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  • user 3:08 pm on November 4, 2016 Permalink | Reply
    Tags: banks, , , , , , ,   

    SBB and Bitcoin: Did You Just Notice The Gorilla On Stage? 

    You may all know the now-famous experiment conducted in the late 1990s by Daniel J. Simons and Christopher Chabris where two groups of people – some dressed in white, some in black – are passing basketballs back and forth. The study subjects were asked to count the passes among those dressed in white while ignoring the passes of those in black.

    Gorilla

    They found that many of those who viewed the video failed to #notice when a person in a #gorilla suit suddenly walked into the game, faced the camera, pounded on its chest and then left the #stage. The gorilla was on screen for over eight seconds, yet half of those who watched the video didn’t see it.

    Did you notice the Gorilla this time?

    Well, the so called Monkey Business Illusion #just happened again when SBB, the Swiss Federal Railway operator, decided to extend its “Service Publique” in Switzerland on 11 November 2016. Where the #banks seemingly &8220;omitted&8221; to serve the public on their ATMs, SBB ventures to close the gap. A new era of state-driven #FinTech revolution has begun: Our government owned SBB is entering the #Bitcoin brokerage business!

     

    SBB is pushing Bitcoins mainstream

    &8220;Make quick and easy purchases with Bitcoin&8221; is the bold statement on the SBB website. The business model of SBB CEO Andreas Meyer seems quite smart. A simple software update on the ticket machines and SBB is ready to earn its share on the 6% commission of each bitcoin sale. It would in fact be very interesting to know from SBB what type of goods are indeed so easy to buy with Bitcoin that someone is willing to pay a 6% commission for. Anyway, this is a different story.

    Bitcoins might actually go mainstream!

    Is it really the time to cheer for another FinTech innovation? Maybe we should pause for just a second. Let’s think of it again: A state-owned company is selling an alternative, virtual currency to the Swiss public that promises to replace our financial system with all its established control mechanisms to ensure price stability, prevent money laundering, terrorist financing and tax evasion and completely undermines upcoming new measures like AEI etc. Of course, the current system is not perfect. But who can guarantee when and whether a financial system based on Bitcoin will ever be stable and secure enough?

    What will happen when suddenly people of all age classes get access to Bitcoins on hundreds of SBB ticket machines? Nobody really knows yet. But one thing should be clear, this is not just the reinvention of the old Swiss WIR currency, a form of digital money backed by Swiss francs. Bitcoin is playing in a wholly different league.

     It&8217;s not about Swiss law, it&8217;s about our economy & reputation

    In Switzerland, contracts with cryptocurrencies are enforceable and penalties can be imposed for criminal offences. The Zug based company Sweepay is acting in the background as financial intermediary and the setup fulfils the requirements emposed by FINMA and the Swiss Anti-Money Laundering Act. So, where is the problem?

    Sweepay

    It&8217;s not about the law, it&8217;s about the fact that this is the first time in the history of mankind where a #cryptocurrency might actually go mainstream in a country and test out its romantic promise of a better world on an unprepared population. There haven&8217;t really been public debates in Switzerland outside of FinTech expert circles. The Swiss economy and its people shouldn&8217;t be lightheadedly used as guinea pigs for a virtual currency rollout fuelled by a state-owned company.

    Switzerland&8217;s reputation and its sound financial center with an ever more flourishing FinTech industry are carelessly put at risk. Maybe some Bitcoin firms will benefit but maybe many other FinTech players will soon loose their businesses or turn their back to a country that just lost control on its price stability. Who really knows about the side effects of Bitcoin in a complex real-life economic system?

    bitcoin

    And what about consumer protection?

    The financial industry has undertaken huge efforts in recent years to better protect the customers against risks and provide them with appropriate information. However, it&8217;s not clear whether there will be any risk disclaimers at all on SBB ticket machines. But imagine if all potential consumer risks would have to be disclosed before buying any Bitcoins. How would you explain to a 14-year old teenager that he better shouldn&8217;t spend all his pocket money on these interesting darknet products like anabolics and narcotics while on the other hand not spending the Bitcoins might suddenly result in a total loss of value?

