Friday,21 June 2024

Tim Berners-Lee on the future of finance

5 min read

Interviewed By The Asian Banker Live

Tim Berners-Lee, inventor of the World Wide Web, traced the evolution of the Web that he created. How its existence as a free and open platform has been commandeered by big tech companies and businesses whose interest are misaligned with online users, especially in the use of their personal data. He also highlighted new financial services regulations and standards such as PSD 2 and Open Banking as positive examples of protecting data ownership and privacy. In a follow up dialogue with Emmanuel Daniel, chairman, and Gordian Gaeta, international resource director, of the Asian Banker, he discussed initiatives such as SOLID (Social Linked Data) aimed at radically changing the way Web applications work today, and how they ensure true data ownership and improve privacy

Here is the transcript by sections:

Opening statements by Emmanuel Daniel, chairman of The Asian Banker:

Opening keynote speech by Sir Tim Berners-Lee, inventor of the World Wide Web:

Onstage dialogue between Sir Tim Berners -Lee, Emmanuel Daniel and Gordian Gaeta of The Asian Banker:


Opening statements by Emmanuel Daniel, chairman of The Asian Banker

Emmanuel Daniel (ED): Good morning Beijing! We have many guests from overseas here with us today. We want to say to you “Beijing welcomes you”.  Ladies and gentlemen, welcome to the 20th Asian Banker Summit, which last year was rebranded as the Future of Finance Summit. The Summit has been transformed over the years from a gathering of senior bankers to a gathering of all sorts of different players who are transforming the financial services industry today.

The Summit used to feature the largest banks in the world, and yet, today, the largest players in the financial services industry are no longer the banks alone, but a whole range of new players whose existence has been made possible by the world wide web. And so, from inviting regulators, bankers, and people who lead large institutions, this year, we’ve made a change and invited the men who created the world wide web itself to come and talk to us.

It’s a very proud moment for us to be able to bring the Asian Banker Summit back to Beijing. The last time we had the Asian Banker Summit in Beijing, in 2009, this was a bankers’ conference. Today, it is a gathering of a whole range of different players. And so, even the name “The Asian Banker” is a strange name because we now carry our message not just throughout Asia, but through the Middle East, through Africa, and other emerging countries around the world. And, we do not just talk about banking, but financial services industry as a whole, and we are able to carry this message primarily because of the tremendous transformation taking place right here in our part of the world.

And so, even as we welcome our foreign friends to Beijing, we are welcoming them to ground zero of the transformation of the financial services industry. All they need to do is walk out of this room and experience the city of Beijing, and they will discover how life itself has changed in that nobody carries cash in China. Nobody makes a payment using a bank card in China. A whole range of new players have now disintermediated financial services as we know it to be – shared bicycles, shared cars, hotel bookings, restaurant bookings, taxis – everyday life wholly transformed with the financial services portion built into our daily experiences.

And, it’s this message and it’s this capability that we now can boldly export to the rest of the world so that when we talk about social media and the future of platforms in the West, we now have an alternative reality evolving in the East which is just as credible and just as important as anything that’s going on in the rest of the world.

And, something that China brings to the conversation on the future of the financial services industry is the sheer size of the transformation. There was a time when a large payment platform like Visa and Mastercard could do 20,000 transactions per second, and Alipay and WeChat can do five times that amount anywhere in the world, and at a cheaper cost. There was a time when the largest credit card model liner institutions were companies like GE, which had 65 million customers, and in China, the Big Four banks each have 400 million customers, and a regular bank would have 60 million customers.

So, with this ability to absorb the scale, and carry it into the internet, and carry it into the digital world, it’s China’s reply to the world. It’s China’s lesson to the world. It’s China’s example to the world in terms of the scale and the propensity that we are able to generate today.

When we talk about the future of the financial services industry, we talk about a whole range of players who now need to relate with each other in many different business calls, and at this summit, we bring all of them together. So, is Baidu or JD a competitor to the traditional banks? They say they’re not. They’re actually partners who can bring financial technology into banking as we understand it to be. Are the peer-to-peer players going to disintermediate traditional banks on the loans business? Maybe, maybe not. It’s an evolution that is taking place, and we see all the different types of business models that are being evolved today.

