1507: Digital Human & Digital Bank, Launch A Digital Bank by Chris Skinner

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your financial Independence Day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors. Welcome to episode 1507. 1507. And hey, I've been right about a lot of predictions. Maybe, maybe, maybe this is just another one. Yesterday, not less than yesterday, I talked about helicopter parenting when I was giving advice to our listeners based on, I believe it was a tools question about moving out of the San Francisco Bay area. I think that was where that came up as I recall. And then today, today there is an article in the Wall Street Journal that says, has Covid brought an end to helicopter parenting? The pressures of the pandemic have forced families to abandon the hyper vigilant approach popular since the 1990s that could help kids become more independent. Yay. And of course the article has, but also comes with risk. Oh my God. Guess what everybody? If we want a risk free life, we have to either be unborn or dead. Everything between those two bookends is filled with risk. Filled with risk. Yes, living is a risky endeavor, no question about it. But you know, this hyper vigilant helicopter parenting approach. By the way, this is a financial show. We'll get to that in a moment. It's been popular since the 1990s. Guess who was probably born in the 1990s? Millennials. And also Gen Z. Right, but millennials especially. We don't know enough about Gen Z yet. Too early to tell how they're going to turn out. But millennials most definitely the most catered to generation in all of human history. Like not even close. Now this article in the Wall Street Journal backing up my thesis from yesterday. Right. See, now I can. Maybe I'll start a new podcast about parenting advice. Yeah, parenting advice by a completely unqualified non expert, yours truly. It says about half of. I guess they did a survey of about 2,000. A little over 2,000 adults said they are allowing their children to go to bed later 46% of them and wake up later, 51%, and are allowing more screen time, according to a May survey conducted by Harris Poll on behalf of the University of Phoenix. A separate poll found that nearly 30% of parents said their child rearing styles are at least somewhat or much more relaxed than normal, according to a June survey of 900 parents by Pittsburgh based consumer research firm Civic Science. Okay, so, folks, look, my comment. Not that I know anything. I'm going to just really encourage everybody to end the helicopter parenting. Kids have got to develop some of their own strength. They've got to have some of their own hardships. And not only that, back in the day, I know it seems like forever ago when you were carting your kids around to soccer practice and musical instrument practice and being a chauffeur all the time. I'm absolutely shocked at how parents are literally chauffeurs. I'm sure you're amazed, too. Parents, when you're carting your kids around all these things and making sure your kid has not one second of downtime. Think about that. Was that anything like your childhood? No, of course it wasn't. You had a lot of downtime. I'm sure you had downtime to think, to be creative, to explore your world. You know what I used to do all the time? I used to read. I remember this because I always read it. Maybe you remember this book. I don't even know if it's still around, but it's called the Book of Lis and Then Almanacs. I used to love to read Almanacs and the Book of Lis. That's plural. Liszts. How do you say? It's hard to say without a lisp. I used to read those all the time, and I just found it fascinating. And, you know, other stuff, too. And I used to explore things. I think that was really good for me to have downtime, even to watch tv. And now we didn't have the Internet back then because, you know, I grew up in the Stone Age, but I just can't imagine this is good for kids to be carting them around, catering to them, helicopter parenting all the time. I used to ride my bike all over Los Angeles, like miles and miles and miles away from my home. Miles and miles. I used to go get my own meals at McDonald's and restaurants and all this kind of stuff. Not saying McDonald's. I never eat at McDonald's anymore. It's disgusting. But you get the idea. Like, look, folks, your kids gotta do some stuff by themselves, Help them grow up that's all. I'll shut up now. That will be the conclusion of my parenting advice on this show. You're never gonna hear it again. Well, I might break that promise. I'm just gonna warn you in advance, but Wall Street Journal even thinks we might be at the end of helicopter parenting. So I just finished an interview I was on with Rick Sanchez with RT Tele today, and he asked me to come on and talk about how the banks. The banks are stockpiling money. What does this mean? What does this mean? Well, they have stockpiled the three biggie banks. JP Morgan, Citigroup and Wells Fargo. Yes, the crooked scam artist at Wells Fargo. Hey, they're all crooks, okay? I'm not gonna. Not gonna just pick on Wells. But that's the one to pick on in the last few years because they are disgusting. It's like Wells Fargo, a scandal every week. Who are we ripping off this week? And what government Fine. Are we going to pay this week? Ask Wells Fargo. Anyway, they've stockpiled these three big banks about $28 billion. Now. Compared to what is the question? Compared to what is the question? Okay, so if you compare this, and I am looking at a chart, and you know why I love charts? Because they always answer the Jason Hartman question, which is, compared to what? And compared to the