Leapfrogging to Leadership: Abu Dhabi Global Market’s Richard Teng
Matthew Van Buskirk
In financial innovation, we sometimes see the world turn upside down. What used to be disadvantage, becomes advantage. What once seemed like assets, become liabilities. The “new” somehow becomes better than the old, even where the old has seemed like a standard to which everyone should aspire.
This insight underlies the work of today’s guest. Richard Teng is CEO of the Financial Services Regulatory Authority of the Abu Dhabi Global Market.
Four years ago, the ADGM launched a bid to become the fintech hub of the MENA region -- the Middle East and Northern Africa. Their goal is to attract financial innovators from all over the world, with two enticements.
One is an enormous, young, growing market. Richard says that by 2050, this part of the world will account for 50 percent of global population growth. It contains 1.6 billion people, nearly half of whom are under the age of 25. Huge numbers of them are underserved or unserved by traditional financial services. That opens incredible opportunities for rapidly reaching scale, for companies that serve these consumers through new technology that can remake the cost and pricing structure of the industry.
The second attraction is to offer a modernized regulatory environment that supports innovation.
This insight is counterintuitive to many, but financial regulators throughout the developing world are rapidly moving to build 21st-century regulatory models that, instead of replicating the legacy design in the advanced economies, can leapfrog them. Since many of these regulators are not deeply invested in older technology, they have a chance to deploy newer, better tech, from scratch.
Richard notes that in many markets, the mental models of the system are stuck in physical infrastructure, making it much more difficult for fintechs to transform the whole value chain. In those economies, fintechs end up working alongside banks under entrenched infrastructure that make transformation take much longer. In emerging markets, in contrast, the rules are less defined and innovators can more readily transform the entire landscape.
Richard and I had our conversation on the sidelines at Money 2020 in Las Vegas last fall -- and he also spoke there at the regulator meetup. As we talked, he painted the picture of what’s happening in Abu Dhabi and the region. He shares how much VC capital is being raised by fintechs, how much investment is coming from regional governments, and how all three sectors are reinforcing each others’ efforts.
He also describes ADGM’s 3 year old regulatory sandbox, which is now called a regulatory laboratory and which has become the second most active sandbox in the world. It focuses heavily on the needs of underserved consumers and takes a blank sheet approach -- Richard explains the criteria for participating, what each sandbox company must be able to prove, and how ADGM designs testing and a safe control environment for each one.
He also notes that ADGM has created the region’s first digital banking license, and also a comprehensive crypto-exchange regime. They are the first regulator in the region to issue crypto guidance, robo-advisory guidance, and other cutting edge strategies that have attracted many crypto exchanges that were unable to find workable risk frameworks elsewhere.
We also, of course, discussed the risks of all this regulatory innovation. Richard shares his thoughts on the need for much more domestic and international regulatory collaboration; for assuring that regulators have the right expertise and resources (ADGM brings in experts from all over the world); the extensive hand-holding they do with startups on challenges like cyber-security; and much more.
Links:
More on Richard
Richard Teng is the CEO of the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), an award-winning International Financial Centre (IFC) in Abu Dhabi. Richard spearheaded the establishment of the financial regulations and financial centre, leading up to the successful launch of ADGM in October 2015. He oversees the whole spectrum of financial services spanning the banking, insurance and capital market sectors with integrated prudential and conduct supervisory responsibilities. He also leads several innovative ecosystem initiatives and the development of financial services offerings in Abu Dhabi.
With over 20 years of regulatory leadership and financial sector development experience, Richard is known for thought leadership on financial regulations, FinTech regulations, Belt & Road developments and governance. Prior to ADGM, he was the Chief Regulatory Officer of Singapore Exchange and was Director of Corporate Finance, Monetary Authority of Singapore.
More for our Listeners
Remember to leave us a five-star rating on your favorite podcast platform so we can help more listeners find us. Please subscribe to Barefoot Innovation -- our newsletter, podcast, and updates, donate to keeping the show going, and follow me on Twitter, LinkedIn, and Facebook. You can also visit AIR to learn about the Alliance for Innovative Regulation and the exciting work we are doing in the Regtech space.
We have wonderful episodes in the queue.
First, we have really thought-provoking shows coming up with two heads of US bank regulatory agencies: Comptroller of the Currency, Joseph Otting, and FDIC Chairman Jelena McWilliams. We have a show with Jeff Dyer about his book, Innovation Capital. We have a conversation with Ellison Anne Williams of Enveil. We have a fascinating discussion with Greg Becker, CEO of Silicon Valley Bank, and one with David Reiling, CEO of Sunrise Banks. And, soon I’ll be speaking with Sarah Willis of the Metlife Foundation and Allie Burns, CEO of the nonprofit Village Capital.
Upcoming Events
If you would like to book me to speak to your group, contact jay@provokemanagement.com.
Meanwhile, I’ll hope to see you at these events:
Paris Fintech Forum, January 28-29, Paris, France
Innovate Finance Global Summit, April 20-21, London, UK
Shared Assessments Third Party Risk Summit, April 29-30, Arlington, VA
LendIt Fintech USA, May 13-14, New York, NY
The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.