Trust in finance, the rise of financial technology, and how it can be used as a force for good were debated by a panel at the University of Auckland Business School last Thursday.
“Finance is the bloodstream of the economy that determines what gets built, who gets backed, and which ideas have a chance to grow,” said Dr Drew Franklin from the Business School, who facilitated the panel discussion.
“At its best, finance fuels innovation, supports livelihoods, and spreads opportunity. At its worst, it concentrates wealth, extracts value and accelerates exclusion.”
The first question posed to panellists was: Is there a useful way to think about finance that helps make sense of both its power and its risks?
Professor Raghavendra Rau of Cambridge University described finance as how money is moved across time, giving the example of borrowing from your future self.
“So, essentially, the simplest financial transaction you can think of is I need money now, so I borrow the money and I will repay that money in the future. Possibly with interest, possibly with another stake, something like that.”
Trust in the financial system, according to Rau, is essential to ensuring the system doesn’t collapse and that money goes forward into the future. He said regulation can help build that trust amongst the ‘unbanked’ – those not in the financial system.
“Why am I unbanked? Because I don’t trust the system. Why do I not trust the system? Because I think it is being governed for the benefit of somebody else. So that’s why in a way, you need regulation because it serves a purpose to tell people that regardless of your level of expertise, you’re not going to be discriminated against, and therefore you don’t leave the system.”
Chris Swasbrook of Elevation Capital and current board member of the Financial Markets Authority expressed concern that in New Zealand there are ‘unbanked’ because of failing social safety nets and frameworks.
“There are some people that just check out and don’t want to participate. I fear the greater proportion of the unbanked in New Zealand now are those that are really less fortunate and suffering societal exclusion on a whole lot of levels.”
Finance sits in an ecosystem, according to Becki Butler of Tax Traders, and if the ecosystem is failing, then there is a duty of care to those people. According to Butler, for fintech to be a force for good, there needs to be a concept of dignity as a design principle, rather than profit in isolation.
“In many communities, finance hasn’t earned trust, and the way to do that, whether you align it with purpose or not, is through the process of transparency, inclusion and concepts like co-designing – bringing people in who maybe haven’t been involved before.
“I think we need to stop saying in fintech, ‘what can we build?’ and actually start asking ourselves, ‘who is this really serving and who are we leaving behind when we build in this way?’”
Decio Nascimento of Norbury Partners asked if different kinds of technology could be used in a way that people can balance each other out and make sure rules and regulations are not going in a specific direction.
“As an economist, I would say internalising externalities, and seeing how technology can do that, is a good way to keep purpose and profits aligned.”
Nascimento also talked about the importance of financial literacy.
“It’s a bit surprising if you think about it, that around the world you’re not learning about finance, economics and law…So a lot of the time, we are using a market mindset to think about the allocation of capital…. But what if the gap is financial knowledge?”
Dr Chanelle Duley from the University of Auckland Business School said, “I think a lot of the impetus for why we’re all here today is that we notice that capital is highly concentrated, and there’s a lot of discrepancy in who holds these resources over time and across different cross-sections.”
Dr Duley pointed to decentralised finance, saying that with it being a brand new financial landscape, it had seemed to offer an opportunity to reset everything, but ended up with discrepancies in the concentration of capital.
“In theory, we were all starting off at an on equal footing, but what we observed, and I think that speaks to finance more generally is how very small asymmetries to begin with, when people start off on very slightly different footing and runs of luck can lead to vast discrepancies in the concentration of these resources over time.”
Dr Duley thinks the general public should work on financial literacy, but that innovative products like crypto also need to be brought into the regulatory net.
“A lot of the innovation in fintech has unlocked a customer base who are potentially less financially and digitally literate than a lot of the traditional financial world. And so I would say the responsibility is partly on the general public and we all should upskill and be open to these tools, explore them, work on our own financial and digital literacy because that makes us resilient against cybercrime, but it’s also on these fintechs to understand, to put effort into understanding the regulatory environment and work with the regulators.”
According to Swasbrook, the financial system works if it sticks to some basics, and fintech fits in with every other traditional financial service that is offered in the marketplace today.
“You need very clear railway tracks and a regulator that regulates according to the laws and provides clear frameworks.”
