Big Tech in Finance: Navigating Blockchain, AI, and the Future of Money with Igor Pejic

In this episode we speak with Igor Pejic, Author of Big Tech in Finance about his WHY, WHAT and HOW to Prevail In the Age of Blockchain, Digital Currencies and Web3.

Igor explores the transformative impact of emerging technologies like blockchain, AI, and digital currencies on the financial industry. He discusses big tech's expansion into finance, systemic risks, and the future of a multi-asset world, emphasizing regulatory clarity and innovation.

Key Words:

• Igor Pejic
• Big Tech in Finance
• Blockchain Babel
• Blockchain
• AI
• Digital currencies
• Financial industry
• Innovation
• Regulatory clarity
• Multi-asset world
• Super money engine
• Systemic risks

Transcript

Hello and welcome to Banking on Information. Today with me is Igor Pejic, the author of the books Blockchain Babel and Big Tech in Finance, How to Prevail in the Age of Blockchain, Digital Currencies, and Web3. Igor, welcome on the podcast. Thank you for having me. It's a pleasure. Now, let's start with that very important first question based on the book by Simon Sinek. Start with why. Why, Igor, do you do what you do? That's a good question, but let me answer that in two parts. The first part is why am I working on tech and the money business? And the second thing is why I'm writing books about this because I think it's two separate but strongly connected questions.

The first one is well basically I spend my entire professional life working at the intersection of technology and finance uh and I relished it right uh why was that because I think we're blessed uh to live at an age where we have technological progress not just accelerating uh but it's accelerating exponentially right so we don't have any more these long time frames in between innovations and it's also not just one technological trajectory but it's multiple of them uh so you see Things like AI, blockchain, also other areas, non-digital areas. And they're all advancing extremely rapidly. And they're also feeding off each other. So it's very difficult to forecast what will happen. So it's highly interesting. And I'm not just talking, as I said, about digital technologies, but it's also things like gen tech, biotech, satellites, new space race, new ways to harness energy.

So I think really that exploration is kind of the essence of the human spirit. And that's why I'm very interested in finding out what will happen, what new technological potentials would bring and what we will make out of them. And that's not just a professional interest or personal interest in the topic, but it's also the fact that if we look at the history of technology, it has always had a tremendously good impact on the human condition and human life, right? And I think that it's just some very important trends that we're living through, and I'd like to do a small contribution to it. But you might ask, why not be just working on it in the company? Why not be a founder? Why not be an innovator? Why talk about it all the time?

Why write articles? And especially why write books in such a fast-paced environment, such a fast-paced time as today? Because technology is literally changing every day, and yet you have publishing with very long cycles. Well, quite frankly, because I believe that, again, if you look at the history of technology, there have been so many groundbreaking technologies. Invented and oftentimes they have been there for a very long time until they actually made a difference, and why because it takes people to act on those technologies to materialize the potential that they deliver. I think that one way to to make those entrepreneurs or managers or whoever understand what the technology is and where the future is headed to is by books.

I think that books are really the best way to learn of new technology, and it's quite simply the fact that you have to spend so much time and invest all of your cognitive resources and all of your time for multiple hours, you're just trying to to understand one aspect or one technology, and that's quite frankly extremely important. And I think that this is particularly important in an age of social media that's extremely fast-paced, where oftentimes rather shallow information but also an age where you have many, many very good resources-excellent articles, excellent reporting, and great in-depth analyses. But still, I think that the book as a medium is the best way to have this calm introspection to learn.

About the complex new thing which the technology is, and it's not just the technology as I said but also its implication in the real life so that's why I believe that the books are so essential even though sometimes they're forgotten in our discussion especially about technology, yeah no that's that is great. So you are passionate about innovation not just at the intersection of financial services and technology but just broadly, and then you are a teacher who likes to teach people things you like to do that through the medium of writing a book and actually putting it down on paper. Which I appreciate that you take that time to do that. So that is great. Thank you for sharing your why. Now, how in the book, what are you talking about in the book?

How do people learn from what you're writing down? Tell us a little bit about the big tech in finance book that you've just released. Definitely. So the way I see it, or the way I hope that my readers will see it, that, you know, they spend my $20 to $30, but they get a whole bunch of what a research team would do and also what a management consultant would do for their thing. Well, basically, big tech and finance, like blockchain Babel, is on the one hand a strategic consideration so I look at a certain trend in financial services that is connected to innovation in this case the entry of data giants and and it giants in general into the financial services world and not just the entry but also the expansion of what they're doing but I don't just stop with my own analyses but I also interviewed dozens and dozens of experts

and not just any expert, it was really some of the top-notch thinkers on the on that issue and whether that be bankers, whether that be entrepreneurs or politicians regulators so it has been a very very wide range of them very wide range of perspectives also contrasting perspectives and basically I try To tell on the one hand the story of all of the opportunities that companies like Google, Apple, Amazon bring to the table. Because let's face it, they are perhaps the biggest scalers of technology out there. But on the other hand, they also show that it is on the one hand a danger to commercial banks or to other companies, whoever is in the business of, in a business that will or might be disrupted by those huge and hugely impactful players.