second quarter of 2019, when this chart starts, you can see the three big banks. The biggest one of them, JP Morgan, they were stockpiling about $2 billion. That's one year ago. $2 billion. Now, in the last quarter, they stockpiled about $12 billion. Or no, no, sorry, 10.5 billion, to be exact. $10.47 billion. The chart goes up to 12 billion. And it looked like the graph was hitting the top, but it wasn't. I stand corrected. So 10.47 billion. JP Morgan Chase and Wells Fargo stockpiled almost 10 billion, 9.75 billion, and Citigroup a little bit less. Okay, so the point is they are getting ready for a wave of defaults. And I'm not talking about mortgages here. Mortgages are just one part of the portfolio that these banks are. Well, that they seem to be worried about. We don't know what they're thinking, but by their actions, it looks like they are getting ready for a wave of auto loan defaults, credit card defaults. I don't know how much they play in the student loan market, but there's going to be a lot of defaults there. We've talked about that extensively. Not dischargeable in bankruptcy, et cetera. Total scam. Harvard disgusting. Shame on Harvard. As we talked about, I think last week, everybody's got to go do their classes on a 13 inch laptop screen. But we're not lowering our prices at all. We're still going to charge you $47,000 and change to attend Harvard online. It should be like $5. What a complete scam. I am so glad the student loan debt enslavement complex, well, the government student loan debt enslavement university disgusting complex is coming to an end, folks. Thank God for COVID 19. It has put a nail in the coffin. Everybody has realized that the emperor has no clothes. This is a scam. They have been scamming people for decades and it's finally, finally going to start. The end, the beginning of the end is here. Oh, by the way, I want to make sure I mention we have our first live stream tonight. Yes, we're live streaming and so that'll be on my YouTube channel and on our Facebook page. Our Facebook. By the way, the name of our main Facebook page is jasonhartman.com yes. So you go facebook.com jasonhartman.com and it comes up and we'll be live streaming there. If you're friends with me, if you're one of my 5,000 friends on Facebook, unfortunately, you have to cap out at 5,000. It goes onto my personal page as well. So come on live stream. Join the live stream, Ask questions, get your questions answered and we might surprise you and invite you right on on camera with us as well. And we're going to have Evan and Lisa, two of our team members, on with me to do this live stream, talking about some interesting stuff. And we plan to do those regularly. So if you can catch it tonight, it's at 8:00 Eastern. 8:00 clock Eastern. And then of course, you can watch the replay on the YouTube channel or the Facebook pages after that. But if you want to catch it live, ask questions, get your questions answered. Join us, Join us live this evening. You may not hear that soon enough, but it's 8 o' clock Eastern, 5 o' clock Pacific tonight on YouTube and Facebook. So anyway, as we are in the third inning, I believe, of this whole pandemic and as we are operating, one of the things Doug and I talked about this morning, by the way, you've heard Doug on the show many times and Doug and I were commiserating over the idea that everybody is just assuming. They're making a giant assumption about this. They're making an assumption that I mean, everybody's making this assumption. What assumption are they making? They're making the assumption that a vaccine is coming. Why are they making that assumption? I mean, maybe a vaccine will never be developed. Maybe there will never be a vaccine and we will have to socially distance until the entire planet achieves herd immunity, which could take a long time and we could have a lot of illnesses before then. You don't know. We're operating under a faulty assumption in my opinion. And then Doug volunteered a story about a disease. He couldn't think of the name of it, so I can't share it with you, but some disease that was a pretty big deal in South America and they finally came out with a vaccine but the vaccine was worse than the disease. See, sometimes the cure is worse than the disease, as that old saying goes. You know, we don't know. Let's not assume that there's ever going to be a vaccine. Hopefully there will. But again, we don't know. We just don't know. Anyway, hey, today we're going to talk about digital banks and how you can actually create your own bank. Would you like to have your own bank? No, this is not about infinite banking or something like that. This is about a real digital bank. So you're going to hear about that. It's interesting and I think you'll like it. And so let's dive into that. Be sure you get your tickets for our upcoming Meet the Masters and tickets selling like hotcakes and you know, hotcakes, they go fast. So Jason hartman.com masters for that early bird pricing available on the second tier of early bird available till Friday of this week. So get those tickets right now and let's go to our guest and let's talk about digital banking and we are going to have a little cameo appearance from George Gammon in this show as well. So here we go. You've heard him on the show before and it's my pleasure to welcome George Gammon back just for a brief discussion of what he is going to talk about at our upcoming Meet the Masters of Income Property conference. This is the first time we've done it virtually. It's our 22nd anniversary event and George, we are so excited to have you tell us what you are going to be sharing with our attendees.

