How the ‘Brexit’ Could Impact the UK’s Blockchain Influence
Momentum around the UK’s rapidly growing #blockchain industry #could slow following the ‘#Brexit‘ vote, experts say.
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Blockchain Groups Gain Momentum in Cross-Border Payments
Real-time international #payments are not far over the horizon anymore. San Francisco-based Ripple announced that seven global #banks have joined its network to improve their cross-border payments experience. Among the banks are Santander, UniCredit, UBS, ReiseBank, CIBC, National Bank of Abu Dhabi (NBAD), and ATB Financial. All of the banks tested transferring moneyRead More
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Asset Managers Need to Adapt Their Business Models
As #fintech surges, Luxembourgers #asset #managers and servicing firms “are well-positioned to ensure that Luxembourg is in the driving seat for innovation,” according to Simon Ramos, partner of Deloitte Luxembourg.
In a new paper entitled ‘How can fintech facilitate fund distribution,’ Deloitte Luxembourg and the Association of the Luxembourg Fund Industry (ALFI) explore Luxembourg&8217;s vibrant fintech scene and further dive into the impact of new technologies on the distribution model of the asset management industry.With over 150 fintech companies based in Luxembourg, the domestic fintech scene has been flourishing, and new technologies, including #blockchain, artificial intelligence, machine learning, digital investment platforms, and peer-to-peer lending, are quickly emerging.
According to Denise Voss, chairman of ALFI, fintech will have a fundamental impact on the operating model of asset managers, distribution intermediaries and services providers. Fintech should not only allow the investment management ecosystem to increase in efficiency, it should also enable the industry to provide better customer experience and that, at a cheaper cost.
&8220;The asset management industry has a once-in-a-generation opportunity to re-imagine and modernize its distribution model to address market and operational challenges – for future and current investors,&8221; Voss said in a statement.
The new generation of investors will redefine the service level expected from asset managers by imposing more interaction with the brand, the report says. It notes that there is also a strong #need for online and enhanced execution platforms. This includes market insight, wealth reporting as well as social investment interaction with peers.
The report further dives into the key fintech innovation trends which are expected to redefine the industry.
Machine learning will enhance prediction-based portfolio management techniques.
Digital investment platforms and #robo-advisors will become more and more popular, especially in execution-only-driven D2C. They will also enable a strong investor education about products and #their related risks.
Peer-to-peer lending is on its way to become an alternative asset class.
Big data offers a lifetime opportunity for investment management actors to make use of and create value out of the enormous amount of information at their disposal. Possibilities include digital wealth reports, market intelligence, and peer comparison insights to the end investors.
Nevertheless, the increased digital interaction on online platforms will increase cyber risk, a top priority for digital businesses.
Asset servicing providers can leverage the benefits of blockchain #technology to offer a cost efficient and automated asset-servicing model.
Infographic via Deloitte
The report urges Luxembourg actors to actively drive the fintech innovation locally, as well as engage with disruptors, modernizers, and enablers in order to be ahead of developments and avoid relying on innovation from abroad.
The report advises for greater cooperation, calling for the investment management ecosystem to collectively explore initiatives in terms of enhanced online trading platforms, white label data analytics, managed services, regtech, blockchain or digital distribution passports.
The organizations foresee further growth and tech developments in the sector. It predicts that in the near future, many more companies offering technological solutions streamlining the current operating model and addressing the needs of new generation of investors, will be entering the market.
As fintech grows, so will competition. Hence, the report advises incumbent firms to #adapt to this emerging trend. A possible strategy would be for them to develop their own technological solutions. They can also collaborate with fintech companies or even absorb them in their business model.
This technological shift will be a challenge for incumbents but will also bring many opportunities.
Get Deloitte Luxembourg and ALFI&8217;s &8216;How can Fintech facilitate fund distribution?&8217; whitepaper: http://www2.deloitte.com/lu/en/pages/technology/articles/how-can-fintech-facilitate-fund-distribution.html
Featured image by Denphumi via Shutterstock.com.
