Updates from user Toggle Comment Threads | Keyboard Shortcuts

  • user 8:29 pm on August 27, 2016 Permalink | Reply
    Tags: , , ,   

    Is it the Blockchain or the Blockchain Solutions that are struggling in the Financial Services? 

    While the concepts and potential of distributed ledger or #blockchain #solutions are becoming better known, the implementation of them in the financial services has run into some fundamental challenges.

    Is this a fundamental shortcoming of blockchain concepts in general or the current solutions?

    What if there was a new blockchain methodology approach that mitigated the challenges by design as opposed to the current approach of iterative improvements on current, available solutions with diminishing or unrealizable returns?

    The current solutions tackle the issue of confirming a shared ledger by different means.

    • Proof of Work – puzzle solving
    • Proof of Consensus – majority participant voting
    • Proof of Stake – majority value voting

     

    Problem 1: Speed and Logistics

    Beyond the computing power that is required to run these methodologies, all of them introduce latency, capacity constraints, throughput limitations and ever expanding active memory requirements (i.e. scalability issues) on the networks that run them. Current innovations are attempting to speed these processes up or bi-pass them. Some of these methods include:

    Sharded consensus – a divide and conquer mechanism for quicker, fragmented consensus.

    Lightning Networks – transactions agreed off the chain and then recorded to the chain later.

    For their benefits, do these solutions introduce more risk as it relates to control, integrity and protection from malfeasance?

    The core processing of a distributed ledger is the creation and sharing of contracted transfers of value and updates to a shared ledger that records positions of value through those agreed transactions.

    Although it sounds counter-intuitive or even improbable, if there was a means to confirm a ledger’s integrity by the transactions alone and without the need either to gain consensus with other network participants or to involve the network in puzzle solving problem, the computing power of the network would only be dedicated to processing and verifying transactions. The latency, capacity and throughput of the network would then be purely a function of the network participants’ processing and communication hardware.

     

    Problem 2: Reality (Securities and Transactions)

    Cryptocurrencies are wonderful because they are not “perfected” (i.e. held and proven to exist) by a central authority. Any national currency is perfected by a central bank and any security is perfected by a depository, sub-custodian or transfer agent. Any blockchain solution that deals with securities, which are not issued into and perfected by that blockchain’s network, has to have a relationship with the securities’ perfecting entities or it will not work.

    Looking at the publicized blockchain solutions that are being built, they primarily focus on:

    • Repo
    • Syndicated Loans
    • Credit Default Swaps
    • Payments

    The properties that these transactions and markets all have in common is that they are:

    • OTC transactions of…
    • … unregistered securities…
    • …that have a low volume per transacting party and…
    • … predominantly only involve cash transactions.

    These represent the least complex use cases in the industry. However, in most cases, they still have to allow for the posting of collateral or the transacting in the underlying securities and those positions must easily be settled between the blockchain solution and the current markets in conjunction with the securities’ “perfecting” entities.

    While a blockchain solution for the above products may provide benefits, they will be customized rather than holistic and translating them to other types of transactions will be very difficult. Regardless, beyond flexibility, have they solved for the prior issues including: capacity, throughput, latency, ever expanding accessible memory requirements (i.e. scalability issues) and confidentiality?

    The financial services businesses are demonstrably very parochial when it comes to products and functions in the industry. Most of the solutions are customized and pursue implementation paths of least resistance. These practices and behaviors will not create an optimal blockchain solution.

    Is it the temptation to take an off-the-shelf solution and inflexibility that is preventing the realization of a realizable, innovative solution?

    In all the publicized solutions, there are also real, unaddressed challenges of how the market actually works – including short transactions and financing. The obvious use case is market making but what about a Fund Manager selling a security that is on loan by his/her custodian to a Broker who sold it short for margin financing to a Hedge Fund and the settlement of that sale was to a broker who sold it to another investor whose money, for now, is in a money market fund, not in his/her custodial bank account?

    What distributed ledger entry do you reference for securities and cash that you don’t own or can’t point to at the moment of execution?

    Without a consideration for all the above issues, any blockchain solution for the financial services comes up short (no pun intended).