Well, I just can't wait, first and foremost, Jason, to get there and share hopefully what's going to be some knowledge bombs and some serious value with your listeners, with your viewers or the people that are going to attend this virtual conference. So the first thing I'd like to talk about is something that nobody understands. And I think it's just going to blow people's mind. And that is in the most recent tax bill that came out in 2018. The tax bill that we thought lowered people's taxes actually is going to increase people's taxes substantially over the long run. So how is this going to happen? Because they switched the CPI measurement and that's the rate of inflation for the tax brackets. So if they increase the tax brackets too slowly, in other words, they use a rate of inflation that understates the the CPI dramatically, then the tax brackets will move up slower. That means you are going to pay more and more of your income to the government over time. And I won't go into great detail, but trust me, this is something that everyone is going to want to find out about. Take notes so you can prepare in the future so you're not getting ripped off by the government.

George, that is fantastic. I saw you talk a little bit about this before with your famous whiteboard and you're great with the whiteboard for sure. That is a super important topic and it is amazing the kind of really sleight of hand that the government plays with the irs, with monetary policy, with fiscal policy. It's just incredible. And it's so important that people understand this, isn't it?

It absolutely is. Because as real estate investors, we can take advantage of certain tax opportunities. We've got depreciation. I mean, you go this in a lot of your videos and I'm sure we'll be talking about it more at Meet the Masters. But we're going into an environment in the United States where taxes are going to increase. I can almost promise you that. Whether it's corporate taxes, whether it's income taxes or maybe capital gains tax. So you need to be cognizant of what's going on because you've got two options right now going into the future. You can either be prepared or you can be a victim. And personally, I'd rather be prepared.

Yeah, absolutely. Well, we can't wait to have you. And it's your first time speaking at Meet the Masters. We originally folks had this scheduled as a live conference. It will be live now, but it's virtual. But it was going to be an in person physical conference, I guess I should say, in Southern California. And then we postponed that and turned it into a virtual event. So here we are. George, we can't wait to have you. And thank you again for joining us. And I'm sure the audience is Just going to be really looking forward to what you have to say. So thanks again.

All right, buddy. Well, I can't wait to see you and everyone else, July 31, August 1 and August 2. We'll see you there.

You got it. Looking forward to it. It's my pleasure to welcome Chris Skinner. He is chairman at the Financial Services Club and founder of Financer. He's author of the best selling books Digital Strategies to Launch or Become a Digital Bank. Digital the Fourth Revolution of Humanity includes everyone. And the new book Doing Lessons from Leaders. Chris, welcome. How are you?