The post Asset Managers Need to Adapt Their Business Models appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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Understanding The DAO Hack for Journalists
#Blockchain strategist David Siegel gives a step-by-step overview of the attack on The DAO for #journalists and media members.
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31 Chinese Firms Form Financial Blockchain Consortium
A group of #technology and finance companies in Shenzhen, China, have launched a new #blockchain #consortium.
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Blockchain Startup Everledger Joins MasterCard Incubator
#MasterCard has selected diamond provenance #startup #Everledger for its summer startup #incubator. One of seven companies to join the 2016 Start Path Global program, Everledger will receive assistance from MasterCard to scale its operations and enter new markets. The startups will begin the program by working with MasterCard during a week-long immersion in London, followed […]
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Blockchain and the Auditing Revolution – Real Time Audit within the Capabilities of Blockchain
#Auditing is the process of conducting an independent examination of an organization’s accounts, books and/or documents in order to determine whether the organization’s financial statements present a fair view of the business. It is based on a set of pre-determined guidelines, normally the International Accounting Standards, or GAAP (generally accepted accounting principles).
Auditors themselves are normally independent third-party intermediaries who are employed to verify the accuracy of companies’ financial statements. Indeed, the financial statements themselves can be viewed as a summation of what happened in a company’s ledger throughout the accounting period. Ultimately, the auditor then decides that either the financial statements make sense, or they is a discrepancy between what the company’s management has provided and what the true numbers should be.
Auditor and Client relationship
Because the client is responsible for paying the auditor, an inherent bias emerges. This pecuniary relationship between auditor and client could tempt the auditor to provide a false (or rosier) assessment of its client’s accounts, for the chance of repeat business from the client at the end of the next accounting period. Moreover, the client may also present the auditor with false or exaggerated figures to inflate the company’s true value – this is known as ‘cooking the books’.
Whether the auditor can detect this or not is largely immaterial – the fact that potential exists for compromising the accuracy of the financial statements at the expense of the public is of grave concern. This has significant implications for how internal and external parties &8211; including regulators &8211; perceive the quality of the auditing process.
There have been high-profile cases where poor standards of auditing have been uncovered, and which have had significant consequences on the accounting industry. Enron is arguably the most high profile example. Arthur Andersen, the firm responsible for auditing Enron’s books since it started doing business in 1985, played a significant role in the scandal, particularly once it was revealed that the accountancy firm was guilty of obstructing justice by playing an influential part in the shredding of a huge number of incriminating documents just before the investigations commenced.
The scandal was just one in a number of cases involving auditing incompetency where corporate accounts were misrepresented, including the UK’s Polly Peck International, Germany’s Metallgesellschaft, and Cendant Corp and Sunbeam Corp in the US. Indeed, by the #time Enron collapsed in early 2002, it was revealed that 700 US companies had to restate accounts in the previous 4 years alone.
The collapse of Enron
The fall of Andersen highlighted the pressure on accountancy firms to boost profits, while the company itself compromised the integrity of the auditor’s role as an independent third-party by making partners effectively become salespeople. This made auditors agenda-driven, as they began empathising more with their clients, and in doing so, destroyed the auditor’s dual function of servicing its clients but also equally looking out for the public interest.
Indeed, the basis for many auditing failures since then has been the questionable business relationship between auditor and client, which has generated much conflict of interest. Instead of a company’s auditors being appointed independently by shareholders, many were chosen by the company&8217;s internal management, or even worse, they were hired to senior management positions, often with the intention of saving costs. Perhaps in the wake of the Enron scandal, the biggest fallout experienced by the global auditing industry was the loss in public trust.
Auditors are trusted upon to issue their opinion as accurately as possible, while the public also trusts that the company has not tried to cook the books. According to Ellen Masterson, former global head of #audit methodology at PwC, moreover, the priority for client management was to reduce the cost of the audit, meaning that auditors were “pressured to do the minimum”.