    After a presentation, earlier this year, by William Mougayar, renowned author of “The Business Blockchain” (available on YouTube: https://www.youtube.com/watch?v=l5hK4YKxPSo ), the moderator’s first question after the presentation (at 18:45 into the video) was “What about the scaling issue?”. Mougayer’s response was telling. He basically said that this was a known issue and there are smart engineers working on it and someone will solve for it.

    While altruistically optimistic but not definitive, does that response and the questions above about current solutions’ shortcomings make an extract from a Gartland and Mellina Group press release, made earlier in the year, worth a second read?

    “Blockchain #technology, the new frontier in transaction processing, offers powerful real-world financial applications but presents a number of challenges that must be overcome before it can be adapted to securities transactions. Secure, near real-time trading, settlements, and reporting would significantly reduce the capital requirements and costs associated with enterprise processes #banks and brokerages currently use for post-trade operations.

    Principals at Gartland & Mellina, a management consulting firm focused on the financial services industry, have been engrossed in the research and development of this new blockchain technology application to better approach future client and industry needs. GMG’s Managing Director and Blockchain Solutions Lead in the Financial Services Strategy and Solutions Practice, Paul Dowding, explains, “By understanding the current utilization of blockchain as used in cryptocurrencies, we identified the core challenges involved in applying the technology to the financial services industry as a whole. By resolving these challenges, we were able to design a unique, holistic set of blockchain solutions for the whole industry that is product, transaction and functionally agnostic.”

    GMG’s solution solves the core challenges of applying blockchain technology to the financial services industry by offering:

    1. Flexibility for Coding and Control: We designed a mechanism to create complex, multi-leg, dependent transactions within the primitive, (stacking, read-write, conditional flow) coding logic of blockchain technology
    2. Scalability & Volume: Our innovative blockchain ledger design and approach handles the significant memory, capacity and volume requirements of a high volume and high capacity continuous record
    3. Anonymity and Integrity: The GMG blockchain has the means to retain client and trade confidentiality, even on a shared ledger
    4. Suitable Blockchain Methodology: GMG maintains ledger integrity through a new real time, high volume, low latency processing design
    5. Contingent, transaction legs: We created a flexible option securing the settlement of dependent transfers of different assets such as DVP/RVP (sell-side fills and buy-side allocations), collateral substitution and FX
    6. Financing & liability-driven assets: Our blockchain solution accommodates lending, collateralized and default transactions
    7. Non-Ledger referenced transactions: The blockchain allows for future dated, accrued and short transactions
    8. Interface with Current Markets: Asset value can be transferred between the blockchain and current markets
    9. Interoperability: GMG created a product, process, functional and blockchain agnostic environment
    10. Current Regulatory, Risk, Credit, Custody, Performance & Accounting Reporting: Data acquisition and interpretation is significantly enhanced by blockchain ledgers

    This revolutionary design and approach helps GMG overcome many of the challenges facing the financial services industry today. It addresses growing industry needs for superior security, enhanced data acquisition, quicker transaction times, scalability, and lower costs. John Gustav, Partner of Financial Services Strategy and Solutions at GMG said, “Blockchain technology is considered by many to be the key ingredient to disruption within the financial services industry. It certainly has the potential to create a paradigm shift similar to the way the internet did. Our holistic, product-agnostic approach to blockchain is very different from the other publicized solutions within the financial services industry at this time.”

    With blockchain technology, a decentralized network stores the value of all investor assets in encrypted records. This allows contractual transactions, transfer of value, safekeeping and settlement for asset positions to occur digitally in near real-time without the need for a trusted third party. As forging a transaction, stealing or double spending requires overpowering a majority of the computers across the decentralized network at the exact same time, blockchain has an inherent level of security unavailable anywhere else. “Our patents include a generic mechanism to translate financial services transactions into the blockchain’s simple logic and secure code,” Dowding continued. “Benefits include significant cost reduction, near-real-time settlements, new business, product and revenue opportunities and process, and balance sheet and capital efficiencies.” GMG is currently in discussion with different parties to leverage and develop blockchain capabilities as a utility.”

