Interview: Niall Ferguson

Niall Ferguson has a call in a little over half an hour, he warns, after the introductions are done. He needs to call his immigration lawyer ahead of a naturalization examination he faces in the US on his return. As a professional historian at Stanford, he points out, it would be more than a little embarrassing if he failed to answer questions on the US constitution, for example.

“I know about the first and second amendments for obvious reasons, but I need to find out what the third one is,” he says, presumably joking. (Or perhaps not: Euromoney checked it later and it places restrictions on the quartering of soldiers in private homes without the owner’s consent, forbidding the practice in peacetime.)

Niall Ferguson Ferguson is in São Paulo in early April to deliver a keynote speech to Itaú’s annual MacroVision conference, which in 2018 has the theme of technology. Ferguson delivers a talk derived from the content of his new book ‘The Square and the Tower’, which, among other things, deals with the role of social media and the various models of interaction of these technologies with those who hold the power in nation states.

Whoever at Itaú invited Ferguson to address the conference couldn’t possibly have known that he would be speaking on the same day that Mark Zuckerberg faced questions from a panel of US senators.

His speech focuses on the US, Europe and China. Afterwards a Q&A session saw the historian pulled a little off his main theme; there was a question about Brexit and one about the Brazilian elections.

On the latter, Ferguson predicts that the use of social media will favour right-wing candidate Jair Bolsonaro, who has most followers. This goes against the local consensus that TV time and the machinery of the big parties’ local networks will still be more decisive than social media, given the relatively low influence of the internet across the country.

Mostly, however, he sticks to the US, China and Europe.

Euromoney meets with Ferguson later that day, a little uncertain about Ferguson’s range of knowledge and experience of Latin America. Such concerns were laid quickly to rest with Ferguson’s response to the opening question, which picked up on a point that he had made in his speech about the relative speeds of adoption of mobile payments in Asia (and China in particular) compared with the US. Could emerging markets in Latin America reach Asian levels of near-universal adoption of new payment technologies?

His answer revealed that he is on the board of directors of Argentinian financial technology firm Ualá, which already has 130,000 users of its mobile app that links to a pre-paid MasterCard, enabling payments and building credit histories for the large unbanked population in Argentina.

The reason, he says, that the US has been slow to adopt mobile payment apps is that the US system was good enough not to need urgent replacement, whereas in many emerging markets – and Asia is leading the way – the banking systems have evolved leaving large sections of the population behind.

He points out to another specific example of M-Pesa in Kenya.

“Any system of electronic, digital banking that lowers the entry barrier [for individuals] is likely to take off faster in emerging markets than in developed markets. We see this very clearly in Asia today, with Alibaba and Wechat; in different ways, these create very attractive and effective payment platforms that most Chinese people use. Even beggars take money on smartphones,” he says.

As an interviewee, then, Ferguson has range. And if the sheer breadth of his argument seems implausible, he peppers it with personal experience to back up the expansive oratory. In January he was in Hangzhou meeting the people from what he calls “financial Alibaba”, and he believes their technology is attractive to deploy in other emerging markets, in large part because it is a benefit to the many small businesses in these countries that are not being well served by the traditional banks.

“I think this is a huge deal,” he says, “and it gives China a large edge in EM. And that’s already becoming apparent in India and parts of southeast Asia.”

He says Chinese companies have been quick to partner with local fintech startups to enable these domestic firms to scale up effectively.

“This is happening in India and then these markets get drawn into the Chinese fintech empire,” he says, which could end up being a problem.

“The obvious unintended consequence of getting involved in Chinese platforms is that there is just no data privacy at all,” he adds.

Unfortunately for Silicon Valley companies, the recent Facebook data scandals have weakened their ability to contrast themselves favourably in terms of privacy: “But there is still a counter argument to be made that, ultimately, the US will do better than China on this front – though we are not there yet. As long as the platforms that the US produce are less effective for e-commerce then China is likely to win this global competition.”

However, presumably Ferguson will be wary of Ualá getting involved with any Chinese partner. “You have to look very carefully about what you are getting involved with,” he says.

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