Yeah, I'm good, Jason. Thanks for having me on.

It's good to have you. And you're coming to us from Poland, a great place I've been to many times. What city are you in?

Just outside Warsaw, in the suburbs. Luckily, we moved to a place with a big garden in November, so it's not been so bad for the last three months when we couldn't get out of the house.

Right, Absolutely, yeah. The world has really changed and all of this change is accelerating what economist Joseph Schumpeter called creative destruction. And it is really accelerating change in the world in so many ways. A lot of it for the good. I mean, a lot of things that would have taken five or 10 years to happen in terms of convenience, technology, so forth, are happening right away. There's definitely some good that's coming out of this, no question about it. But tell us what's going on in the world of money and banking and how that affects all of us and the economy in general.

Well, I've been saying for a long time that banks are challenged fundamentally by technology because they have in many instances not upgraded their systems for over half a century. A stunning statistic from Reuters is that 43% of the big bank systems in America run on Cobol. That was developed back in the 1970s in most cases. So this is an issue because today everything is being born on the Internet and everything is moving to be cloud computing based and allowing people to plug and play software wherever they want to be able to work in whatever way they want. And that's led to what's called a fintech revolution. In the last decade, and in particular in the last decade, there's been a big pressure on banks to move to being more digital. And they've resisted that move because they have leadership that doesn't understand technology that well. And then the lockdown arrived, everyone had to work from home. And they've all suddenly found that they left those decisions way too late because they didn't have a digital backup to their physical operations. They only had physical backup and suddenly they needed digital backup and they didn't have it. We're going to see a massive change, not just in banks, but in retail and all institutions to digitalization over the next couple of years. That might have taken a decade. It's going to happen in 12 months.

Yeah. Their old systems, the software that runs their businesses, just won't integrate with the Internet. Or how does that play out?

Well, a lot of people describe the systems of any large institution that's been around for more than 50 years as spaghetti structures. And what they've got is a lot of underlying core technology that's dating back to the 1980s, 70s, or if you've been in some cases, the 1960s, you wouldn't believe. And they've layered everything on top of it through the years. So it's now become incredibly complex. I liken it to the New York subway. If you try and put in a brand new subway line, navigating through the existing subway system is incredibly difficult. And that's what banks are trying to do and large companies are trying to do when they add the Internet to their old systems. Instead, what they should be doing is re architecting completely fresh and new for the Internet era and the digital era, eventually dumping all those old systems.

So tell us how it will change. I mean, what can we expect? And what will happen to the criminal organization known as Wells Fargo or the criminal organization known as Chase or Bank of America? They've all had their foibles, but lately Wells, wow. It's like one scandal after another. It's incredible. Are these banks just going to kind of fade away? Will we all be using Venmo or what's going to happen? What does this future look like?

Well, I keep coming back to the fact that unfortunately, the big banks will not go away, they'll just get bigger. We thought they would disappear after 2008 and the global financial crisis, but they've actually gained market share and they're bigger than they ever were.

And they've consolidated more. There's a lot less choice. Right. Because the too big to fail created a consolidation of power.

Exactly. And that will continue. And a lot of that's to do with the way in which the financial system is completely integrated into the governmental and economic system. And so you can't take that away. And because a lot of it's to do with trust and regulation, then it's very difficult for it to change. And in my lifetime, I've spent many Times thinking that banks would eventually disappear, but they just get bigger because of that regulatory structure. There's an interesting statistic again in the US which is the average bank in America deals with 128,000 regulations. The average technology company deals with 27,000. So it's five times more regulations to deal with than if you're dealing with pure technology play. But what is happening is the pure technology players are starting to make an impact, particularly around credit, loans, payments and savings. So you're absolutely right when you mentioned Venmo or Square or Stripe or Lending Club. Sophie. All of these new companies that have just appeared in the last 12 years, born on the Internet after the financial crisis, are really starting to have an impact. But the impact is on the margins and profits. It's not on the core business of banking.