    Let&8217;s build a safe financial system based on a solid cryptocurrency

    Cryptocurrencies have many advantages over fiat currencies. But I still prefer to entrust our economy to some type of a &8220;Utility Coin&8221; that ensures to actually deliver all of the advantages of a promising new technological concept without all of the obvious and potential side-effects of Bitcoin.

    Let&8217;s properly prepare for such a transition process before we carelessly risk to &8220;Trump&8221; into an economic disaster. And please &8220;like&8221; this post if you even slightly doubt that SBB brokered Bitcoins are completely risk-free.

    This article first appeared on LinkedIn Pulse

    The post SBB and Bitcoin: Did You Just Notice The Gorilla On Stage? appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

     

  • user 7:23 pm on November 3, 2016 Permalink | Reply
    Tags: banks, , , Entry, , , , , ,   

    Federal Council Wants To Reduce Barriers To Market Entry For Fintech Firms 

    A dynamic #fintech system can contribute significantly to the quality of Switzerland’s financial centre and boost its competitiveness. Against this backdrop, the Federal Council called for an easing of the regulatory framework for providers of innovative financial technologies during its meeting on 2 November 2016. This easing should #reduce #barriers to #market #entry for providers in the fintech area and increase legal certainty for the sector overall. The Federal Department of Finance (FDF) was instructed to prepare a corresponding consultation draft.

     

    Digitisation in the financial business is advancing rapidly and has given rise to different business models in the fintech area. Accordingly, the requirements of these players for low barriers to market entry are different. The #Federal #Council is striving for a future-oriented solution which is as comprehensive as possible and is thus recommending an approach with three supplementary elements:

    Fintech Teaser (1)The first element sets a deadline of 60 days for the holding of money in settlement accounts, which is particularly relevant for providers of crowdfunding services. Fundraising for a crowdfunding project can thereby be facilitated. This amendment would not be restricted to fintech companies, and would instead be generally applicable.

    The second element is a sandbox (an innovation area). In this area, a provider can accept public funds up to a total value of CHF 1 million. These activities do not have to be authorised and are not monitored by FINMA. This fact must be disclosed, however. The current money laundering provisions are applicable in the case of a sandbox.

     

    The third element is a new fintech licence granted by FINMA. For institutions which are restricted to the deposit-taking business (acceptance of public funds) and thus do not operate in the lending business with maturity transformation, less stringent regulatory requirements should apply than those for classical #banks. Involvement in the depositor protection system is thus not envisaged. The public funds accepted by providers with a fintech licence may not exceed the overall value of CHF 100 million. So long as protection of the individual client is guaranteed by special conditions, FINMA can authorise a higher threshold. For institutions with the new licence, the minimum capital should amount to 5% of the accepted public funds, but no less than CHF 300,000.

    FINMA - FinTech-Regulierung

     

    The creation of a fintech licence is also pioneering by international standards. The new regulation sets out in concrete terms one of the strategic thrusts of the financial market policy recently adopted by the Federal Council. The Federal Council has instructed the FDF to draw up a consultation draft with the required legislative amendments by the start of 2017. Moreover, the FDF should conduct additional clarifications in cooperation with the interested authorities on reducing further barriers to market entry for fintech #firms, also those outside financial market law (e.g. legal treatment of virtual currencies and assets).

    The post Federal Council Wants To Reduce Barriers To Market Entry For Fintech Firms appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

     

  • user 3:35 am on November 3, 2016 Permalink | Reply
    Tags: , banks, , , , , , ,   

    F10 Selects 10 Fintech Startups For The -Swiss Accelerator Program 

    F10F10, the #Fintech Incubator and #Accelerator, is delighted to announce that out of the 167 Startup companies that applied to F10’s Prototype to Product (P2) #program 10 #Startups have been chosen to join.

    The P2 Program allows teams with a thrilling prototype to participate in the product development program where they produce a minimal viable product and subsequently incorporate their startup. These 10 startups will now become part of F10’s roster and will be accompanied and supported in their endeavor to bring their ideas to the market.

    Earlier this month, F10 announced to the world that the FinTech Incubator and Accelerator had reorganized itself in the form of an association with the aim of bringing innovation to the finance and insurance sectors of Switzerland and Europe.

