Chinese New Year Shockers: DeepSeek Innovations and X’s Superapp Goals
McKinsey desperately looks to unlock AI value in banking.
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Topics:
DeepSeek's Chinese New Year's Surprise: China Can Innovate
McKinsey Desperate to Unlock AI Value in Banking
Musk's "X" Makes Its Play For Superapp With Visa Direct Payments
CapGemini Top 5 Tech Trends Surprise: Nuclear Power Returns
Overlooked: The Insidious New Risk Of AI In Finance
Tokenization: The Fix For Market Inefficiencies—What's The Holdup?
Wishing my readers a Happy Chinese New Year!
This week had so much going on I feel like I’ve got whiplash from all of the jolts. From DeepSeek topping the news to “X” making a play for superapp status, it was a much more eventful New Year’s than most! Let’s dive in.
DeepSeek Shows China can Innovate
Let's start with DeepSeek, the story that jolted markets and dominated the news between Trump’s executive orders and the Chinese New Year.
What made this story so interesting is that everyone was “shocked, amazed, stunned” that China can innovate and develop a new LLM like DeepSeek.
I’m not, and you shouldn’t be either.
DeepSeek is an excellent example of China’s ability to innovate within the constraints of chip bans. It shouldn’t be a surprise but an anticipated outcome of the constraints put on China.
The problem isn’t that China innovates but that most of the world still believes that China can’t!
China has been launching significant innovations, from hypersonic missiles to Huawei cell phone chips, all of which are reported as surprises. By now, the press should be tired of running stories about how surprised they are when China innovates.
After being surprised so many times, you'd think that the West would realize that China’s innovations are the norm, not the exception.
Read why Deep Seek’s innovation was predictable: HERE
Where is AI’s Value in Banking?
McKinsey made very large predictions about the value of AI in banking, claiming that it would be worth between $250-$350bn globally. However, I bet this figure will be hard to reach quickly.
That’s why McKinsey seems increasingly desperate to get banks to adopt AI. Banks should adopt AI, which is undeniably good advice. But what do bankers do when their consultant advises them to throw away their entire tech stack? It makes their consultant seem rather desperate.
I don’t doubt that AI will disrupt banking. However, I disagree with the speed of this disruption. Since when have banks been fast in tech adoption?
Read why Mckinsey’s advice makes bankers cringe: HERE
"X" Makes Its Play For Superapp With Visa
“X” made a bold move this week, announcing a partnership with Visa to bring payments to the app in what will likely be the West’s first superapp.
This move is genius because X will use Visa Direct to enable low-cost P2P payments on the X network. Trust in payments is critical, and users aren’t required to trust X with their payments; instead, they are required to trust Visa, a far more compelling proposition. That’s what makes this move absolutely brilliant.
Read why “X” is well positioned to become the West’s first superapp: HERE
Nuclear Power Makes a Comeback thanks to BigTech
Surprisingly, nuclear power is one of Capgemini’s top five tech trends for 2025. Nuclear power’s big comeback is driven by big tech’s AI ambitions, which require massive quantities of electric power—at least they did before DeepSeek showed that a less power-hungry AI is possible.
That nuclear has gone from pariah to savior in recent years is surprising to me and wouldn’t have happened without big tech’s blessing. Read more as to why humanitarian considerations had nothing to do with nuclear’s comeback: HERE
AI: New Risks in Finance
The OMFIF examines the risks of AI in financial markets and, unsurprisingly, finds that it increases the chances of a crash. This aligns with the SEC's recent declaration that “AI deployment in portfolio management may result in more violent market swings as financial algorithms move together.”
Unfortunately, like airplane crash investigations, the crash will have to happen first before investigators can recommend changes in AI use. Read more: HERE
WEEKEND READ: Tokenization Fixing Inefficiencies—What’s the holdup?
Today's weekend read on tokenization includes two papers: one from the IMF, which shows the benefits, and the other from the OECD, which shows the impediments to adoption.
These are great papers that, when read together, will give you a better idea of where tokenization is going and why it may not happen overnight.
Tokenization is undoubtedly gaining traction within central and commercial banks, who broadly agree that it has great potential to increase efficiency in securities markets. It is simply a leap in technology that cannot be ignored.
Yet the same banks also realize that their rich cash flows as market intermediaries might be threatened, which significantly slows tokenization.
Read both papers:
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