We cannot accept a parallel financial system
Anders Borg, the former Swedish finance minister and current chairman of the World Economic Forum's Global Financial System Initiative, has the world as his working field. He believes that the recovery in Europe will slowly continue, and the hopes of the global economy are very much dependent on the development in the USA. Quite unexpectedly he also places a small bet on China, where he expects continuous strong growth, as in other regions in Southeast Asia.
“The parts of the global economy that are most affected by digitalization show such strong development that it is not wrong to talk about a revolution. Here we witness tremendous growth in which financial companies will play a key role. The financial sector adopted IT in their services early on. This time the sector will continue to develop dynamically as a result of digitalization.”
Borg is not willing to completely dismiss the virtual currency Bitcoin, which is based on a decentralized registration of blockchains. But he stresses that we have not yet seen examples of virtual currencies replacing physical currencies.
He calls Bitcoin and other digital phenomena an “Uberization of the banking sector”. That is a metaphor referring to the digital taxi company Uber, which uses an IT platform to organize taxi services around the world, without owning its own fleet of vehicles. He wants to highlight the fact that through digitalization banks and the entire financial sector are facing major changes that drive new business models.
But, there are as always also countervailing powers in place. A heavy burden of regulation has been imposed on the financial sector since the financial crisis in 2008.
“We want a stable financial system,” says Borg. “It is important for all companies to play by the same rules. New digital businesses in asset management or financial services must not be allowed to bypass stricter rules. That encourages imbalances and distorts competition. We cannot accept a parallel financial system.”
So what will financial companies do best in this new digital world?
“There is only one answer,” Anders Borg responds quickly. “The future winners will be the ones who respond to change and work close to their customers. Working close to your client means you can charge more for the most important services you provide. If you do not know how to do it, copy the successful and be proud to do so.”