But Stripe isn't a bank, for example, that's just a merchant credit card processor. Right. Or is it more than that?

It's a little bit more than that. I mean, they're my favorite fintech company. And fintech is this term that describes the integration of finance and technology that's come around in the last just over a decade. And a lot of that's resonating around cloud computing, the Internet and platforms and marketplaces, which are all terms you'll hear.

But I don't get it. I mean, authorize.net, a big old credit card processor, they have a website, so does Stripe. Stripes is better. But what's the real fundamentals?

Stripe's unique aspect is that they offer beautiful piece of code that allows checkout to be created really easy and simply for anybody trying to merchant checkout as a company on the Internet. And it's just seven lines of code. And they launched in 2011 and they're now worth 36 billion.

Oh, I know, they're amazing. I follow their story.

If I put that in context. One of the oldest and biggest banks in Germany is Commerzbank and stripe is over 7 commerce banks in value. Isn't amazing, it's a phenomena.

Yeah, but just to ferret that out a little more, and we don't have to belabor this point, if you Sign up with Authorize.net to do your merchant processing, that's sort of an old company or you sign up with Stripe, I mean, they both have integrations. A lot of various merchant websites just have like a one click integration. They'll both integrate. Right? Or what am I missing there that makes Stripe such a big deal?

I think it's the simplicity and beauty of the Code that they developed and offer. And they do have competition, but it's not from companies like authorized.net, it's more from companies like Adyen or Alipay, players from different industries and countries and different markets. And the reason why Stripe's been so successful is that they got a lot of traction with the new big players, the sort of Ubers or Lyfts or the Airbnbs of this world. And as a result, that traction gained a lot of momentum. And when people are developing code, they look at the plug and play code, which are called APIs, that they can get from other players. What they tell me is stripes, the engineers and developers that are developing code online look at their code and go, oh, it's just art. It's beautiful. It's almost like saying, would you rather have authorized.net, which would be, let's say U2, or would you like to have Snow Patrol or Taylor Swift or whatever? But it's kind of. Do you want some old guys on the block or the new guys?

Yeah, yeah. Something a geek would appreciate for sure. Okay, what about all the other services that bank. I mean, banks offer a variety, a whole cafeteria of services, and they largely suck at it. They're pretty bad. The service is pretty terrible at banks. Everybody complains about them, kind of the way people used to complain about the phone company, the old traditional phone company. Are these services all discombobulated among a bunch of different companies now? Or maybe none of them exist outside of banks? In terms of certain services, there's a whole infrastructure of various services, right? A big variety.

Yeah. I mean, what's happening, and I often talk about this specifically, is that there's thousands of new companies doing one specific thing, like the stripes and the adjuncts of this world and the squares, just doing retail payment or merchant payment online with a bit of code. So that's stuff that is replacing just a very small piece of processing within the financial network. And when you think about the financial network investing in mortgages and real estate and payments and high street deposit taking, full service accounts, et cetera, et cetera, there's a myriad of services that banks are offering. And what's actually going to happen over time is they're going to start providing those services by picking these guys who are the new kids on the block and bringing them to the customer. I call it the curation of technology, which banks haven't got there yet, but some are moving in this direction more and more quickly of saying, we know we can't develop Everything ourselves, we're not good at everything. We're going to start bringing the best things out there to the customer and we'll do the integration, we'll do the delivery. Because why should you or I as a customer go and find out can I trust Stripe or Square or Adyen or Alipay? Let the bank do it for me and then bring that to me and make it something that's a really great service.

One of the bank names that comes to mind that was probably from the sort of the first dot com bubble era is Ally Bank. You know, I remember I called them once and it seemed as though the disconnect was they just do consumer banking and I need business banking. So they weren't for me. These old fashioned banks really seem to still have a lock on like real business level services when it comes to banking. I mean, I assume that will change but with all the know your customer rules and so forth too, how do you really operate an online bank when you can, you can't meet your customer. That's I guess another part of it. Right.

