that I think creates a very good [inaudible 00:22:22] opportunity for these FinTech startups and firms that are based in Europe or in the U.S. to come to Asia and use landing pads like Hong Kong or Singapore to really target Asia and really target financial institutions in the region.

I think even though if you’re not the startup nation yourself, you can be the landing pad nation if you want where people come and use that as a hub for the region.

Jay: True, fair enough yeah. That’s all good points. Henri, can you talk a little bit about what we can look forward to in the upcoming week. There’s like I said, two out of five days has been dedicated to FinTech, that’s how popular, that’s how big this vertical is. Day 25th and 26th will both be FinTech days during the Start Me Up Hong Kong festival. It’s something called the FinTech Finals, what do we have to look forward to during those three days?

Henri: Yeah, it’s definitely a very exciting week. There’ been … From a FinTech delegations coming in to the FinTech Finals which is a great event. I’m actually speaking on … Giving a keynote on RegTech actually there. There’s quite a few conferences going on including the AFF which is probably one of the biggest conferences of the year. I think there’s obviously a lot of continent at these events, there’s a lot of interesting events, I think what’s really interesting though, what the audience can get the most value is actually connecting with some of the people coming to these events.

The FinTech ecosystem, unlike some of the more traditional financial sectors, is actually very friendly one. I would say it’s a big community, it’s a big family where just generally people help each other, they actually share knowledge to each other, and there’s actually a lot of activity around there. I’ll give you one example where … They were soon setting up in the Hong Kong FinTech Association which is really trying to be kind of an industry association of the FinTech community. A lot of these initiatives actually all started and a lot of these are discussed at events like the one we have this week. I’m very excited actually for the week again. It’s going to be a very busy week, but definitely one that’s going to be quite exciting.

Jay: Yeah. I’m sure it’s going to be busy for you. That’s fantastic. Henri, what are you working on these days specifically not necessarily just professionally but maybe personally, what goals or new projects that you have for 2017?

Henri: I always tell people, I’m a workaholic and a nerd which is never a good combination. There’s always a lot of products … And last year was actually very excellent, but not only from some of the FinTech-related things, I also published … My book as well came out from Palgrave on entrepreneurship and finance, which is great. Thank you.

I think some of the products obviously, a part of work which takes the vast majority of my time, I think we’re doing a lot of community work on the FinTech’s side. Like I mentioned, we’re setting up the Hong Kong FinTech association which as you can imagine, it really takes a lot of energy and time perspective. But also the other thing we’re trying to do is actually educate the broader public on FinTech and RegTech. I think there’s a lot of … Even though FinTech has reached a mass market right now, I think there’s a lot of people that would benefit and that you’re learning some of the benefits of it.

The other thing I think is always good to spend some time is on the … I wouldn’t say advocacy, but I’m really spending time with the government and regulators. I’m very fortunate, I sit on a number of these, where our leader, our chair are member of many FinTech committees, which is actually good. We’re actually being able to help the broader community and stakeholders on trying to shape the FinTech ecosystem of moving forward, because I really believe it’s an ecosystem play where we need every angle and every participant of the ecosystem for this community to really flourish and move forward.

Really 2017 should be quite an exciting one from that perspective for the FinTech world not only in Asia, but also globally.

Jay: Right. Sounds very exciting. If someone were a novice say in FinTech, where would you tell him to start other than maybe just sit, other than your class, and perhaps coming to the FinTech Finals and listening to you speak and some of the other speakers? What’s the best way for someone to just … If they just have an itch to learn about FinTech like you did many years ago, how can they get started?

Henri: Yeah, it’s a great question. I think Jay, from that perspective, I tell in all many conferences I told you, a piece of homework everybody can do is to attend an event a month or take the time an hour a week to read about some of the latest FinTech developments coming up. If anything from what the tech firms are doing to some of the leaders, A.I., developments and chat box developments, that will really shape the financial industry of the future. I think that’s the one, it’s being curious and being interested on what’s happening in this broader ecosystem.

But honestly, I think there’s also some more fundamental changes that FinTech is bringing along that would really have a transformative impact on the financial services industry. Not on the short-term, but definitely on the medium of long-term. One of them is Blockchain, Blockchain technology for example where … I often tell people if there’s one thing they should read about, it’s just Blockchain, just be aware of what’s happening. It’s not going to happen over the next five years, but this is really … It’s what about with Blockchain technology, where the internet was in the mid 1990s. Nobody could have anticipated in the mid 1990s, or did how the internet has changed the way we live in our daily lives, but I think it’s through … Including this podcast.

I think we’re really at the early stages, but I think it’s good for individuals especially if they work in a financial services industry to be aware. But however that being said, entering the FinTech industry is actually quite difficult. There’s a lot of buzz around it, but if you dig down, there’s not that many jobs in FinTech. For somebody who just wants to enter the FinTech industry, there’s not that many. It’s interesting, about a year and a half, two years ago, I used to get at least two or three LinkedIn messages a day from individuals who wanted to leave banks to join the FinTech world, basically just out of passion and changing the banking world.

It’s interesting how that has changed recently because there’s obviously been a lot of layoffs at banks and outlook for many is not that rosy, so people are really trying to see as FinTech could be [rescue both 00:28:40] and people can clean job. Unfortunately, FinTech is quite different. The skill sets you need are quite different. In looking at a big bank where everybody comes to you and you have the benefit of the big business corp. to join in the startup, where you actually have to hunt and you have to go is actually very different skill sets.

That being said, for a lot of the young people, I think a very big difference between those who are starting their careers and those later on, I think for a lot of young people who are still joining I believe traditional banks is a great training ground. It’s a really great place to not only meet people and get the industry knowledge, make contacts, but also I think for more senior people as well. I get it, sometimes senior folks of banks would tell me, “Henri, I want to join the FinTech world.” I think what often people don’t realize is that the money you can make today in a bank for the amount of work and accountability that you have is actually relatively very high compared to other industries, definitely at FinTech world.

I think it’s a [inaudible 00:29:40] to make a decision based on their practicalities and their own reality. But I think the over [arching 00:29:48] team … Actually, I was teaching this today at the Hong Kong university, a FinTech course actually, and what I tell a lot of my students is that whether they want it or not, that those entering the workforce today may need to reinvent themselves every five or ten years, just because the industry of the world is moving so quickly. I always tell people that you should never sit on the chair, but you should always sit on the edge of your chair, and always stay and remain curious, hardworking, and passionate just as the way the industry is moving.

Jay: That’s great advice. A sound advice from Henri. Thank you so much for your time Henri. I had a really good time catching up with you today. Last question is where can my audience, my listeners connect with you, find you, follow you if they want to learn a little bit more about you, where can I lead them?

Henri: I’m quite a friendly guy generally, so I’m always at a lot of FinTech events globally. But also I think the best ways to connect is via LinkedIn. I always tell people that LinkedIn is probably the most powerful professional working tool we have today and one that I quite like, so LinkedIn is a great way to connect with the audience and brand online reputataion, there is a great example of an online prom dress store fabprom you can learn something from them. I’m happy to share the passion and the knowledge with whoever is interested to learn more about this beautiful industry.

Jay: Fantastic. Thank you so much again for your time. Ladies and gentlemen, this is Henri Arslanian. He will be speaking at the FinTech Finals, the two-day event, 25th and 26th of January at the PMQ. Head on over to FinTechFinals.com to pick up your tickets. Thanks so much for your time. Once again Henri, I had a really good time and I appreciate it.

Henri: Thanks Jay. Thanks for having me and I look forward to this week.

Jay: All right. Take care now.

Henri: Thank you.