    The F10 association includes the well-known members Julius Bär, Switzerland’s leading private banking group, and PwC Switzerland; who together with SIX form the foundation upon which the Fintech Incubator and Accelerator is built.

    Twice a year, F10 offers a six-month “Prototype to Product (P2)” program which assists yearly up to 20 selected, promising teams/startups to transition their prototype into a sellable product. The teams gain access to the working space at F10 in Zurich. Coaches from the F10 team, as well as external mentors, will be allocated to each team to support them and ensure that they achieve their milestones. The first batch begins in November 2016 and ends in April 2017.

    Throughout the six-month period, the teams will attend lessons and workshops grouped into five units: Vision, Team & Strategy; Business, Product & #Technology; Marketing & Sales; Legal & Regulations and Demo Day & Graduation. Coaches and mentors will be present to ensure that the teams are on the right track.

    The program can be partially completed online/off-site with only certain dates requiring actual on-site presence. F10 will cover travel expenses with a 15’000 CHF reimbursement for each team upon achieving their determined milestones.

    By the end of the program, teams/startups will have gained in-depth experience of all aspects of the financial industry and top level contact to big financial players, they will have access to the F10 association members’ global network of #banks and benefit from SIX services, regulators, angel investors and venture capitalists. Participation is free and F10 does not take equity in the Startups.

    The 10 Startups that have been chosen to participate in the next P2 Program are:

    air.lifeAir
    A P2P ecosystem which is completely decentralized by eliminating centralized servers to insure that no one cloud computing company has access to the users’ data and information.

     

     

    APIAXAPIAX
    Generating better access to compliance regulations by providing easily integrated public programming interfaces (APIs) that facilitate access to always up-to-date and verified compliance rules.

     

     

    bizgeesBiz Gees
    #Blockchain Technology customised for philanthropic P2P lending with a focus on micro loans for micro businesses in refugee camps.

     

     

     

    Enterprise BotEnterprise Bot
    Focussing on an automated customer support system for banks that is able to understand and act upon customer queries and is easily integrated into existing infrastructure.

     

     

    FuturaeFuturae
    Creating fast, simple and hands-off two-factor user authentication for online applications that require additional security by pairing mobile devices with computers in the vicinity of each other.

     

     

    LendityLendity
    Providing investors with a streamlined system to access tailored loans from multiple P2P loan platforms around the world.

     

     

     

    SONECTSONECT
    Creating virtual ATMs where users can withdraw cash from any shop that joins the program at over 50% cheaper than the current ATM withdrawal costs.

     

     

     

    TraderionTraderion
    Profiling and training of trading professionals using gamified simulators and machine-learning algorithms.

     

     

     

    VesgooVesgoo
    Designers of the ThematicCloud, a platform which will facilitate thematic investment processes by combining technology and research to produce customizable and sustainable thematic investment vehicles.

     

     

    WealthInitiativeWealthInitiative
    Creating a platform to allow wealth management institutions to recognize and exploit synergies amongst their clients, and in a further step amongst their peers.

     

     

     

    This article first appeared on F10

    The post F10 Selects 10 Fintech Startups For The -Swiss Accelerator Program appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

     

  • user 1:31 pm on November 2, 2016 Permalink | Reply
    Tags: banks, , , , , ,   

    Banks can learn from how Fintech Startups do Business Planning 

    For a long time, #startups had to #learn how big companies do business #planning. Now the flow is reversing and we see management consulting organizations pitch methodologies to big companies that have come #from the start up world. Now that software is eating the world, big companies seek to understandRead More
    Bank Innovation

     

  • user 11:37 pm on November 1, 2016 Permalink | Reply
    Tags: , banks, , jenkins, , transforming   

    Why I want to transform banking 

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    I’ve long believed that #banks can leverage technological innovation to offer customers much better, faster and cost-efficient services. Today, after much planning, I’m excited to announce that I’m launching a financial #technology business that will aim to build that better #banking world – 10x Future Technologies.

    After many years as a senior bank executive, this might seem like a surprising move. But every day I see the signs of the huge changes that have taken place since I first started out in banking 30 years ago. Back then, I couldn’t have imagined that today’s financial services would give us contactless payments, or let us pay bills on an app, for example.

