Now let's say a few words about private banking. Like I said, private banking is a special kind of service provided by banks to what is called high net worth individuals. Well how high is high depends. It maybe a million dollars, maybe $10 million in some rare cases in the more developing markets, that maybe even a little bit below that. But one thing that is clear this is significant amount of money. Now, here we see one challenging thing, the amount of money that is sort of the entry ticket into private banking fundamentally exceeds the level of deposit insurance. So people who hold in this bank these balances, they take risks, and they are not protected. And oftentimes if they have let's say $100 million, they seem to be not protected at all. Only a minor part of their assets is protected by deposit insurance. Why is that so? Because if you talk about the high network individuals, these people are not the small and weak investors that should be provided umbrellas. These people could and should take care of themselves. If they don't know what to do so they can hire someone to give them advice. And here we can see that the service of the private banking can hardly be provided in a way that the people who take the bank as a mobile phone would like to see it. Because the main story of private banking is investing. So well clearly you can say high net worth individuals can consume in huge amount. They can buy expensive mansions then can buy collection of cars, pieces of art, collection of wines or you can buy a boat, whatever. But and all that counts millions of times and dozens of millions of dollars. But, most often, before people wouldn't buy a boat for the whole amount of money that they have made. Instead, they would make investments. An investment is something, we study investments in much greater detail in the second course of this specialization that is devoted to value, to corporate finance and to valuation as a process, but the idea right now is clear. We buy a black box that produces cash flow in the future. Now, there are various kinds of investments and these includes talks, bonds the relatives, commodities and many other things. And the key story here is expertise in the estate management. So, some one who help you do so, well you may try to do that all by yourself, but practice shows that this is a special business. This is an occupation that requires some expertise and skill. And you cannot, unless you change your career and become an asset manager that requires a lot of experience. And on this path, you're likely to lose quite a bit of money. Then you should rely on the expertise of someone else. So this is one story and by the same token, you are talking about this absence over a huge umbrella because you are the person now who own the palace or at least the tent to be protected against the shower. So, the big story here, is about risk. And whenever you talk about risk in modern ways to qualify that, analyze then clearly, again these expertise is back. So basically, when we talk about private banking, we see that we, as customers of private banking, although there are many, many fewer. It's not exactly what we have in the case of regular people. But they command huge amounts of money, and therefore these people really are used to the fact that the bank would give them valuable advice. And this valuable advice is based on some proprietary ways of valuing investments. That's a little bit different story to talk about that right now, but it's important to mention. And that is the whole story about that. So whenever you talk about investing and the risk you have to rely on someone else's expertise. And here the assessment of that through social media might not work at all. Now, one important thing that I would like to reiterate right now, is that there is no contradiction between the offering of these highly valuable services in the analysis of valuation of investments, and offering that you and also asset management and standard ways of making some of the simple services. Because for example, if you are a client of a private bank you still will have access to the Internet, and you'll be able to make regular payments in a very convenient way. So we are not talking about just this, although sometimes these people use a regular, let's say smart phone banks for simple things and private banks for managing their assets. So the fact that this service is still flourishing and is widely in demand, sends us another signal that it's not yet time to bury banking as it used to be. And one more thing that serves as a great bridge from here to the next week is that when we talk about private banking, we automatically mention investment and risk as the key stories here. We to some extent go beyond the scope of a regular bank, we have to deal with the investment and that there is a public securities and whenever you talk about this, you have to study in great detail the business of other most powerful financial institutions that are investment banks and that's exactly what we are doing in the next week. And from here, I'm just saying that this is a temporary stop in this week. We talked about regulation and we talked about payment services. And to some extent this week was more descriptive than analytical. But that's only seems to be so. Because although I didn't put any formulas here on this lead charts, but we did dove deeper in the core issues, in the provision of the services, and we've been able to notice our good old friends, inverse incentives, the private information, moral hazard and stuff like these. Well I wish you good luck with your assignments. The assignments here, although they seem to be qualitative, are actually quite deep and they require logic and understanding. So once again, I wish you good luck with them and I'll see you next week.
