The future risks of banking


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Address to banks about the future of banking in India. Particular focus on the global network of ownership and its impact on the global economy and the risks to banking with reference to the UID.

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  • The future risks of banking

    1. 1. The Future of Risks of Banking Inaugural Address at Bankers Meet (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    2. 2. Occupy Wallstreet (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    3. 3. Occupy Wallstreet • Occupy Wall Street is a people-powered movement that began on September 17, 2011 in Liberty Square in Manhattan’s Financial District, and has spread to over 100 cities in the United States and actions in over 1,500 cities globally. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    4. 4. Why Occupy? • #ows is fighting back against the corrosive power of major banks and multinational corporations over the democratic process, and the role of Wall Street in creating an economic collapse that has caused the greatest recession in generations. • The movement is inspired by popular uprisings in Egypt and Tunisia, and aims to fight back against the richest 1% of people that are writing the rules of an unfair global economy that is foreclosing on our future. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    5. 5. Web of ownership • From Orbis 2007, a database listing 37 million companies and investors worldwide, Swiss researchers pulled out 43,060 TNCs and the share ownerships linking them. • They found a core of 1318 companies with interlocking ownerships had ties to two or more other companies, and on average they were connected to 20. • Although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world's large blue chip and manufacturing firms - the "real" economy - representing a further 60 per cent of global revenues. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    6. 6. Vitali S, Glattfelder JB, Battiston S (2011) The Network of Global Corporate Control. PLoS ONE 6(10): e25995. doi:10.1371/journal.pone.0025995 connected 1318 (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    7. 7. superowners • When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies, mainly banks and other financial institutions, - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    8. 8. Superconnected 50 1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co 
7. Legal & General Group plc 
8. Vanguard Group Inc
10. Merrill Lynch & Co Inc 
11. Wellington Management Co LLP
12. Deutsche Bank AG
13. Franklin Resources Inc
14. Credit Suisse Group
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp
17. Natixis
18. Goldman Sachs Group Inc
19. T Rowe Price Group Inc
20. Legg Mason Inc
21. Morgan Stanley
22. Mitsubishi UFJ Financial Group Inc
23. Northern Trust Corporation
24. Société Générale
25. Bank of America Corporation
26. Lloyds TSB Group plc 
27. Invesco plc
28. Allianz SE 29. TIAA 29. TIAA
30. Old Mutual Public Limited Company
31. Aviva plc 
32. Schroders plc
33. Dodge & Cox
34. Lehman Brothers Holdings Inc*
35. Sun Life Financial Inc
36. Standard Life plc
37. CNCE
38. Nomura Holdings Inc
39. The Depository Trust Company 
40. Massachusetts Mutual Life Insurance 
41. ING Groep NV 
42. Brandes Investment Partners LP 
43. Unicredito Italiano SPA 
44. Deposit Insurance Corporation of Japan 
45. Vereniging Aegon 
46. BNP Paribas 
47. Affiliated Managers Group Inc 
48. Resona Holdings Inc 
49. Capital Group International Inc 
50. China Petrochemical Group Company (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    9. 9. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    10. 10. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    11. 11. Making the economy fragile • Failure of one node causes similar failures in linked nodes that propagate throughout the system, creating large scale collective failures. • The global banking network's activities are directly responsible for the majority of the financial woes that have befallen the global community, especially since the 2008 events that have put the financial system into meltdown mode. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    12. 12. Making an economy fragile • Connecting hundreds of unconnected networks. • Few nodes in control of entire network. • Many nodes connected to 2nd or 3rd order nodes resulting in auditors nightmare. • Amplifying fraud through networks. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    13. 13. The UID Initiative • Multiple ID’s linked by UID. • Few foreign companies control all nodes. • Many sub-registrars and even more enrolling agencies with no accountability resulting in auditors nightmare. • Fraudulent ID’s propagate through the system. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    14. 14. Registration of UID
    15. 15. Issues of UID Registration • Who certifies each UID, KYC? • Who audits each UID, UID enrollers, registrars? • Who owns the UID? • Who is responsible for privacy? • Who is responsible for security? • Who has legal liability? • Who is responsible for frauds? (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    16. 16. Using UID to Open Bank AC
    17. 17. Issues of UID Bank AC • Who certifies each Bank AC? • Who audits each Bank AC? • Who owns the Bank AC? • Who is responsible for privacy? • Who is responsible for security? • Who has legal liability? • Who is responsible for frauds, fake ACs? (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    18. 18. Using UID for Cash Transfer
    19. 19. Issues of UID Cash Transfers • Who certifies each Transfer? • Who audits each Transfer? • Who owns the Money? • Who is responsible for privacy? • Who is responsible for security? • Who has legal liability? • Who is responsible for frauds, money laundering? (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    20. 20. Using UID to Authenticate
    21. 21. Issues with UID Authentication • Who certifies each Authentication? • Who audits each Authentication logs? • Who owns the the Logs? • Who is responsible for privacy? • Who is responsible for security? • Who has legal liability? • Who is responsible for frauds, fake ids, identity theft? (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    22. 22. The UID issues • Assumption: Uniqueness of UID. • Assumption: Any UID corresponds to only one real person. • Private party “verification” and “KYC” in UID numbers. • No verification in cash transfers. • More than 1.2 billion UIDs on completion. • Assumption: UID or identity will result in financial inclusion. • UID solves the gap of 18,950 rural branches to service 593,731 villages or 31 villages to a branch. • UID will accomplish what banks have failed to do in 66 years: 40,000 persons per rural branch if they were reachable. • UID will solves the gap of 38,592 branches to serve 5,161 cities and towns. • UID will accomplish what banks have failed to do in 66 years: 7,500 persons per urban branch if they were evenly distributed. • Assumption: Fraud free transfer of trillions of Rupees in subsidies per year. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit
    23. 23. The Future of Banking • Propagating extremely high risk to banks. • Creating a very fragile economy. • Making India vulnerable to financial terrorism. (c)2013AnupamSaraph.ThisworkislicensedundertheCreativeCommonsAttribution-NonCommercial-ShareAlike3.0UnportedLicense.Toviewacopyofthislicense,visit