     [linkedinbadge URL=”https://www.linkedin.com/in/paulfdowding” connections=”off” mode=”icon” liname=””] is Managing Director, Financial Services Strategy & Solutions Practice at Gartland and Mellina Group and this article was originally published on linkedin.

     

  • user 4:29 pm on August 27, 2016 Permalink | Reply
    Tags: , , , , ,   

    Why should bank boards care about APIs? 

    AAEAAQAAAAAAAAhXAAAAJDFkMjdhNzNkLWE3MDctNDhlNy1iMzAzLTk5ZWZhMTUwM2Q4Ng

    The discussion around digital transformation in #banking has long revolved around the nexus of technologies that are globally driving this change. Technologies such as mobile, social, big data and cloud computing are surely impacting significantly all industries, but for financial services there are other silent technological revolutions taking place that, at the very least, can massively accelerate the technological disruption occurring in the sector.

    If mobile, social, big data and cloud computing are the core technologies of digital transformation, for financial services the emerging underlying substrate are APIs (Application Programming Interface). Now, APIs have been around ever since someone wrote a piece of computer code that was meant to be reused by someone else and are common parlance in IT. However, the threat of fintechs and regulations such as the revised Payment Services Directive (PSD2) are elevating the IT lexicon to board-level discussions. Bank boards, in many cases for the first time, are being exposed to IT concepts and jargon that, not only they cannot afford to dismiss, but in effect they need to deeply understand as it becomes a key part of the future of competitive advantage in a digitally transformed industry.

    Why should #banks care about APIs?

    APIs expose banks’ products and processes for use by third-parties. Since banking products are inherently digital and processes already are or can largely be automated, the development of an #API strategy drives three key advantages for banks:

    1. it enables banks to become a part of an integrated and larger value-chain;
    2. it offsets the threat of new entrants by establishing from the onset a “coopetitive” position for traditional banks;
    3. it drives #innovation from within.

    I. Vertical disintegration of banks and ecosystem integration

    The various impacts of globalization and #technology in the financial services industry led to the emergence of niche providers, specializing in key activities of the banking value-chain. Most traditional banks tend to be vertically integrated organizations with relatively fixed cost structures and, as transaction costs decline, some of the key activities in the banking value-chain suddenly become cheaper to procure externally than to execute internally. As a result, we see a move to vertically disintegrate these activities and outsource them.

    With the threat of fintechs and neo-banks looming, an API strategy enables banks to streamline their internal value-chain, becoming at once leaner and more focused, while at the same time, transparently integrate themselves into a broader ecosystem exploring new revenue streams and business partnerships. For instance, consider the ability of a car dealership to provide an immediate loan for a customer at the point-of-sale. In this scenario, the cost of sales would be handled by the car dealership. From the dealership standpoint, they would be able to close a sale on the spot providing great value and a great experience to the customer. Also, consider the fact that this is a contextual sale, where additional products, such as auto insurance with multiple coverages, can (and should) be recommended with increased probability of acquisition by the customer. Now, I’m not naïve to the point of disregarding the many existing hurdles of this or other similar scenarios, such as compliance and legal issues. However, even compliance and legal are prone to disruption by APIs and automation as well as by self-regulating technologies such as distributed ledgers and smart contracts (but that’s a topic for another post).

    II. Healthy coopetition with fintechs and neo-banks

    There’s no longer any question about the threat that fintechs, neo-banks and non-banks pose for the future of traditional banks. After the boom of late 2014, the #fintech “movement” came of age during 2015 and is now competitive across all categories – lending, personal finance, payments, retail investments, institutional investments, equity financing, remittances, consumer banking and more. CB Insights reports that global fintech investment is rising and that Q4 of 2014 was the busiest of the last 5 years with a total of $3.1 billion invested across 214 deals – that’s an average of $14.5 Million dollars per deal. There’s also increased acquisition activity, mostly by established fintechs rather than by traditional banks.