In the aftermath of Enron, the Sarbanes Oxley Act was implemented which required that top executives sign off on audits, fully in the knowledge that they would be held criminally responsible if the books had been cooked. Furthermore, auditors now have to report to an audit committee, which has widened the gap between a company’s management and the auditing firm. Audit-committee members can also be prosecuted by regulators for fraudulently influencing a company&8217;s auditors. While Sarbanes-Oxley has decisively improved the auditing process, there is still no guarantee that executives who sign off on audited accounts know for certain that what they are approving is 100% accurate.
Auditing today, therefore, is still lumbered with such inefficiencies, remains based on ‘reasonable assurance’, and is broadly unchanged from what has been practised for decades, meaning that the process is now ripe for a new, innovative transformation. At present, each account (such as assets, revenues or liabilities) is viewed as a set of combined transactions, which produces a final balance at the end of the period.
During the audit, the auditor will verify a certain number of these accounts with the trading parties and determine the accuracy of the balance using a sample of previous accounting entries. They may also, on occasion, speak to employees to detect whether ethical accounting practices have been followed or not.
Trust – the auditors most expensive good
Therefore, trust of the auditor and the company still remains at the core of the auditing process, and thus is still potentially subject to fraud and manipulation. Further still, there may very well be another auditor verifying the very same transactions at the other end. As such, the entire process remains inefficient, while the quality of the audit still largely depends on judgement calls by the auditor, meaning that it remains subject to accuracy disputes.
Despite Sarbanes-Oxley, moreover, auditors still have the pressure of generating repeat business from clients, so the temptation to stray from objective analysis still exists. Some studies have even shown that firms are reporting downward pressure on audit fees due to clients questioning the value of audit services, especially given that they are now increasingly ‘commoditised’ as a result of being heavily regulated, and thus there is little differentiation among the services being offered by various auditors.
Many believe that #blockchain could transform this process, in part because the #technology removes the need for auditing to depend on trust. Blockchain provides a globally distributed, decentralized ledger of which everyone has the exact same copy. Whereas auditing at present entails the confirmation of transactions and balances on a company’s accounting ledger at the end of the period, a transaction on the blockchain would provide a permanent and immutable record of the transaction almost immediately. In effect, blockchain allows the recording of the transaction to take place at the same time as the transaction itself.
All that would be required at the time of the transaction would be for the two trading parties to compare accounting entries while maintaining data privacy. To ensure the data can’t be changed, digital signatures would be used, whereby companies would publish their keys to a public authority who would verify their identities. “The existence of digital signatures from both parties implies that the transaction data is agreed upon” explains Roger Willis, former member of Ernst & Young’s (EY) forensic data analytics and audit teams.
Once posted to the blockchain, the transaction is time stamped and exists forever. As described by prominent #Bitcoin proponent and investor Trace Mayer, “Everyone agrees on consensus that those transactions actually happened, and boom you have that verification. You have the debit, the credit, and the confirmation by the network”.
CPA at Xen Accounting, Ryan Lazanis believes that “everything that is on the books of the company and therefore everything comprising a company’s financial statements could occur on the blockchain”. If true, then the blockchain’s existence would not require the employment of a third-party auditor for verification purposes; instead, everything is recorded and verified in #real-time.
The redundancy (or indeed, the wholesale elimination) of the auditor’s role, therefore, could transform the entire accounting industry. This would have a whole range of benefits. Charles Hoskinson, former CEO of revolutionary blockchain company Ethereum, for example, attests that because blockchain provides transaction histories that go back to their inception, the auditing process would be immune to manipulation, as “every single penny could be accounted for by this incorruptible entity”.