I will be publishing a book called On the Eve of Finance 5.0. and it’s a book that will be in the market by October this year, and in the book, I take a view of the journey that the financial services has been taking towards digitization, and in a very simplistic way, if we were to try and map out the journey, and we would make it as part of the morning’s conversation with Sir Tim Berners-Lee – because he invented the world wide web – and if we take a view that the web went through several phases of iterations – Web 1.0, 2.0, 3.0, 4.0, and maybe one day, 5.0 – that world maybe is probably a great certainty because of the way in which the technology has been evolving.

Today, we are all in the world of Web 3.0. We’re on a platform created by Tim Berners-Lee. A whole range of applications much larger than we ever imagined has been created: Facebook, Baidu, Amazon, Alipay, Alibaba, and a whole range of different players of this nature that have customers in the hundreds of millions and transactions in the hundreds of thousands per second.

But, before we get to Web 4.0, where a lot of these transformations will be carried on devices, and we become agnostic as to what device we’re carrying with us, and these devices will start talking to each other, and by the time we reach Web 5.0, we will have so much intelligence in these devices that they will be automating a lot of the decisions that we’re making today.

What I’ve done is mapped that evolution to the evolution of the financial services industry itself. There was a day – there was a time when bankers thought that with the advent of the internet, all they needed to do was to paste their banks onto the internet. Then, we discovered that the way in which ordinary people live their lives, talk to each other, connect with each other, pay with each other, has nothing to do with financial services as we understand it to be today.

We discovered new business models where in transportation, in healthcare, in all sorts of parts of our lives, data was being made visible to the user, to the regulator, to the service provider so that all of us know how many taxis there are out in the marketplace, and anytime we need them, the taxi companies could decide how they wanted to price their services at different times of the day, and the regulator knew how that evolution was taking on and how many more taxis they needed to provide in the marketplace.

And, if we turn that information on taxis to the information on finances, we now know how much money there is out there floating in the marketplace, we know where it’s lodged, we know who’s using it, where it’s going to, what we can do with that, and slowly, we realize that the customer is becoming increasingly empowered.

So, I’m suggesting that by the time we reach a realm called Finance 5.0, the industry will be transformed because you and I will not need financial institutions as we know them to be. You and I – in this room – will be able to discover the liquidity that’s available for us to transact with each other, and the safety and the identity of all of the different people we do business with.

But, I have a question for Sir Tim Berners-Lee. When he created the world wide web, the protocol was a thin protocol on which a whole universe of applications were developed. Are we now going into a world where, with the advent of new technologies such as blockchain, we now have a universe where the protocol is large, is within the control of the individual, and is much larger than the application layer that sits on it? What this means is that the technology is evolving such that you and I will have greater control of the data that we possess, who we give it to, how it relates to each other, and what we do with it.

So, even as the world is racing towards creating a financial services industry that enwraps what’s already been created in social media and other platforms, the platform industry, as we call it, where banks and traditional players are, is afraid that the cost of acquisition of customers in traditional finance may be $3.00 or $8.00, but to Amazon, to Facebook, to Baidu, to Tencent, it’s almost zero.

The power of knowing who you give your data to and for what purpose and the ability to monetize your own data is now coming back to the customer. So, for the rest of this conference, we’re going to apply our minds to understand what your digital journey is looking like and where the digital experience – the digitization of the universe – is taking all of us, and especially taking this industry.

So, with these opening words, it gives me great pleasure to invite onstage none other than the inventor of the world wide web, Sir Tim Berners-Lee, to address us.


Opening keynote speech by Sir Tim Berners-Lee, inventor of the World Wide Web

Tim Berners-Lee (TBL): Thank you. Thank you for inviting me to speak. This is an exciting gathering to be in. These are exciting times. They just get more and more exciting, because things change more quickly. Things change because of technology. So, every layer of technology that comes in, these people end up bringing in the next layer on top of it more rapidly. So, I’m going to talk about various things. I’m going to start off, though, by going back to tell you my digital journey. For a lot of people nowadays – so, I invented the World Wide Web, asked me if I invented the internet, you know actually, they’re different.

It was very hard persuading people that the web was a good idea. Somehow, sometimes I think about it like a bobsled. I’ve never actually been in a bobsled, but when you see it on TV, and usually you have to get a team of people together. It is all about getting it going and you push the bobsled, and then it comes to a certain point when the bobsled goes faster and faster and you really have to get it and steer, otherwise it – for the web, there was a critical point. Getting in and steering meant making a consortium. At MIT, they knew how to make a consortium because they'd done it before, so I went to MIT.  