    Yet despite making life far easier for customers, most of these innovations have not been truly disruptive because they have not much affected the hierarchy of the banking world itself. Customers still use the same banks they have for many years – it’s just that now we can view our account balance on our mobiles, make payments online and use cards abroad.

    There’s still so much more that must be done to ensure that new technologies deliver the best impact possible on the customer experience.

    Have you ever received an official bank letter about a financial matter you settled years ago, or been told incorrectly that details on your account are wrong? That’s because the pillars that underpin the existing banking infrastructure are often dated, overlapping and inefficient, and core banking IT systems are sometimes so cumbersome that it’s difficult to get them to talk to one another.

    Even if you have a mortgage and a current account with the same bank, for example, the systems that underpin those two services might not effectively communicate with each other. They reduce potential returns for investors, slow down the customer experience and encourage the complicated banking products that make it virtually impossible for customers to compare providers and get the best deal.

    I’m convinced that 10x Future Technologies can offer the solution. We’ll provide the technology to enable banks to unify those systems into a centralised interface, creating much better customer service in the process. Our technology will help banks offer more personalised credit cards, loans and accounts, among other products. It’ll also allow them to crack the information hidden in the personal data they hold about their customers, which means they could anticipate when a small business owner might need a more flexible line of credit, or offer personalised mortgages that allow you to overpay to reduce your debt, or skip a payment when you need extra cash at Christmas.

    We’ve already assembled a team of top talent working in financial technology, and are in advanced talks with a number of potential major clients. But we’re rapidly expanding and are on the lookout for more exceptional individuals to get involved. Head to the 10x website to find out more.

    #Transforming the customer experience

    I’ve always been excited about the ways new technologies can change our lives. Look at how cloud-based online storage has made working on collaborative projects significantly easier, or how smartphone maps mean you can now find the nearest ATM or supermarket at the touch of a button.

    Yet it’s fair to say that this kind of data innovation has not been fully implemented in banking – and it if were to be, it could transform the customer experience. That’s why introducing new technologies has been a significant part of my career in finance. When I was CEO of #Barclays, I made it the first bank to issue all cards with contactless technology, focused on the bank’s digital and app offering and launched the peer-to-peer money transfer platform Pingit, which uses an open data architecture.

    These kinds of changes aren’t just good in themselves. I see the current climate as providing three broad challenges to banks for which technology is a potential solution:

    • New companies are providing banks with greater competition. Market entrants such as online brokerages are capitalising on their sophisticated technologies to offer better prices and more efficient services than the banks can give in specific business areas. Customers now have many more options. But a leaner, digital infrastructure would allow banks to offer an improved service in the face of this competition.
    • Economic conditions are affecting banks’ bottom lines. Persistently low interest rates mean they are making less money on loans and investments. With new capital controls forcing banks to move away from riskier activities, it’s clear that they need to move away from the aggressive practices that characterised the pre-2008 period. But by unifying their often incompatible legacy systems into a modern, digital infrastructure, banks will be able to cut their costs while providing a significantly improved service.
    • New regulatory changes could expose banks to areas of competition where their businesses had previously been insulated. A recent Competition and Markets Authority report, for example, asked them to develop a single, cross-bank interface to make it easier for customers to shop around and for competitors to overcome current barriers to entry. 10x’s technology could contribute to the creation of that interface, allowing banks to satisfy new regulatory requirements without losing a competitive advantage.

    Banks need the better technology customers deserve – and it starts from the bottom.

    Those banks that take decisive action in the face of this situation will be the winners. 10x Future Technologies will offer them the means to do this.

    I’m convinced that financial services and other businesses need to return to a position where they play a critical role in enabling social and economic progress, with a clear focus on long-term sustainability rather than short-term gain. As an independent company with inherent neutrality in the market, 10x will help this process by providing the services to help companies consider the long-term impact of their actions, build a sustainable business and do right by their customers.

    As new technologies proliferate, boosted by the 10x platform, we’ll see a great deal of innovation in financial services, reinventing the way we all use and move our money. Overhauling the banks’ infrastructure would have no small impact on how we manage our finances, so we’re determined to make sure that the result works for everyone. Our long-term goal is to truly democratise banking: to deliver the ten times better service that banks need and that customers and society deserve. We at 10x Future Technologies believe that technology can create the transparency, lower costs, fairness and competition that mean everyone wins.