And what are the big-4 doing today
The ‘big four’ accounting firms – Deloitte, PWC, KPMG and EY &8211; are also investigating how blockchain can improve the auditing process. Deloitte, for example, is currently focused on developing automation for some of its audit processing. According to Deloitte Consulting principal Eric Piscini, the solution his company is developing will allow the company to post every transaction onto the blockchain in real-time. To audit the company then, Deloitte would simply look at the blockchain and all its transactions.
There would be no need for external verification of the records “because the blockchain is immutable and time-stamped”. Piscini also believes that blockchain will make the auditing process quicker, cheaper and more transparent for regulators, thereby substantially improving accessibility. EY’s Willis agrees with this sentiment, suggesting that auditing all revenues and expenses for multiple companies could be conducted “in literally a split second because the companies are capturing, signing and agreeing all the data at the time of transaction”.
This would ostensibly be good news for the Securities & Exchange Commission (SEC), who recently expressed the urgent need for a Consolidated Audit Trail (CAT), which would create a system that would enable the regulator to comprehensively track markets across various venues and systems, providing increased transparency and better access to critical data.
Given the immutability and decentralized accessibility of blockchain, however, the access and accountability of the SEC’s audit trail could be wholly improved. As highlighted by McKinsey, “blockchains contain detailed and precise histories of asset movements, which has the additional benefit of being attractive to regulators”, suggesting that consolidated audit trails could very well use blockchains for the purposes of capital market transparency.
The post Blockchain and the Auditing Revolution &8211; Real Time Audit within the Capabilities of Blockchain appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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CoinDesk’s Ethereum Research Report Now Available
CoinDesk #Research has released “Understanding #Ethereum“, a 48-page deep dive into one of the most exciting #blockchain projects today.
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The DAO Shows Blockchain Can’t Code Away Social Problems
CoinDesk columnist Bailey Reutzel takes aim at what she believes are the #social misconceptions that led to the debacle at The DAO.
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Falsch abgebogen? Die FinTech-Reise der Europäischen Grossbanken
Adaption, Kooperation, Inkubation? Die #FinTech-Aktivitäten europäischer #Grossbanken in Deutschland, der Schweiz, Großbritannien und Spanien auf dem Prüfstand.
Autor: Hans Jörg Von Shönfeldt, Pass Global ConsultingKürzlich hat die Deutsche Bank verkündet, ernst zu machen: Sie will in diesem Jahr rund 200 Millionen Euro in digitale Innovationen investieren – bis 2020 sollen es etwa 750 Millionen Euro sein. Ein zentraler Baustein: Die Bank kooperiert mit einer ganzen Reihe von FinTechs. Es stehen u.a. die Namen Zinspilot, Figo, Fincite, WebID, DSwiss und Gini im Raum. Für mich der Anstoß, die FinTech-Aktivitäten einiger europäischer Großbanken genauer unter die Lupe zu nehmen – ohne Anspruch auf Vollständigkeit.
Ein Blick vor die Haustüre
Welche Strategien die deutschen Banken verfolgen, hat die Finance-Redaktion in ihrer Serie „FinTech-Strategien deutscher Banken“ zusammengefasst. Wer mehr erfahren möchte, dem sei ein Klick auf die hinterlegten Links empfohlen.
- Die Commerzbank setzt auf drei Säulen: Acceleratoren, Inkubatoren und Venture Capital. Der Main Incubator ist eine Tochter der Commerzbank und stellt FinTechs Kapital, Know-how und Räumlichkeiten zur Verfügung. Ziel ist, die Produkte in die Angebotspalette zu integrieren. Der Fokus liegt auf dem Firmenkundengeschäft, was sich auch im Beteiligungsportfolio widerspiegelt: Hier finden sich Gini, Traxpay, Byebuy und Optiopay. Die Startup-Garage der Commerzbank-Tochter Comdirect folgt dem Accelerator-Modell und CommerzVentures nutzt die Bank für ein Hedging. Die Commerzbank plant, noch im ersten Halbjahr 2016 mit ihrer eigenen Kreditvermittlungsplattform Main Funders zu starten.
