fintech disruption - blockchain technology
TRANSCRIPT
FINTECH DISRUPTIONBlockchain Technology
“It's not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change
- Charles Darwin
INDUSTRY CHALLENGE
➤ New Fintech innovations have radically disrupted the way Front-office functions for investment banks
➤ Yet, despite these technology advancements middle and back office largely remains regimented and clunky
➤ Firms are here still grappling with complex and inefficient processes which need urgent simplification and modularization
OPPORTUNITY IN CHANGE
➤ Untangling of this complexity is getting addressed via a two pronged strategy - simplification using Lean and disruption through technology (such as block chain)
➤ Focusing on exploiting the potential of these disruptive technologies Financial Services industry has formed multiple consortiums and partnerships
➤ Consultants and Service providers are gearing up with innovative solutions and where possible is leveraging co-creation as the chosen vehicle
WHAT IS BLOCK CHAIN?
➤ Blockchain is a cloud based database shared by every participant in a given system. The blockchain contains the complete transaction of the crypto currency or other record keeping in other applications. Think of it as a cloud cased peer to peer ledger.
➤ It uses cryptography and a distributed messaging protocol to create a shared ledger between trading counterparties.
➤ This is made possible by simple transfer of assets through smart contracts
➤ Data on the ledger is persistent and transactions cannot be lost or corrupted by participants
➤ Suggested use cases include - KYC, AML, Reg reporting and Clearing and settlements
KEY COMPONENTS OF BLOCKCHAIN
➤ Secure Transaction Ledger Database...shared by all parties
➤ Elimination of Third Party Validation...assets help in Cloud
➤ Automation...includes automatic settlement
➤ Smart Controls...managed by computer protocols
➤ Cost Reduction...by controlling infrastructure and transaction costs
➤ Eliminates Error Handling...and hence better handling of reconciliation
FEW CONSIDERATIONS TO MAKE THIS REAL
➤ Regulatory framework for adequate controls
➤ Should this be open source and how will competitiveness be managed?
➤ Scalability of the infrastructure
➤ How will the legal framework be established?
➤ Integration with reporting and analytics for audit and control
➤ Hype vs. Reality? What's the true potential to reduce the cost of execution?
➤ A marketplace to perform these transactions
Credits - Forrester research and Accenture research