Alibaba is buying hypermarts and Amazon is buying bookstores. Retailers are closing down everywhere, and not just in Indonesia. Today we’re all learning about what will happen in the future: Muhamad Chatib Basri revealed to us before his speech at Mobiliari Group’s Fintech Festival (FINFEST) 2018 as to whether things will go completely technological or not.
“We’re all searching for the future’s direction, and innovations will continue to happen,” Chatib said, “Anything with big margins will be disrupted, and the end could be equilibrium because not everything could be done with the digital technology.”
This pattern, however, will cause imbalance in the short-term period, according to the economist who was the Minister of Finance from 2013 to 2014. With the establishment being disrupted at such a fast pace, he sees that digital is not just an innovation in technology for it will change people’s way of thinking, lifestyle and behaviour: “It’s important to anticipate the unprecedented that’s going to happen in the future.”
He then gave the example that, back then, it was harder for a company to create bespoke products to cater to individuals outside the confines of specific groups, such as high-net-worth individuals, senior citizens, or university students. Now, with digital technology, the key is big data to study people’s behaviour and, in the future, all products will be bespoke to each and every one.
“Each and every market segment will be made into variable cost,” Chatib said. “I won’t be surprised if, one day, interest rates or insurance premiums differ from one person to another according to each individual’s risk profile.”
Thus, cyber security and stability are very important issues because Indonesia is prone to leaks and crashes. Chatib further explained that we are now in a so-called “crossing the Rubicon” situation where we could not turn back from the world’s connectedness to each other through the Internet. Bitcoin, Chatib gave as an example, presents a problem in financial stability because it has no underlying assets—it could crash suddenly within a day.
“But no one could forbid anyone from downloading and transacting in Bitcoin using related applications unless there’s an imposed capital control,” said Chatib. “If we ban something, then it becomes illegal; but if we localise it into controllable areas, then we can minimise the negative impacts.” In Bitcoin’s case, he argued, the central banks or governments should get involved in the process to monitor the flow from end to end—in the blockchain, for instance. Meanwhile, in cyber security, the system needs to be improved.
Another improvement to be made is in human capital. Today, the most-sought-after job in the world is that of data scientist—although there are not many out there yet. A good system must be supported by quality human capital to survive security, fraud, and many other problems.
Thus, the future of work also hangs in the balance, Chatib said, because many jobs will be redefined instead of disappearing completely. Those without the skillset are bound to be marginalised and inequality will rise: a part of the population is smart enough to monetise ideas, while machines will replace the unskilled—although the cycle will reach equilibrium once more in the end, he remarked.
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