- Die HypoVereinsbank betrachtet FinTechs in erster Linie als mögliche Kooperationspartner. Die Zusammenarbeit erfolgt sowohl über direkte Beteiligungen als auch über Venture-Capital-Fonds. Seit kurzem kooperiert man mit der Technischen Universität München. Über das Accelerator-Programm TechFounders erhält die HypoVereinsbank direkten Zugang zu FinTechs. Im Firmenkundengeschäft setzt die Bank neben eigenen Entwicklungen auch auf FinTech-Kooperationen (u.a. SumUp, Compeon, Fintura und Gini).
- Die genossenschaftliche DZ Bank geht die FinTech-Thematik in erster Linie dezentral an. Die Genossenschaftsbanken sollen eigenständig an ihren Innovationsprojekten arbeiten – trotz einer neugeschaffenen Innovations-Abteilung, die als Sammelpool für Informationen dient. Extern treibt die DZ Bank ihre FinTech-Aktivitäten gemeinsam mit Axel Springer voran. Dazu ging sie eine strategische Partnerschaft mit Plug & Play ein, dem Venture-Capital-Arm des Verlags.
Unsere Schweizer Nachbarn
Wie sieht es in der Schweiz aus? Vor kurzem gab es gleich mehrere Überraschungen: Die Rivalen UBS und Credit Suisse haben mit dem Kickstart Accelerator eine Initiative für den FinTech-Standort Schweizlanciert. Außerdem haben UBS, Credit Suisse, PostFinance, Raiffeisen, Zürcher Kantonalbank, die Börsenbetreiberin SIX, Coop, Migros sowie der Telekom-Riese Swisscom Sondierungsgespräche bezüglich einer gemeinsamen Lösung für digitale Zahlungsverkehrsleistungen in der Schweiz aufgenommen. Das Ergebnis: Die beiden Schweizer Bezahl-Apps Twint und Paymit fusionieren. Hintergrund ist die drohende Konkurrenz durch ausländische Giganten wie Apple, Google oder Samsung.
- Die Credit Suisse engagiert sich im New Yorker Silicon Alley. Das 2010 eingeführte Innovation Lab soll die Entwicklungen im Bereich FinTech beschleunigen. Die Schweizer Bank ist seit dem Programmstart an Bord. Außerdem ist man in Singapur mit einer eigenen FinTech-Innovationsstätte präsent.
- Anfang April wurde vermeldet, dass die Investmentbank der UBS für die Beratung von FinTech-Firmen eine eigene Leitungsstelle schafft – ein Indiz, dass dem Boom-Thema eine große Bedeutung beigemessen wird. Außerdem lancierte die Bank kürzlich die digitale Kontoeröffnung, bietet mit Paymit eine digitale Brieftasche an und tüftelt in einem Labor in London an der #Blockchain-Technologie. Seit Mitte 2014 unterhält die USB ein FinTech-Innovationslabor in Singapur. Allerdings hat der IT-Vorstand und FinTech-Guru Oliver Bussmann das Unternehmen zum 1. April verlassen – es bleibt also spannend, wo die Reise für das Finanzinstitut nun hingeht.
- Prof. Dr. Andreas Dietrich schreibt im IFZ Retail Banking Blog der Hochschule Luzern über diePostFinance: „Viele Banken erkennen das Potenzial und auch die Notwendigkeit von Innovationen, doch die meisten Finanzinstitute haben keinen strukturierten Ansatz, wie sie diese gezielt fördern. Ein aus meiner Sicht sehr gutes Beispiel für die Innovationsförderung stammt von PostFinance.“ Dabei geht Dietrich auf das interne Innovationsmanagement, die Motivation von Mitarbeitern und die Veranstaltung von Hackathons ein. Ab 2017 beabsichtigt man, in Kooperation mit Swissquote, in die Online-Vermögensverwaltung einzusteigen.