Well times are changing and it's all around timing to be honest and that for many years there's been many technologies. Everyone's forecast will change the way we do travel, shopping, buying houses by doing banking, you name it. And it hasn't actually made huge differences yet. So Alibank was kind of maybe before their time and now you've got Chime in the US which are doing pretty well. And in the UK it's been really interesting because there's lots of new banks that have been launched. The two biggest names are Monzo and Starling and Starling has only been going for three years, already has almost 3% of the UK small business marketplace. Monzo's got 3 million account holders which is pretty substantial in a market of 30 million accounts. So you start to see changes happening and it's just timing. And one of the really interesting things about the likes of Chime and Monzo is what they end up doing is becoming quite hip and cool as brands because people like to show their card and their service and so they get your lifestyle payments and services. And the old bank still, maybe you have account with them, you still might have an account with a Wales or a Chase, but they become boring old bank with boring old bills. So it's your utility bills for electricity and gas or whatever, it's your mortgages and loans and foreign exchange, but your everyday living is in the new hip and call bank.

Interesting. Hey, let's switch gears and talk about your other two books for a moment, if we can. Well, really not two, but first of all, strategies to launch and become a digital bank. Can anyone do this? Is this a business opportunity for the common person or is it still only for banksters? Banksters.

It's for anybody. It's for absolutely anybody. One of my favorite stories was a bank that was launched in Britain. Unfortunately it didn't succeed for various reasons, mainly to do with funding, but it did get quite a lot of users and a lot of support amongst the millennial and Gen X community. And it was a bank called Loot, launched by a 21 year old university dropout who was a law student.

Yeah, Loot. Love it. But in the us, I mean you've got to get FDIC insurance and that's got to be super complicated navigating that. You've got to have a million FBI background checks and tons of regulations. So when you talk about launching a digital bank, is that outside of the US or can you do it inside the US?

Monzo and N26 and others are coming to the US and Europe and what they've realized is that the best way to start a bank is not to be a bank, it's to be a prepaid card with a cool brand. And then you build the online community, the social network of finance, and you do it in such a way that people like the way that you talk and the transparency that you offer and you gradually launch more and more services. And Luke, going back to being launched by 21 year old university dropout, again, it wasn't a full bank. What it provided is the front end app and it then brought in APIs and back end services from other providers who did a lot of the regulatory piece, for example. So Wirecard is a big financial back office provider in Europe that does a lot of the pain of regulation and allows people to go on and do the cool stuff at the front.

But how much capital are you talking about that someone needs to start a bank? I mean that sounds like just a giant undertaking. I do see the way, I see the path that you mentioned and I think that is really cool by the way. You start with your audience and you start with maybe one application and you build from there and just keep adding services. But when do you become a bank bank? Sort of. What's the definition of that? I guess when you take deposits. Right, That's a bank.

I mean to be a full bank you have to take deposits and that's when you have to have the FDIC capital coverage of all of your operations. And you also have to have the due diligence, the Federal Reserve looking over your shoulder, making sure that you're doing the right things, you've got the right governance, the right people on the executive team, et cetera.

That sounds like a lot of money in compliance cost in lawyers, accountants, auditors, et cetera, software.

Jason, the minimum amount you need to be a full service bank from the get go is $30 million. And that's just to get the license. That's not to launch the operations, that's just to get through the gate.

Right. So $30 million is considered ultra wealthy. 30 million net worth and above. And so I don't think a lot of our listeners will qualify for that. I actually know that a couple of them will.

If you roll it back to my university dropout, you can launch the tertiary services with $50,000. You don't need 30 million. And then you build and build and build. And as you get the momentum, you get the venture capital and investor support, you get the customer support, and you take it from there. It's step by step. Don't try and eat an elephant all at once, one piece at a time.

Okay, so the future. In your book, the Digital Human, you talk about robotics and other fascinating things. Let's switch gears and talk about that a little bit.