But on the other hand, it's also a consideration of more systemic risks, right? What could it mean to financial stability if all of a sudden millions of people flock to, let's say, the Libra coin that Facebook tried to introduce? So it's kind of a balanced approach to see. What's the upside? What's the potential downside? And how do we manage this? How do we take advantage of the good things, whereas try to reduce the systemic dangers that we have? Yeah. Now, what would you say are the top two takeaways that people should learn from the book? Now, obviously, you don't want to give it away all, but what are the top two nuggets that you can share with us here? Definitely.

So I think one nugget of information would definitely be, let's say, one lesson that you would learn from the book would be that big tech in the past has already entered all kinds of industries, in particular the financial industry, on the wings of new technologies. And of course, everybody knows Apple Pay and Google Pay. In China, we have the same, even much more pronounced with Alipay and WeChat Pay and so on. So they're trying to enter the payment business on the wings of mobile, contactless, wallets, all of these related technologies. While at the same time, those are technologies that are maybe 7, 8, 9, 10 years old, depending on which area you're talking to, which geographic area you're talking about. And now they are trying to do the same thing with blockchain, with AI, with digital assets.

And this time, I think changes could be much, much more profound because in the past, what you had is they focused on payments, they focused on the customer interface. Now, with those more transformational technologies, they could theoretically address any area, any segment of finance on the one hand, and they could also hollow out the entire value chain. And the second thing is, second lesson, what can be done about it, right? It's not easy to compete with an Amazon or a Microsoft or whoever. And I believe that you have to ride the waves of technological progress as well. And one concept that I introduce in the book is the super money engine, which basically means that you're capable of handling all types of assets and not just holding them, but also staking them, swapping them, selling them, processing them in all kinds of ways.

And this is kind of the solution of how do you succeed in tomorrow's world, despite those very big and very strong competitors. Yeah, well, that's a great bridge. Tomorrow's world, you mentioned that. I always like to do this thing called futures thinking. Obviously, we don't know what the future is going to bring, but we can think about it and we can describe what we think is a possible future. So I would love for you to do that. And I think this is right in your wheelhouse. Think 10 years out. We're in 2034. What does the world look like? What do big tech companies, what does finance look like? Give me an idea of what your thoughts are, what a possible future could look like.

Yeah, so 10 years from now, that's definitely a highly interesting point in time because I would say five years, it's quite easy to have a forecast. With 10 years, it gets really difficult because we humans are very poor in judging exponential growth, right? So we tend to underestimate what will happen in the long run. And it's really difficult to do so if you have a panoply of technologies, because as I mentioned, they feed off each other, they impact each other. So if we look only at blockchain digital assets, because I think this is something that you can answer with a little bit more, let's say a little bit more certainty. I think the major trend that stands out to me is that we will live in a multi-asset world.

So people come up to me all the time and ask, you know, will Bitcoin take over the financial system or will central banks issue CBDCs and everything else will be gone? Or is Bitcoin and crypto just a hype and a fad and will go away? And the answer is neither. Right. So we will have a world in which all of those assets are coexisting. We will have cryptocurrencies. We'll have central bank digital currencies. We'll have traditional cash. We will have private stable coins, which are. Which are blockchain-based currencies pegged to a fiat currency, will have so-called deposit tokens issued by licensed banks, so there will be all these kinds of assets and also the non-fungible assets.

And I don't necessarily mean pixelated pictures or metaverse land; I mean traditional financial assets put on a blockchain, things like IP commercial exploitation rights but also things like securities, bonds, commercial real estate. But also for a more mainstream customer, it could be his own apartment or a house that I put in a decentralized protocol and use it as collateral to get a loan. So I think these are all things that will happen. And so we will have multiple assets and they will be merging with each other. And that's why I mentioned earlier the super money engine. Whoever builds this first and is among the first and most successful to to scale it, I think

has a very very good chance of ending up at the top of tomorrow's financial world, yeah so so you we're you're almost there already with the the the answer to my next question which is kind of like okay if we do backcasting if we see that future of all these different assets um both sort of on chain and off chain what do we need to do today to get ready for that possible future that you were describing? So it depends from from which perspective you're looking at, I think the most critical is probably the regulator. That's, that's where we have or we could run into very significant also systemically important issues, right? If I have a mass of people as I just mentioned putting their putting their apartment in the protocol, losing their houses-what happens right?

We don't have any regulatory clarity. Is this something that would hold up in courts? Uh, what happens if too many people do this? We have a liquidity crisis, so there's a lot of regulatory things so we need to we need to clarify first. And the second thing is, of course, you need to build the technical capabilities. But that's kind of difficult at the moment because not everywhere do we have very clear regulation. I have good reason to believe that it will, in the US in particular, it will change in the next couple of years, hopefully even months. But I think regulation is really the number one issue that's kind of holding big investments back. Yeah. So hopefully we'll get more clarity on regulation soon. That's probably a great point to wrap up on.

So thank you very much, Igor, for sharing your wealth of knowledge and looking into the future together. Where can people find your book? Basically everywhere where you get your good books. Amazon, of course, or you can go to your Barnes & Noble and all of the other big and small booksellers. They should all have it or at least be able to order it. Perfect. So wherever you get your books, go there and find Igor's book, Big Tech in Finance, How to Prevail in the Age of Blockchain, Digital Currencies, and Web3. Thank you so much, Igor, for being on the podcast. Thank you very much for the invitation. And until next time, choose to be curious.