A Panel: Blockchain May Change the Way Financial Orgs Operate

by Carlo GutierrezNovember 14, 2016
While there have been many discussions about blockchain in finance, it's still unclear how much one can save and how the business models will evolve.

A recent Hyperledger meetup in Zurich included a panel discussing the current state of blockchain in the finance industry. The speakers consisted of UBS’s Peter Ivankay, Capco’s Nourdine Abderrahmane, and Credit Suisse’s Martin Ploom.

 

Three blockchain perspectives

During the event, Peter mentioned three points of views for assessing whether a particular problem warranted a blockchain solution.

  • Business view. Do we act as intermediaries? Is there more than one party?
  • Technical view. Does the throughput need to be big? Do we need low latency?
  • Regulatory view. Does the regulator have to be able to look at the transactions? Does it have to be immutable?

However, Peter is concerned that some people “try to find use cases for the blockchain technology and not the other way around.”

Hyperledger Blockchain Finance Martin Ploom Peter Ivankay Nourdine Abderrahmane 1

Nourdine emphasized the required key features that would make blockchain a suitable solution:

  • Immutability
  • Lack of trust
  • Decentralized and distributed database approach

If your business has any pain points where these key features of blockchain can help to solve the issue, then it’s “worth exploring.” If not, then you’re “better off taking a different solution,” said Nourdine.

 

A change in the business models

Nourdine noted that blockchain is already affecting markets, where there is a high level of intermediation, such as stock exchanges. They fear being left out because of a dated business model.

“You don’t use a central clearing system and pay fees for that, because you like it so much and it provides the best service but because there is no alternative,” he said. “Whenever you find alternative ways to settle your payments, you will look into this.”

Hyperledger Blockchain Finance Martin Ploom Peter Ivankay Nourdine Abderrahmane 3

Peter mentioned that in wealth management, clients are charged based on the number of assets they have under management. In a blockchain system, that’s not going to work, since it implies a very different business model.

“It opens the opportunity where we can charge based on the advice that we give or the research that we do.” —Peter Ivankay, UBS

So, adopting blockchain may also mean a change in the way a financial institution operates, how it is charged, etc. Obviously, this may lead to some fears and resistance.

 

Deep Dive with Hyperlenger Fabric

How to calculate savings?

Peter joked about people’s fear around blockchain and it’s either seen as a disruptive force or an opportunity to prepare for.

“You just say blockchain and you get money thrown at you.” —Peter Ivankay, UBS

With everything we currently know about blockchain—its potential to reduce monopolies, streamline international trade, and make a difference in any business network—is having a blockchain always better and cheaper?

Hyperledger Blockchain Finance Martin Ploom Peter Ivankay Nourdine Abderrahmane 2

Right now, it’s difficult to put an exact quantitative cost reduction with blockchain implementation, but there are already instances where we can see qualitative cost reduction. Blockchain is about streamlining and in finance where T+3 and T+2 is the norm, being able to shrink processing time to minutes brings a lot of value in terms of savings in manpower, time, and risks.

“You need to know the business case in order to identify the money you can save. The qualitative potential of cost saving is huge, quantitative I couldn’t say.” —Nourdine Abderrahmane, Capco

In trade finance, there are cases wherein reconciliation between parties take multiple days. Blockchain’s consensus and immutability address this problem.

“Most of the time is being spent just with reconciling with other parties on what is the truth.”
—Nourdine Abderrahmane, Capco

If we use these examples, it’s all about looking at the business model, finding the processes that are streamlined, then deriving the formula for cost saved. Nevertheless, in reality, it’s far more complicated, of course.

 

Want details? Watch the video!

Table of contents

  1. What makes you excited about blockchain? (3’20”)
  2. What’s the criteria in picking blockchain? (6’45”)
  3. Are there cases where blockchain wasn’t the answer? (12’05”)
  4. How can you estimate the economic value of using blockchain? (19’25”)
  5. What use cases are you most passionate about? (31’25”)
  6. Q&A. Are there particular use cases where blockchain has been implemented? (37’34”)

 

 

Related discussion

There was another panel in the meetup, which included IBM’s Elli Androulaki and Angelo De Caro and ETH Zurich’s Stefan Klauser. Here, they highlighted a few challenges to the development of blockchain—community, trust, regulations, and governance.

 

 

Related reading


About the panelists

Martin Ploom, Credit Suisse bio
Martin Ploom is Senior Business Project Manager and VP at Credit Suisse, a global financial services company providing Private Banking & Wealth Management services, and Investment Banking services and expertise, to companies, institutions and high-net-worth clients. Martin is delivers strategy projects, implementation projects, pre-studies, and process change projects. He has 15 years of experience in international project management, 8 years in financial sector, 3 years in insurance sector, and 4 years in a startup company.

 

Nourdine Abderrahmane, Capco bio
Nourdine Abderrahmane is Principal Consultant at Capco, a global management consultancy with a focus in financial services including banking and payments, capital markets, and wealth and asset management. Nourdine leads a number of business topics and client relationships on Swiss blockchain practice at Capco. Nourdine’s experience includes working for Credit Suisse, Accenture, and UBS Investment Bank.

 

Peter Ivankay, UBS bio
Peter Ivankay is Innovation Project Manager at UBS. Peter is involved in ideation, incubation, and acceleration within wealth management. He has special expertise in blockchain, personal identity, natural language generation, and a number of other areas. Before joining UBS as transformational innovator, Peter worked as M&A advisory intern at Deloitte, corporate finance analyst at KBC Securities, and real estate finance and risk management intern at UniCredit.

 

Chris Hawkes, Sapient Global Markets
Chris Hawkes is Director at Sapient Global Markets. He has management experience across multiple countries, clients, and industries with responsibility for multi-million euro projects. Chris specializes in account management, large program management, portfolio delivery management, management consulting, pre-sales, IT strategy, offshoring, outsourcing, and risk management.
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