Yeah, I mean, I'm a big fan of technology. I've always been in the technology industry in financial services, which is why I always talk about those two things. And I always focus on the future because that's what we don't know. But what was interesting is that until the pandemic, I've pretty much been traveling non stop for a decade and I've seen nearly every nook and cranny of the world. And I generally ended up in museums and churches and temples, learning a lot about the history of humanity. And it kind of struck me during those travels that we initially became human because of shared beliefs, because we could communicate, because we have a voice and a larynx. Then we had another revolution when we became civilized and created farming so we could live in cities and towns. And at that point we invented money. Then we had another revolution when we started to connect across borders and across continents and went through the industrial revolution, which is when we invented banking. And now we're going through another revolution because for the first time ever in humanity's history, every single human on earth can connect directly in real time, anytime, all the time. And you and I are experiencing that right now because we're on different sides of the world. And I have zoom calls almost every day where I'm meeting people in every single country of the world. The fact that I still have that global connectivity, although I'm sitting at home for the last three months, is quite incredible. That's never been something available to humanity before and it's changing the way we think and do things. And a lot of what's happening right now is going to turbocharge that technology transformation. I just was writing something about 2030 arrived in 2020, which is because when everyone's been locked in at home, suddenly everyone said, well, we have to do things differently. We have to shop from home, get everything delivered. And that behavioral change is going to be a fundamental shift that will actually impact your audience massively. Because of the real estate drop in the uk, I just got a statistic and they just ease the lockdown and everyone's gone to the shops. But compared to a year ago, the numbers that went to the shops is down 69%.

Yeah, absolutely.

Amazon and co are going through the roof.

Yeah, right. And the thing three primary value drivers for real estate have always been, even since we were living in caves, location, location, location. And eight years ago in 2012, I started saying that location is less meaningful than it's ever been in human history. I started saying that on my show back then, eight years ago. And I was primarily saying that not necessarily because of all the technologies. And you know, we had WebEx 20 years ago. Okay. You know this. We had Skype many years ago too. These technologies are not really new, but the adoption has been, you know, somewhat mediocre really, until the last three months, which is great. I mean, it's wonderful that people are finally really, really using these things. I mean, even my mother now will use all this stuff. Right. She wouldn't before. And the reason I said that in 2012 was because of the rise of autonomous vehicles. The self driving car was going to change the location being so meaningful. And like you said, you live in Poland in a somewhat out of the way place, it sounds like, and you can still be fully connected. That's great. That's incredible.

I was just going to say there's two big behavioral shifts that have happened immediately this lockdown came in. One is that for some reason everyone wants to connect on a video call, which we never did before. We're quite happy with a phone call and actually we're connecting more and more often. So take your mother and my mother. My mom's 92 and yet I'm talking to her three times a week on Zoom when I used to speak to her one time a week on the telephone. But the other second big shift in behavior is that people have downloaded loads and loads of apps to have more things that they can do easily on their mobile devices, specifically mobile banking. And a lot of people were wary about using digital bank services. That's again, completely fundamental shifted. Now we're not going to go back to doing the way we were doing things before. And one of the trends that I spotted going to your point from 2012 about location, location, location is I actually saw it in China first and India, which is a lot of entrepreneurs who had to move to cities to get work have now gone back to the villages because they're using the Internet to work. And that is a massive shift in the way in which urbanization and society will operate.

Right. But it's also a digital divide because some people can't do that. And that's what we're really seeing. And I think that's going to shift the pay structure a lot. I think all of these people that have been doing these physical jobs have sort of been getting jipped. They haven't really shared in a lot of the prosperity in the economy. I mean, it's just kind of odd to me that, like, why has it always been that food workers get paid so poorly? You know, if you're a waitress, you can make good money with tips, right? Or at least in the States you can. But you know, if you're the cook in the back, unless you're like a famous celebrity chef or something, you're getting meager wages and that job isn't very enjoyable in my opinion. It's just sort of a, it's odd that it's that way. Like, I don't know why it evolved that way. I mean, obviously a lot of people have that skill. A lot of people can cook. So there's not a rarity to it. But a lot of people can do digital work too. The technology's become so easy. Thoughts on that?