    Additionally, regulations such as PSD2 will inevitably push traditional banks into the playground of fintechs and neo-banks. Strategically, it’s a dangerous place to be in for traditional banks, since most of them are not yet ready to compete with these new enterprises in their own ground. However, with the right invesments, such as APIs and open banking, banks are starting to develop the resources that’ll be a key part of the answer to long-term prosperity in an evolving and growing eco-system. Here are four key areas of cooperation and competition with fintechs and neo-banks that banks can explore in the course of their API/open banking strategy:

    1. Replace costly parts of the bank’s value chain with services provided by fintechs and neo-banks – this can reduce the bank’s cost structure and improve cost-to-income ratios;
    2. Increase the reach of the branch network through partnerships with non-traditional and specialized players (car dealerships, realtors, etc.) and increase the breadth of products by integrating specialized products from fintechs and neo-banks – this can increase share-of-wallet and sales;
    3. Provide OEM financial products and services, acting as the backbone for neo-banks – this can improve operating income;
    4. Traditional banks still have a lot of infrastructure that fintechs and neo-banks don’t have and do not want to have as it will hurt their business model. Banks can provide back-office services that are too costly for fintechs and neo-banks to develop – this can increase the interdependency of these players on the bank, mitigating the risk of their threat.

    III. Looking within for innovation

    It’s true that when talking about APIs and open banking, we usually address it from the standpoint of an outward-facing competitive advantage that can enable incumbents to compete and/or partner more effectively with fintechs. However, looking within traditional banks, we can also find areas where APIs and an open platform can help drive increased performance and efficiency.

    To be fair, through the years banks have made significant investments in IT and in services platforms, primarily driven by interoperability and modernization rationales. The problem with these approaches is that they have mostly been IT-led and for a long time there wasn’t really a great business justification for them so they weren’t typically discussed from the business standpoint as a key strategic investment. Where these investments occurred, banks are now taking a new look at their IT assets and resources and realizing that they are better off than they actually thought. Some of those past IT investments have become key in this new digital economy, particularly when it comes to simplifying business processes and products.

    Internal APIs are also key to driving innovation from within. They can work as a sandbox for internal development of ideas before external exposure to partners and others. In this area we see several banks hosting internal Hackathon events, pairing business and IT people in the development of new digital products and in the automation and simplification of internal processes. Internal innovation is key as the rate of change accelerates in the industry. Simpler processes, new innovative products, and a leaner organization will drive growth and efficiency for traditional banks. I believe that in the short term, we’ll see an increased focus in using APIs to build resilience into the banking business model, whether through innovative products and services, or through the ability to replace internal processes and services with external providers.

    [linkedinbadge URL=”https://www.linkedin.com/in/josealmeida” connections=”off” mode=”icon” liname=”José Almeidaos”] is digital advisor at Microsoft and this article was originally published on linkedin.


     

  • user 12:18 pm on August 27, 2016 Permalink | Reply
    Tags: , , , , , , , Puck   

    We Look at Biggest Fintech VC Deals of 2016 To See Where the Insurtech Puck Is Going 

    Image source We looked at the 30 #biggest VC #deals in #Fintech for #2016 (courtesy of CB Insights Pulse of Fintech Report) to see where the #InsurTech #puck is #going to. The answer is blindingly obvious when you #look at the 3 out of 30 that we tagged as primarilyRead More
    Bank Innovation

     

  • user 12:18 am on August 27, 2016 Permalink | Reply
    Tags: CarBuying, , , , ,   

    Chase Debuts Digital Car-Buying Service 

    #Chase launched a new #fintech offering, Chase Auto Direct, to allow customers to shop for a vehicle and secure financing through the Chase.com website or app, the company announced yesterday. Consumers can then close the deal at one of Chase’s network of 14,000 dealerships.
    Bank Innovation

     

  • user 3:40 pm on August 26, 2016 Permalink | Reply
    Tags: , , Elects, , ,   

    Hyperledger Blockchain Project Elects New Tech Committee 

    The #Hyperledger #Project, the #blockchain initiative led by the Linux Foundation, has elected a new technical steering #committee.
    CoinDesk

     

  • user 3:35 pm on August 26, 2016 Permalink | Reply
    Tags: Administrations, , Corporates, , EInvoicing, , , ,   

    Corporates and Public Administrations Look at E-Invoicing to Cut Costs 

    Companies are looking at e-invoicing as a way of saving #costs, according to a new survey by Vereon AG, a Swiss conferences, congresses and professional training courses organizer.