Ein Blick auf die Insel
Auch britische Banken sind nicht tatenlos und versuchen mit Acceleratoren und anderen Start-up-Initiativen ihr Glück – sie haben das Thema FinTech deutlich früher aufgenommen als die Konkurrenz der DACH-Region. Nicht umsonst wird London derzeit als europäischer FinTech-Hub gehandelt.
- Barclays hat einen eigenen Accelarator und ist insgesamt sehr aktiv im Promoting, Aufbau und Entwickeln von diversen FinTech-Start-ups.
- RBS kooperiert beim Thema Accelerator mit NatWest, Lloyds mit dem Londoner Startupbootcamp und HSBC hat angekündigt, weltweit 200 Millionen Dollar in Start-ups zu investieren, die die Finanztechnologie verbessern wollen. Ende 2015 wurde außerdem ein Fintech-Lab in Singapur eröffnet.
Unter der Sonne Spaniens
- Die Santander setzt anstatt auf Eigenentwicklungen auf gezielte Investitionen – u.a. in innovative Bezahlverfahren: Fünf Millionen US-Dollar aus dem Innoventures Fund der Bank bekam Mycheck. Das New Yorker Start-up erleichtert Freunden das Bezahlen im Lokal per App. Die Rechnung wird dort aufgeladen, danach kann jeder sein Scherflein mobil beitragen. Ansonsten hat man mit Santander InnoVentures ein Vehikel zur Hand, welches sehr dynamisch große Summen von Venture Capital in die FinTech-Szene pumpt. Man geht hierbei in der Werbung durchaus aggressiv vor.
- Die Bankengruppe BBVA mit Hauptsitz in Spanien, eine der größten Banken in Südamerika, hat im März bekannt gegeben, das finnische Start-up Holvi zu übernehmen. Hierbei handelt es sich um einen Online-Dienst, der Unternehmern, Kleinunternehmern und Freelancern ein digitales Geschäftskonto anbietet, mit dem man Banking, papierlose Buchhaltung und Rechnungslegung von einer zentralen Plattform abwickeln können soll. Holvi, das auch in Österreich genutzt wird, soll als eigenständiger Service weiterlaufen. Der neue Eigentümer erwartet sich davon, Know-how und Ideen mit der neuen Tochter austauschen zu können.
Ohne interne Innovationen geht es nicht
Natürlich ist das nur eine oberflächliche Zusammenfassung. Sie zeigt aber eines ganz deutlich: Ob London, Berlin/Frankfurt, Bern oder Madrid – die #europäischen Großbanken suchen an den gleichen Stellen nach Inspiration, und verlassen sich vornehmlich auf externes Know-how. Dabei fällt auf, dass die Investitionen längst international gemanagt werden. Die Banken- und Venture-Capital-Szene rückt länderübergreifend zusammen. Was fehlt, sind durchschlagende Erfolge.
Innovationen kommen in der Bankenbranche nach wie vor hauptsächlich von außen – trotz quer über den Erdball verteilter Innovation Labs. Und genau hier liegt der entscheidende Knackpunkt. Banken können mit FinTechs kooperieren oder FinTechs kaufen, aber ohne ein internes Innovationsmanagement fehlt in letzter Konsequenz die Durchschlagskraft. Es reicht nicht, losgelöste Einheiten auf der grünen Wiese testen zu lassen. Ein Mehr an Innovation erfordert ein Mehr an systematischer Kreativität: Banken müssen ihre Kultur verändern, Methoden lernen, um selbst kreativ zu sein. Denn mit dem richtigen System und der Freiheit, auszuprobieren und Fehler zu begehen, können auch Banken zum FinTech werden – aber eben auch nur dann….
Originalpost aus: http://www.finance-it-blog.de/hypes-trends-challenges/falsch-abgebogen-die-fintech-reise-der-europaeischen-grossbanken/
The post Falsch abgebogen? Die FinTech-Reise der Europäischen Grossbanken appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.
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