    [linkedinbadge URL=”https://www.linkedin.com/in/antony-#jenkins-642953105″ connections=”off” mode=”icon” liname=”Antony Jenkins”] is Executive Chairman at 10x Banking

     

  • user 12:19 pm on October 31, 2016 Permalink | Reply
    Tags: , banks, , , , , , ,   

    Data Keeps Customers Safer, But Access to It Has Become a Battle 

    In the Age of Information, companies that have made #data their business are getting more competitive as they seek to tame the mountains of available data into useful, actionable insights and answers. The #banks have the data. #Fintech startups want it, and argue it is better for #customers, but of course,Read More
    Bank Innovation

     

  • user 11:35 pm on October 28, 2016 Permalink | Reply
    Tags: banks, ,   

    INSURTECH – You will never insure – or be insured – the same again! 

    In the startup world, #insurtech is currently one of the most dynamic and exciting sectors: more than $2,6bn were invested in the industry last year, three times the amount invested the year prior. Corporate insurers such as Axa, Allianz, AIG or Aviva are creating in-house funds to identify the most promising innovation in the field. The landscape is fast evolving, with the shared economy practices turning the industry upside down: thus, unicorns like Blablacar or Airbnb push traditional actors to develop new insurance models that go beyond transportation and housing, and draw from IoT, big data, or gamification to transform the insurance industry overall.

    An entire book would not be enough to capture all insurtech innovations, so let’s focus on three transforming trends in the industry and their impact on traditional insurers.

    Don’t speak about insurtech, speak about insurtechS!

    Traditional insurance used to be applied to a few sectors, with a few bundle products, but times have changed! The industry is now facing several levels of segmentations:

    • first, a segmentation in model, with an increased separation between product ownership and product consumption as a result of the shared economy. You no longer use a car that is yours but one you have borrowed to someone – so who should pays the insurance?;
    • second, a segmentation in application, with insurtech going beyond the traditional insurance products applied to transportation or housing, to now comprise new wearables or peer-to-peer practices;
    • third, a segmentation in #technology, with insurtech start-ups choosing specific verticals such as data analytics, claim acceleration tools or customer engagement to support more traditional insurance activities.

    These segmentations mean traditional insurance actors are faced with new challenges to respond to new consumptions habits, as well as new business opportunities, for instance responding to specific needs.

    Mastering personalised insurance

    Not only have consumers changed their habits, but they are also increasingly asking for personalized services: less and less people are willing to pay bundles, and would rather get personalized coverage. Whilst before, insurers relied on market trends to develop new insurance products, they now need to be more lean and creative in their packages.

    Failure to satisfy increasingly demanding and selective consumers would result in losing clients, but traditional actors have in fact been very good at embracing insurance curation: they are making the most of new health tracking devices to provide premiums to fit customers, or offering discounted auto insurance for customers using telematics devices to track safe driving. All-in-one policies are also starting to emerge, thanks to highly personalised digital risk assessment.

    For corporate insurers, insurtech is a way to climb the food chain

    The emphasis put by traditional insurers on insurtech is easily justified: from data analytics and lifestyle apps allowing client service personalisation, to hardware supporting preventive action rather than corrective ones (to detect fire for instance), the added-value of insurtech is immense. Information security systems or digital processing are further revolutionizing customer service, making insurance/client relations more seamless.

    Insurtech ultimately gives incumbents the opportunity to get directly exposed to the client rather than go through intermediary brokers, making coverage more affordable for consumers and more profitable for the providers. As such, corporate actors and insurtech startups should not see each other as competitors, but rather as complementary actors. In fact, no insurtech today is directly challenging an insurance company like Monzo or Starling Bank do with traditional #banks, and for insurtech, the path to customer acquisition is more so than not likely to go past corporate insurers.