    An online survey conducted by Vereon found that 65% of businesses believe that the saving potential of e-invoicing is high. 27% see it as a driver for other projects aiming to optimize business processes.

    E-Invoicing Cost Saving Potential, Vereon AG report

    Respondents believe that the biggest challenges in implementing e-invoicing in their organizations are internal resistance (21%), compatibility issues (20%) and lack of information (15%).

    Biggest Challenges for E-Invoicing Vereo AG report

    Electronic invoicing, also referred to as e-invoicing, is a form of electronic billing often used by trading partners, such as customers and their suppliers, to present and monitor transactional documents between one another and ensure the terms of their trading agreements are being met. These documents include invoices, purchase orders, debit notes, credit notes, payment terms and instructions, and remittance slips.

    As corporate enterprises and #public #administrations seek to automate business processes, e-invoicing allows has numerous benefits such as reducing costs, errors and time spent on administration.

    Vereon will be hosting the Exchange Summit in Barcelona on October 10 and 11, 2016. The event will provide attendees with the opportunity to learn and share their experiences on a global level. They will also get the chance to meet and connect with experts, thought leaders and professionals in e-invoicing, purchase to pay, e-procurement, supply chain finance, and accounts receivable/accounts payable (AR/AP).

    Among the topics that will be discussed, experts will tackle the potential of #blockchain #technology to disrupt the peer-to-peer process, the state of Public Procurement in the EU, as well as the region’s regulatory framework for e-invoicing.

    Exchange Summit Barcelona 2016 E-Invoicing

     

    E-Invoicing regulation in Switzerland

    In Switzerland, e-invoicing is subject to certain legal requirements under commercial and tax law. The rules require for instance that all VAT relevant e-invoices are digitally signed by one of the four Swiss-admitted digital signature providers.

    That said, the Swiss Federal Tax Administration (SFTA) has moved closer to the general EU rules recently and has approved different ways of accepting e-invoices, according to Deloitte Switzerland.

    The authority requires that the integrity and authenticity of the e-invoices are assured, and that companies establish an internal control system that allows a constant and reliable audit trail between procurement process, e-invoice and payment. Businesses are also required to establish a new procedure-to-pay internal control process, which is regularly audited.

    Many governmental initiatives are currently being implemented, notably by the European Commission. By the end of 2018, public administrations in all EU member states will be required to support e-invoicing and to automatize public procurement processes as stipulated in Directive 2014/55/EU.

    Separately, EDICOM&8217;s R+D+i initiative, driven by the European Commission as well, aims at fostering implementation of the European e-invoicing schema between hospitals and laboratories.

    The initiative is open to healthcare suppliers and public agencies belonging to any of the EU member states.

    In Europe, Finnish #fintech startup Zervant is one of the leading e-invoicing solution providers. Earlier this month, the startup announced a new €4 million funding round to fuel global expansion. This brought the total amount of capital raised to more than €8 million.

    Zervant is used by tens of thousands of entrepreneurs all over Europe. Its core markets are Finland, Sweden, Germany, France and the UK. The company’s revenue is expected to grow by 200% this year, according to EU-Startups.

    According to Mattias Hansson, Zervant co-founder and CEO:

    “There is going to be a tremendous shift towards electronic invoicing in the next 5 years and more accessible financial products for micro enterprises. We want to lead the way in this segment.

    &8220;This investment will help us expand significantly and strengthen our position as the leading invoicing service for small businesses in Europe. We will accelerate growth in our current markets as well as expand into new countries.”

     

    Featured image: Online invoicing concept by Bakhtiar Zein, via Shutterstock.