Well, it's interesting that going back to your earlier question, which I didn't really answer, is about robotics and artificial intelligence and the word robot. It actually comes from where I live right now, Poland. It was first used in fact in the Czech Republic, which is a next door country. And to describe forced labor, doing drudgery. And that's what robot means, it's doing drudgery work. And so many people are doing that sort of work. In fact, what amazed me, and again to your point, is that when we had this lockdown, who were defined as essential workers? Well, it wasn't bankers and technologists.

Exactly.

People in hospitals and driving buses and.

Working at the grocery store.

Yeah, yeah, exactly. Exactly. And so what's going to happen? And this is a huge debate, and I don't know the answer, being honest, because I'm not an economist, and this is an economic question, is what happens when people no longer need to work? How will we structure society?

I have been wrestling with that forever. I mean, is it universal basic income? You know, when you look at the robotic revolution, it's way more than just these menial, repetitive tasks, you know, flipping burgers, et cetera. It's writing music, writing articles, doing all sorts of things humans do. Now, are we all just going to live in this world of abundance that's created by the machines, or is there going to be massive unemployment and civil unrest? I mean, which way is it going to go?

Well, we got a little bit of an answer around it during the last few three months in this coronavirus crisis, which is, you know, what have we been doing at home? You know, in my case, I've been getting much closer to my loved ones, sharing a lot more time with them, learning or trying to learn to speak Polish, which I've never had the time to do before, getting better on the piano, which I played 40 years ago, but haven't touched since, and that sort of stuff. And so it really says I'm in a lucky position because I can afford to do that. If you don't have the universal basic income, if you don't have some way for people just to get the basics of food and shelter, then you have an issue. And I think what we'll see is that governments will be forced in the next 10 to 20 years as more and more jobs are automated, that they will have to give people food and shelter as a basic human right.

I agree with you. Even my most libertarian friends that don't want the government to do any of this stuff are saying, UBI is the future, it's going to happen. And we're already seeing evidence of that now. I agree. I had Andrew Yang, the presidential candidate, on my show that was a big part of his platform was universal basic income. And that's going to happen. Right? It's just got to. Do you think so?

Maybe because there's a downside to it, which you've seen maybe on the first people's reservations in the USA or we've seen in experiments that have been taking place in the Nordic communities in Finland and Norway. Which is if people are given everything so they don't have a work ethic, then they can fall off the wagon and start to abuse themselves. So it's kind of where's the pride in not doing anything? You have to encourage people to do something. But the question is, what are we going to encourage people to do? Is it to be creative and share emotions and relationships, or is it going to be to do drudgery? It definitely won't be to do drudgery. So we'll rise to be something above what we are today, I hope.

Yeah, there's definitely a moral hazard in that, and we're already seeing it with these enhanced unemployment benefits in the US People won't come back to work. Now that we're having things reopen, a lot of people are just deciding, I'll just stay home and collect my government money. So it's quite interesting. Wrap it up with a closing thought and give out your website. Sure.

The website is thefinancer.com with an S because it's short for Financial Services, and also Chris Skinner Global, which is where you'll find everything about me.

All right, any closing thought you want to mention?

I think bottom line is some people said I'm way too optimistic because digital human ends with the view that eventually we move to being far more like Star Trek. And Gene Roddenberry, when he invented Star Trek, categorically refused to allow money to be exchanged because in the future, his view was that we deal with the betterment of humanity and not with the generation of wealth. That's an interesting thought. Will it ever happen? I don't know. But it would be interesting if we all just are better humans.

Right? That would be interesting. We'll see if that can happen. Chris Skinner, thank you so much for joining us.

Cheers. Jason.

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