    Increased synergies between insurtech and corporate insurers are likely to be beneficial to both parties. Other than the traditional challenges related to regulation and barrier to entry, the main test for insurtech and insurance companies will come from the consumers’ reaction: if the personalisation of services can be beneficial operationally, it also comes at high cost, that of privacy. Traditional insurers and insurtech companies will therefore have to work together to guarantee that their customers’ data is collected and managed in a secure and safe way. And for that cybersecurity startups may have some answers.

    [linkedinbadge URL=”https://www.linkedin.com/in/antoine-baschiera-85aa033a” connections=”off” mode=”icon” liname=”Antoine Baschiera”] is CEO at Early Metrics

     

  • user 7:35 pm on October 28, 2016 Permalink | Reply
    Tags: , banks, ,   

    How Fintech will Disrupt Banking Industry! 

    The #banking industry for a long long time enjoyed strong barriers to entry. It was difficult for new #banks to start – licensing and regulation kept new entrants away. As a result banks enjoyed low customer switching, which in turn, allowed it to earn high returns on capital over extended periods. Banks could easily get 16-18% returns.

    #Fintech is now changing this industry. New Fintech startups are launching discrete banking products that disrupt that particular segment of banking services. For example, Digital Wallets is disrupting credit/debit cards.

    Lets take a look at how Digital wallet is disrupting credit cards. In India, Digital wallets such as PayTM, Mobiwiki & others are at a stage where number of transactions over digital wallet will exceed the number of payments done on credit & debit cards.

    The rise of digital wallets is changing the industry’s dynamics. By 2017, more number of transactions will be done over digital wallets than with the older credit or debit cards.

    Source: scroll.in

    As digital wallets gain preeminence, digital wallets can morph into credit cards, and offer credit to customers and even merchants who accept digital wallet payments.

    Today most consumers who use digital wallets such as PayTM also use credit/debit cards to transfer money from their credit/debit cards to their wallets & having a credit card like facility available on their digital wallet will make them stop using credit/debit cards.

    Digital wallets uses cloud computing and captures all the transaction data to analyze customer or merchant usages. Based on this transactional information, a credit score can be developed and against which loans or business lines of credit can be issued.

    In short, digital wallets will completely disrupt and swallow debit & credit card business of the banks.

    [linkedinbadge URL=”https://www.linkedin.com/in/arun-kottolli-24ba881″ connections=”off” mode=”icon” liname=”Arun Kottolli”] is Product Portfolio Strategy at Hewlett Packard Enterprise

     

  • user 10:00 am on October 28, 2016 Permalink | Reply
    Tags: banks, , , ,   

    Blockchain and major questions we need to understand. 

    After reading hundreds of papers on #Blockchain the question and choices are becoming clear. Companies are starting to get an insight of what Blockchain can do for them. I have discussed the possibility for not only as a financial system but also supply chains, government voting, medical record keeping, Identity, transport systems, security systems and the list goes on and on. The possibilities seem to be a bit endless at this point and therefore my mind started to think about what is the next step. What are the #questions we need to answer to get going on a project? I decided to write this whitepaper dissecting the hype word Blockchain and clearing up two major questions that lets us look at the different #technology’s and some of the technical choices we need to understand to get started. This paper is intended for business strategist but techies might find it interesting too.

    What is a Blockchain?

    First, a Blockchain in its simplest form is sets of data, called blocks, connected in some manner to form a chain. The data is usually transaction data but does not have to be. Transaction data gives information about “A” sending or moving something to “B” at what time and how much. The users keep track of their transaction’s by saving links to their transaction’s and storing them in there “wallet”, a small piece of software. The Blockchain organizes blocks with some predefined capacity e.g. 1000 transactions, 1 megabite, all the transactions this hour or some other defined perimeter. The Blockchain mechanism’s, that will be outlined in this paper connect the block of data it to previous blocks and store them.

    First question:

    How are you connecting the blocks to each other? Or even more technical, if you want to give the impression you know something about Blockchains: What is the consensus algorithm?

