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“Brett’s best yet! Bank 4.0 is a tour de force that opens your eyes to what already exists, and your mind to the imminent possibilities. A must-read.” —Piyush Gupta, Group Chief Executive Offi cer, DBS Bank BANK 4.0 Banking Everywhere, Never at a Bank B R E T T K I N G www.brettking.com Praise for Bank 4.0 “From Bank 2.00 to 4.0, Brett has not only been tremendously accurate in predicting where the ball is going in the future of money, but, more importantly, he’s been actively shaping how it will get there. Here’s a tip: don’t bet against him.” — Alex Sion Co-founder of Moven and General Manager, Mobile Channel, JPMorgan Chase “Brett King has done it again with his latest volume. Bank 4.00 pushes us to deconstruct the mouse trap we call a bank, wipe the digital slate clean, and reimagine banking for the year 2050 by focusing on fi rst principles and customer needs. Drawing on examples from the developing world, King paints a compelling vision for how digitally-native banking can be a winning strategy—and an inclusive one.” — Jennifer Tescher President & CEO, the Center for Financial Services Innovation “In Bank 4.0, Brett does it again and moves our thinking along in fi nancial services from rethinking the bank model as discussed in his previous books to pointing to how to build the new model using fi rst principles thinking. It’s another ground-breaking book and brings together not only his own thoughts, but the thinking of many of us who are trying to create the next generation of fi nance using technology, or FinTech if you prefer. Anyone involved in fi nance, technology, money and banking who doesn’t pick up this book is missing the key to their future and, as a result, might not have one.” — Chris Skinner Bestselling Author of Digital Human and Chairman of the Financial Services Club “Brett’s best yet! While one may not agree with all his assertions, the fundamental insights—that banking needs to be reimagined from fi rst principles, that it must be embedded into daily lives, that data, AI and voice are game changers in this regard—cannot be argued against. Bank 4.0 is a tour de force that opens your eyes to what already exists, and your mind to the imminent possibilities. A must read.” — Piyush Gupta Group Chief Executive Off icer, DBS Bank “As the banking industry continues to disrupt at an ever-accelerating pace, this unputdownable book paints a future that is both exciting and inspiring. Th is is Brett, the King of futurism, at his compelling best! Speaking as a banker, you must read Bank 4.0.” — Suvo Sakar Senior EVP and Group Head of Retail Banking and Wealth Management, Emirates NBD “Banking is being disrupted on a global basis and Brett’s book helps to navigate through these rapid transformations. A must read in the new era of banking.” — Valentin Stalf CEO and co-founder of N26 “Yet again, Brett King brings together some of the most knowledgeable and experienced fi gures in global FinTech for this authoritative guide to the very latest mega trends.” — Anne Boden CEO and founder, Starling Bank “‘I don’t think anyone else on the planet has Brett’s ability to piece together what is happening around the globe and forecast the future of banking. A thoroughly researched, data-driven analysis from someone who has ‘walked the walk’.” — Anthony Thompson Founder and former chairman Atom Bank and Metro Bank, co-author of No Small Change “Two years ago on stage in Beirut, I called Brett King ‘the King of Ban- King’ and I stand by every word. Th is book continues his canon on the subject of where banking is going next. Everybody in a FinTech company should read it, everybody in traditional banking HAS to read it or they will be without a business in fi ve years.” — Monty Munford Founder of Mob76, SXSW emcee and Public Speaker, writing for The Economist, BBC, Forbes and Fast Company “Th e organizations we develop partnerships with know that our customers are in the driver’s seat. We’re innovating for them and that’s non-negotiable. Brett King and Moven understood that from day one, andBank 4.00 is his manifesto.” — Rizwan Khalfan EVP, Chief Digital and Payments Off icer, TD Bank Group BANK 4.0 BANK 4.0 Banking Everywhere, Never at a Bank BRETT KING Copyright © 2019 Marshall Cavendish International (Asia) Pte. Ltd. All rights reserved. First published in 2018 by Marshall Cavendish International (Asia) Pte. Ltd. Published under license by John Wiley & Sons Ltd. For distribution in Canada, Central America, South America and North America. Not for sale in Asia. Registered offi ce John Wiley & Sons Ltd, Th e Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offi ces, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher. Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners. Th e publisher is not associated with any product or vendor mentioned in this book. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best eff orts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifi cally disclaim any implied warranties of merchantability or fi tness for a particular purpose. It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom. If professional advice or other expert assistance is required, the services of a competent professional should be sought. A catalogue record for this book is available from the British Library. ISBN 978-1-119-50650-8 (paperback) ISBN 978-1-119-50649-2 (ePDF) ISBN 978-1-119-50652-2 (ePub) ISBN 978-1-119-50651-5 (WOL) 10 9 8 7 6 5 4 3 2 1 Cover design/image: Kylie Eva Maxwell Printed in the United States of America To Katie, with whom I am quantum entangled, and my Dad, a role model, and whose energy allowed me the freedom to go well beyond my limitations. Contents Preface 13 Acknowledgements 16 PART ONE: Bank 2050 Chapter 1: Getting Back to First Principles 20 First principles design thinking 23 Applying fi rst principles to banking 27 A bank that is always with you 32 Is it too late for the banks? 39 Feature: Ant Financial—The First Financial Firm for the Digital Age by Chris Skinner 44 The Alibaba stories 46 Ant Financial: Building a better China 58 Chapter 2: The Regulator’s Dilemma by Brett King and Jo Ann Barefoot 64 The risk of regulation that inhibits innovation 66 A fl awed approach to fi nancial crime and KYC 72 The future form and function of regulation 82 Elements of reform 86 Feature: How Technology Reframes Identity by David Birch 93