Also, the center of gravity of the Internet was in the States. So, we jump into the bobsled with the companies who were excited about digital and HP, IBM, with the Netscape which was just being formed. And we started – the consortium’s first job was to manage the battle between the browsers between Microsoft’s and Netscape’s browsers, to make sure that whatever browser you used, it was just one web. The danger then was that different manufacturers would go off and make different incompatible versions of the web, and you wouldn’t be able to just make it, so making one web was really, really important. Fighting for that, has been really important.

So, I suppose, from the – one of the transition points, I suppose, was that bobsled moment when we realized, I didn’t have to push it anymore. We formed the consortium. Another different transition was when several years later we looked at the world and found that 20% were using the web. Whoa! So, 20% was, at the moment, a very large number and a very small number. So, suddenly, all the people who had just been trying to make it more cool, trying to make it more powerful, were thinking, every time we make it more powerful for those 20%, we make it – we make the digital divide bigger. Whenever we make it more powerful for the 20% that will have the web, then we leave the other 80% of the world more disenfranchised. So, we started the World Wide Web Foundation, which is about two things. It's about making sure that the web serves humanity, stepping back and having much bigger goals. And part of that is getting that – was getting the 80% to 70%. It was getting there, now it is the other 60% online.

Looking at the last few years, we've added a whole range of areas that the Web Foundation is thinking and that's based on the fact that what happened to the web and then the world is based on AI.

And one of the questions that – you can ask all sorts of questions about AI and questions you could. I’m going to ask one. It’s a question you should ask about all of your AIs. Who do they work for? When you build an AI in your company, when you use AI in your phone who does it work for?

Remember that data is only powerful when it’s joined to other data. Data by itself isn't very powerful. Data joined to other things is when you get insight, of course. So, that's why the open data is so cool, because it gives you data, you could link to  corporate data, too.

Well, until this point, most of the joining, which had been going on had been Facebook had been joining data to data about all – to other people.

How could we get from here, the silos of Facebook and Twitter, or Cambridge Analytica how can we get there? Well, one concern may be Cambridge Analytica, there is a massive wave you’re aware of, of emotion, and reaction, and concern about what's been going on. So, people are not happy with the status quo. People – there was a lot of resentment, the sort of Facebook tag. And those are – but when people delete Facebook, they don't know what to go to.

Imagine you made a world where they could own their own data  there is a huge amount of – so, the first reason is that there’s a huge amount of anger and frustration that to a certain extent I need to make you aware that it shouldn't be like this. I am prepared to spend all the effort to make it different.

Open banking means that you have to – as a bank you have to give the consumer access to your data. So, if all of the areas of healthcare, and fitness, and retail, and so on, were all of a sudden, were all subject to things like open banking, then regulation would be – we'd be able to build Charlie (an AI enabled bot) and there’s a third reason why you might get it.

Bob may end up owning his data, not because he's got it from somewhere else, but maybe because it just always belonged to him. In the new world, which we’re building SOLID (SOcial LInked Data) at MIT, then you – in the SOLID world, you have data policy which allow you to store your data when you runapplications. Whatever that application is, it actually runs in a private cloud and so, all of the things you do in your days, and communicate, and chat with people. You create events and you've planned parties, and you’ve designed products, and you execute, and you write code, then all of that stuff goes immediately into a store and it's immediately –

From creation is actually completely under the control of the user, so that is the SOLID vision, and that's the third way thatwe get through the space that we have complete control of our data.

So, you spend 95% of your life using the World Wide Web and you should spend that other 5% of your life helping protect it. Keep it open and free. Make sure that you are working to make the standards open standards, but also fighting to keep the Internet between all platforms keeping the Internet as an open platform. Depending on which country you’re in, at various different times we have to fight for net neutrality in and America that’s battle on net neutrality going on right now.

People have been out there in the streets, there are numbers of people have been writing to Senators, and in the US, a little gain in the Senate, but now that it is in Congress, which is getting more difficult. Each country has a time when the local industry tries to take control, tries to get a way of putting some special “bribery” system, taxation system onto the internet, and that will be a massive damage. Please help us join the Web Foundation and join me helping, fighting, to keep it open and free. Thank you very much.


Onstage dialogue between Sir Tim Berners -Lee, Emmanuel Daniel and Gordian Gaeta of The Asian Banker:

ED:    If we didn’t have net neutrality, what would – where would we be today?
TBL:  We would be headed to cable television, as it was in the USA. So, cable television, when you got cable television, you bought the cable lead and you paid for a certain amount of TV shows. And then you paid more money for sports, and you spent more money for news, and so on. And the cable TV provider completely determined what you could watch. Now, a lot of people in that industry would love to go back to that cable, you could watch anything over the internet. Because now we have, with net neutrality, we have a certain amount of connectivity, and just pay for bandwidth, service provision is fast, and reliable, and cheap.