    Consensus algorithms vary a lot. There are thousands of methods for connecting blocks. I will explain the three most commend ones:

    PoW – Proof of Work, this means that you have some work to do, usually mathematical. To give a real-world example of this, imagine walking in a dessert and suddenly, as you come over a sand dune, you see a pyramid. Before you know who has built it or even what it is, you automatically understand that it took a lot of work to set it up. That is proof of work. Looking at the Eifel tower it dawns on you that someone had to put all those nuts and bolts in place. That is proof of work. If proof of work is implemented correctly in a Blockchain this can be an extremely secure solution. #Bitcoin uses PoW by using application specific circuits (super computers) to solve a hashing challenge, basically brut forcing an incomplete alphanumeric solution. This is kind of like solving a Sudoku puzzle. Because looking at a solved Sudoku it is easy to see if it is solved correctly and at the same time someone has obviously solved it and so its proof of work. To complete some work it requires energy, no matter if it’s the pyramids or the nuts and bolts in the Eifel tower or the hashing challenge on the bitcoin Blockchain, the all require energy. Bitcoin Blockchain PoW translates into using extreme amounts of electric energy. There-fore, since there is no guarantee that you’re the one that will win the challenge, you’re basically staking (gambling) your power consumption as an external factor from the Blockchain itself. With PoW the history, of all the transactions, is secured by the latest block, so any changes in technology will swiftly be compensated as newer technology, e.g. quantum computing, will help securing blocks. This type for Blockchain has one big draw back. You need a large amount of computing power before the Blockchain can be considered secure. I believe decentralization is the only option that has a chance but more on that later.

    PoS – Proof of Stake, this means that you have lottery tickets based on the amount of Power you hold on that Blockchain. Ethereum, Litecoin and Steemit are examples of PoS Blockchains. Compered to PoW, you are now on an internal stake in the Blockchain. So, say you have a vast amount of ether on the Ethereum Blockchain you win the lottery because the odds are in your favor. You then accept the block with your digital signature so that it is approved to connects to the Blockchain. There are to major challenges that arises with PoS. One, it is all done internally so the system is only of value to itself. Two, everyone in the system must watch and make sure that you are not cheating by corrupting the latest block, especially if your odds are so high that you’re signing several blocks in a row. However, if you’re corrupting blocks who are you hurting, if you have vast amounts?

    PoA – Proof of Authority, this means that VISA, MasterCard, a Nations central bank or someone of authority puts their stamp of approval on the block. In this scenario, you could have a 1024-bit encryption code. This code is virtually unbreakable now in this day and age. However where will we be in 20 years. With quantum computers, right around the corner, someone could change a transaction 20 years back that could render the Blockchain corrupted.

    Second question:

    How are you storing the information in the Blockchain? Or even more technical: The Blockchain is distributing the ledger, who is it distributing it to?

    DLT – Distributed Ledger Technology, this means that someone is storing the copy of the ledger usually in real time. Everyone that has a copy of the ledger can see the information in it. Practically you would run a query or search as they tend to get very long. The examples that I have encountered are consortium (a group of partners) of #banks and financial institutions. The R3 Blockchain is one example. These are known as permission Blockchains, as they are closed to the public you require permission to get access. Bitcoin, Ethereum and most crypto-currencies are referred to as decentralized Blockchains, as a play on the opposite of a central bank. As the term suggest it is permission-less and therefore open for everyone to get their own copy of the ledger.

    [linkedinbadge URL=”https://www.linkedin.com/in/bbjercke” connections=”off” mode=”icon” liname=”Bjorn Bjercke”] is Blockchain Specialist

     

  • user 6:00 am on October 28, 2016 Permalink | Reply
    Tags: banks, , , ,   

    The Bankers’ Plumber on FinTech: The Swiss and UBS have good chances to win the battle of digital wealth management. 

     

    The Swiss are world leaders in many things: watches, chocolate, Swiss Army knives and wealth management. Although the world of Swiss private banking has had more downs than up lately, wealth management is in the national DNA. There is good reason to see the Swiss coming out on top as private banking reinvents itself as a more digital product. Amongst the Swiss #banks, UBS is well set up to lead the pack; its recent announcement of its intentions in the UK: “UBS to launch digital wealth management platform in Britain” offers much promise, as does history, or rather deja vue.

    In the #FinTech world, several different terms are used to describe expected changes or influences on the same thing: Digital Wealth Management. #Robo-Advisors. Machine Learning are all being applied in relation to what commentators see will be the future in the world of asset or wealth management.