The panel discussion concluded with a Q&A session, and the audience had the opportunity to ask questions to the panellists. During the session, there were also group discussions around questions like, “If finance is meant to serve society, what’s one principle or value you think should guide how it works and why?”
This event was the first in a dialogue series bringing together voices from academia, industry and government to collectively reimagine the systems and structures of capitalism to better fulfil their promise to society and our environment.
Panellists
Professor Rau is the Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge Business School. He also holds the Gresham Chair in Business at Gresham College and the Ambank Chair of Financial Services at the Universiti of Malaya.
He is the incoming President of the Financial Management Association, a past president of the European Finance Association, past Vice-President of the Financial Management Association, and a past editor of Financial Management.
He is a founder and director of the Cambridge Centre for Alternative Finance (CCAF) and a member of the Cambridge Corporate Governance Network (CCGN). He also serves on the editorial boards of several journals including the Journal of Corporate Finance, and the Journal of Banking and Finance, among others.
Chanelle Duley is a lecturer in the Department of Economics at the University of Auckland Business School. Her research focuses on international and financial economics, with interests in globalisation and digital finance. Dr. Duley’s work has been published in leading journals, including the Journal of Political Economy: Microeconomics, where she co-authored a study on the economic and social complexities of migration policies. She is actively involved in teaching and mentoring, contributing to the academic community through her research and professional activities. Dr. Duley has collaborated with central banks in New Zealand, Canada, Germany and the Bank for International Settlements on policy issues relating to cybersecurity, cryptocurrencies and central bank digital currency (CBDC).
Becki Butler
Becki is the Co-CEO of Tax Traders and is known for her commitment to seeing business embrace regenerative capitalism to solve the complex problems that the world faces, intersecting positive social impact with competitive advantage, and higher market capitalisation. Becki has studied Profit and Purpose: Creating Shared Value by Michael E. Porter and Mark R Kramer at Harvard Business School. In 2022, Becki was made a Fellow of the Chartered Institute of Marketing.
Decio Nascimento
Decio Nascimento is the Founder and Chief Investment Officer of Norbury Partners, an investment firm that integrates fundamental discretionary macro and sustainability analysis into its decision-making process. In addition to his role at Norbury, Decio serves as Chief Intelligence Officer at 6DI.
Previously, he was a co-founder and Chief Investment Officer at Richmond Global Compass, where he designed one of the first multi-asset investment strategies to incorporate material sustainability factors into a highly analytical framework.
He holds an MBA from Yale School of Management, where he is a guest lecturer on Integrating Sustainability into Asset Pricing and Portfolio Management. He serves as a board member at the Norbury Foundation and Ample and is also a member of the Forbes Finance Council, the Milken Institute Young Leaders Circle, and the NationSwell Council.
Christopher Swasbrook
Christopher Swasbrook is the Founder and Director of Elevation Capital and Co-Founder and Director of NZX-listed New Zealand Rural Land Company. He is also Chair of the Auckland Future Fund and Executive Chair of McCashin’s Brewery Limited. Previously, he was Chair of NZX-listed Allied Farmers, Director of NZX-listed Mowbray Collectables, Director of NZX-listed Satara Co-Operative Group, and Director of Ruapehu Alpine Lifts.
Early in his financial markets career, Mr Swasbrook became a Foundation Broker of the New Zealand Exchange (NZX) after having been a Full Member of the New Zealand Stock Exchange (NZSE). He became Partner and Co-Head of Institutional Equities at Goldman Sachs JBWere (NZ) in 2003.Mr Swasbrook is currently a Board Member of the Financial Markets Authority (FMA), having previously served as a Member of the NZX Listing Subco mmittee (2008-2023) and a Member of the New Zealand Markets Disciplinary Tribunal (2013-2023).
Event facilitator
Dr. Drew Franklin is a Senior Lecturer in Marketing and Associate Dean of External Engagement at the University of Auckland Business School. Drew also serves as Associate Director Strategic Engagement for Juncture: Dialogues on Inclusive Capitalism. Drew’s research centres on marketing relationship dynamics, particularly trust, and the impact of emergent technologies on business and marketing practices. Prior to his academic career, Drew enjoyed 12 years of global experience in sales, marketing, and business development across North America, Western Europe, and developed Asian markets.