And that’s all and then for the content provider. The internet got much faster, and faster, and faster, and in an incredible way cheap and fast data no one has done before. So, the Internet service provider industry has been very innovative and now provides faster services. But, it hasn’t had to worry about who produces the movies. The movies and the cool websites; they had to worry about how to get them connected. In the cable TV world, if you wanted to produce a really good movie, then you had to start negotiating with all of the individual regions. So, that’s horrible from the point of innovation.

ED:    Couldn’t both the models co-exist? that you will have players who want to have their own subdivisions and then just have choice?

TBL:  The market for connectivity and the market for contents are separate. That is what you hear and it has been much more healthy. You don’t see them coming together. Free data it sounds great for all intents and purposes. But it is very insidious. It means that they can get Facebook for free data on conditions that they share their data, they don’t pay for it.

Gordian Gaeta (GG):  A very good point that you make on connectivity has to be neutral, that is what you invented, ie a big system. Then you have to accept that content is not neutral; it’s privately owned. That means that data is privately owned and not neutral.

TBL:  So, you could put a whole lot of contents you can put your movies on the web. But then, when I watched it in what we call activity screens things like what I’ve been watching. I can – we can be clear either you can track it within YouTube, or whatever it is you use, on YouTube. Most of what I watch, we can track it on the browser history and I can feed it back to my AI to know..

GG:   And so, the problem is that the creation of the data and the recording of the data is increasingly separate. Those who record the data actually can use it. You can bring it back to financial services. The financial institution records the data, the customer creates it. Why shouldn’t the financial institution be actually entitled to use that data?

TBL:  Oh, I think they should be entitled to use it, yeah; certainly. So, for example, my bank statements. In the ideal world, when I swipe my credit card then waived my credit card. Then my password is changed, and I should have – there should be a computer that I have at home and computers in the bank should be in sync. Basically, the list of bank transactions for my checking account is a distinctive relationship between me and the bank. It should be something that I and the bank agree on at all times, and I should store it I have the same right to storage as they do. From the privacy point of view, I own it; completely legally I own that data.

So, if they want to sell it to an advertising company, then they have to talk to me.

GG:   Now, that is for the regulator to take the next step That is our next discussion and this is a very real position. You now have the same financial transaction. Your bank statement with a  non-regulated, non-financial institution. How does that then change the perspective?

TBL:  I think, of course, when you design a completely new system, then you have to design it. You have to design all the aspects of it. You have to design how you transfer money. But also, you have to decide on, is it – when you put in public do you use a traceable – do you put something in blockchain? Do you use it? Where do you put it there, so you can trace it what you spend your money on.  design a system to be more or less accountable, more or less – and so, yes, I think there are opportunities. I can imagine a system which is perfect for money laundering and the government will have to clamp down on it.

ED:    You seem to advocate that the owner of the data should have greater ownership of it, but you are not advocating it all the way. Meaning that if my data is mine then I decide who I want to give it to, for what purpose, and so on. Something has to happen to data to be within the control of the owner, and we’re not exactly describing what needs to happen. You are still advocating that data should be out there and they’re connected to each other and  neutral.

TBL:  Well, the need for the dropbox is, for example, is stuff you control who gets – it’s your data that you put in your dropbox and you can share it with professional people. You can share it with family members. So, imagine that when you run some new financial deals you have to log onto some financial services site, which is  advising you on your investments, or something, you can say all of the data  people use it, because if the data’s in the dropbox, people understand that it belongs to you, and so it's and you can understand the ability to share the data.

ED:    The ultimate data is identity is something which – after you invented the World Wide Web, the jokes that were going around was that the person on the other side could be a dog

TBL:  Now they know.

ED:    There’re so many other questions, and so on that we want to be to continue with you but before I invite our two panelists up, I need to take a selfie and put it up on my World Wide Web. Please thank Sir Tim Berners-Lee.

Categories: Data Management, Financial Institutions, Financial Technology, Risk Management
Keywords: Financial Institutions, Financial Technology, Data Management, Risk Regulation
Country: China
Region: Asia Pacific
People : Tim Berners Lee, Emmanuel Daniel
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