    In essence, this is about applying more advanced processes to the matter of looking after people’s money; making the interaction between bank and clients function faster, better and cheaper via mobile and internet channels, using rules to drive investment decisions and using AI, artificial intelligence, or Machine Learning to learn lessons and fine tune those decisions. For all the new terms and new #technology, the underlying core banking discipline is not changing;

    1. Asset allocation according to investment goals, which are based on risk appetite and risk experience, or awareness.
    2. The two basic approaches to investing: as an investor either I am “self directed”, making my own decisions, with varying degrees of input from my banks or advisor, or I am a passive investor giving a “mandate” to my advisor.

    Swiss banks have been managing money on this basis for a very long time. There is an ingrained culture of formally setting investment strategies based on investing goals; growth, balanced, capital preservation and of dealing with the multi-currency needs of an international clientele.

    The theory is underpinned by solid back-office processes, for example in investment controlling, making sure that the investment guidelines are followed. Having been the product manager for a Shariah complaint cash management fund, I have seen this working first hand at Credit Suisse. Asset servicing is another discipline where the Swiss excel; the international client base means the banks have a very diverse set of asset information and detail to keep on top of. Prices, corporate actions and dividend information are all effectively gathered and processed.

    Historically, the Swiss have not been that efficient; fat, super-normal, profits bloated by lots of offshore, black money have masked high costs and poor processes. The game plan worked as long as the vast majority of those assets were processed on the big, old-iron, mainframes in Switzerland. Neither UBS nor Credit Suisse managed too build really great platforms for offshore processing that would replicate the efficiency of the HQ machinery. In the US, firms such as Vanguard have led the way in offering low cost investment vehicles.

    So, the core already exists as the industry transitions to another generation, both of clients, technical capabilities and regulatory requirements. The challenge is to adapt. According to head of digital at one of the major banks, the key challenges are:

    1. Moving from a push business model to a pull model, including the move from a predominantly offline experience to an online first experience.
    2. Transformation of legacy technology stack into a modular, open-API platform which is more horizontally integrated
    3. Biggest obstacle is culture change, i.e. to find the talented people required to create new world and change existing mindset to a digital one

    In thinking about where the industry is headed, I had a sense of deja vue. In the early nineties, securities lending, or Stock Borrow & Loan as our American cousins like to call it, became possible in Switzerland. The challenge was to to open up all the “internal drawers” where the security positions were filed away and channel the aggregated holdings to the market. The assets were there, they just needed to be connected up and channeled to the borrowers. UBS, or rather the then SBG, led they way. Led by the charismatic Felix Oegerli, a very capable team added a great deal to the industry. Credit Suisse had the same starting position, but could not get out of the starting blocks. From days at Goldman Sachs, where we were active borrowers, I recall a time lag of about two years between the first deals with the leaders at UBS and the laggards at Credit Suisse.

    Another recent announcement UBS’s private banking arm suggests the bank is taking the steps to simplify their infrastructure: “UBS’ European Bank Finds a Home”

    Lessons Learned: Digital private banking is really the world of what the academics call the “adjacent possibles“. What is close to what we are already doing?

    Apple did not invent MP3 music storage, they innovated around it, creating the iPod and the iTunes music store. Apple was not a start up when it made that move. In the mid aughties, Credit Suisse, then under the leadership of the ex McKinsey duo of Lukas Muehlemann and Thomas Wellauer pursued a “mass affluent” strategy. This was based on “bricks” rather than “clicks”. That was an idea ahead of its time. The “mass affluent” will not pay 100 basis points or more for advice. What they will pay will support a “clicks” based approach, but not a “bricks”based one.

    There is wonderful advert for Ricola, a Swiss company which makes lozenges. The main character pops up to challenge others around the world making claims to have invented the sweet, challenging them: “Who invented it? The Swiss!”

    My money, well at least the deeply out of the money options my wife has as a UBS employee, is on the Swiss mastering this evolution and UBS leading the pack.

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    [linkedinbadge URL=”https://www.linkedin.com/in/bankersplumber” connections=”off” mode=”icon” liname=”Olaf Ransome”] is Bankers`Plumber | Intraday Liquidity | Cash Management | BCBS 248 | CLS Programme Manager

     

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