    The post Corporates and Public Administrations Look at E-Invoicing to Cut Costs appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

     

  • user 12:18 pm on August 26, 2016 Permalink | Reply
    Tags: , Ante, , , , ,   

    Fintech Players Up the Ante on Comprehensive Credit Reporting 

    Image #credit: Cafe Credit In March 2014 the Australian Parliament rubber stamped new Credit #reporting & Privacy Laws that enabled Credit Providers (CPs) and Credit Reporting Bureaus (CRBs) to commence voluntary #Comprehensive Credit Reporting (CCR). Australian lenders are well behind on CCR, much to the detriment of Australian borrowers, argue many #fintech startups.Read More
    Bank Innovation

     

  • user 3:35 am on August 26, 2016 Permalink | Reply
    Tags: , , , , investiere.ch, , Minority, , Shareholder, , ,   

    investiere.ch Closes Financing Round: Zürcher Kantonalbank Becomes a Significant Minority Shareholder 

    The Swiss investment #Fintech platform for start-ups, investiere.ch, has successfully closed another #financing #round. With a substantial participation in the capital increase, Zürcher Kantonalbank has become a new #minority #shareholder of investiere.ch. The financing round represents the largest fintech investment in Switzerland this year to date.

    investiere.ch announced that it has successfully closed a Series B financing round totalling CHF 3.5 million. This capital increase will enable investiere.ch to further develop its investment platform with services and tools related to start-up financing and to drive the platform’s growth. At the same time, investiere.ch has gained an important shareholder in #Zürcher #Kantonalbank, which is a leading provider of start-up financing and has many years of experience in this field. Existing shareholders and other experienced business angels also participated in this financing round.

    Zürcher Kantonalbank

    Image from Zürcher Kantonalbank Facebook

    “With Zürcher Kantonalbank, we have acquired an ideal partner as an investor,” Steffen Wagner, co-founder and CEO of investiere.ch, explains. “Zürcher Kantonalbank has repeatedly demonstrated its innovative strength and its expertise in the area of venture capital and has for many years shared our mission of providing professional financing for start-ups.”

    Martin Scholl, CEO of Zürcher Kantonalbank, commented: “We decided to invest in investiere.ch based on the team and #technology behind the platform. The digitalisation of the venture capital market offers attractive growth potential and also creates opportunities for the further development of our own financing activities in areas such as SME financing.”

    investiere.ch and Zürcher Kantonalbank are among the most active venture capital providers in the Swiss market. Zürcher Kantonalbank has long been investing in young companies. More than a decade ago, it launched its ‘Pioneer’ initiative and since then the bank has invested more than CHF 100 million in start-ups with new and innovative business ideas. This has resulted in the creation of almost 1,000 jobs. #investiere.ch has already provided over CHF 17 million in funding for start-ups in more than 40 financing rounds. There will be no changes to the activities conducted by Zürcher Kantonalbank as part of its ‘Pioneer’ initiative. At the same time, investiere.ch will retain full independence with regard to the development of its business.

     

    Featured image: Pixabay

    The post investiere.ch Closes Financing Round: Zürcher Kantonalbank Becomes a Significant Minority Shareholder appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

     

  • user 12:18 am on August 26, 2016 Permalink | Reply
    Tags: AmericaViewpost, , , , , , ,   

    Bank of America-Viewpost Partnership Brings Digital Payments to SMEs 

    #Bank of America, a financial institution with 3.2 million small business customers, announced today it has partnered with #fintech startup Viewpost to open the wider world of fintech, specifically the modernization of #payments, to small businesses. “It’s important to move the dialogue beyond the transactional friction,” said Mark Eliscu, CEO of Viewpost. HeRead More
    Bank Innovation

     

  • user 9:40 pm on August 25, 2016 Permalink | Reply
    Tags: , Author, , , ,   

    Blockchain Book Author Appears in New TED Talk 

    #Author Don Tapscott recently helped kick off the TED Summit in Banff, Alberta with a #talk about #blockchain #technology.
    CoinDesk

     

← Older posts

Newer posts →

c
compose new post
j
next post/next comment
k
previous post/previous comment
r
reply
e
edit
o
show/hide comments
t
go to top
l
go to login
h
show/hide help
shift + esc
cancel
Close Bitnami banner
Bitnami