Finance, Technology and the lessons for business.. 10s: Digitisation - - PowerPoint PPT Presentation

90’s: PC’s and the age of the Spreadsheet 00’s: The Internet – unprecedented access to data, distribution and communication 10’s: Digitisation and the future

Finance, Technology and the lessons for business…..

2

 20+ Years at Deutsche Bank…

• Trading
• Sales & Distribution
• Product Management

Who Am I?

3

News Flash: Technology is disrupting traditional Businesses!!

4

Banking amongst first industry to adopt Computers

Personal Computers – 1990’s

5

Very expensive: business case was back-office automation...

Spread Sheets allowed the development of the Derivatives...

Personal Computers – 1990’s

6

Put Computer Power in the hands of non-technologists…

Financial Derivatives

7

Innovation outpaced understanding…..

Lessons from the first Era

8

Technology may not be used the way the inventor intended

TNT was originally developed for use as a yellow dye

Lessons from the first Era

9

Abstract Technological Complexity Away from the User.

Make it simple to use!

Lessons from the first Era

10

Don’t “improve” your Products beyond what the user needs!

Beware unintended consequences!

Greater Distribution

The Internet – 2000’s

11

Ability to automate customer interactions

New Entrants

12

Robot Trading

13

Solving the Business Problems with algorithms…..

Data & Analytics

14

Social Networks

15

Coffee houses served the same purpose as Social Networks…

Lessons from the second Era

16

Don’t get frustrated when your product doesn’t work, find out why and PIVOT to a new product, market, etc

Lessons from the second Era

17

Clay Christensen: “innovate in low end or in a new market”

Lessons from the second Era

18

The more data you have, the less intelligent you need to be….

Lessons from the second Era

19

Make sure you keep the user in mind!

Digitalisation – 2010’s

20

Digitalisation – 2010’s

21

Disaggregators

22

Break The Business into Components

23

Client Product Component Product Shared Services

The Future - Yap Stones!!

24

What is Crypto & Why Should We Care?

25

Bitcoin has reconceptualised one the fundamental banking Product: Trust

• Can you keep my assets safe?
• Can you transfer my assets safely to other parties?
• Can you take delivery of assets on my behalf?

Cryptocurrencies – A Beginners Guide

26

Cryptocurrencies – A Beginners Guide

27

Cryptocurrencies – A Beginners Guide

28

Cryptocurrencies – The Blockchain

29

The Blockchain is essentially a Ledger containing a list of all

• transactions. Its’ key features are that it is Distributed and

Transparent.

30

 Way to transfer ownership of a ”Digital Asset”

• Eliminates Forgery
• Eliminates Fraud

It’s very quick It’s cheap It’s irrevocable

Will Bitcoin become the new currency?

Will Bitcoin become the new currency?

31

Anonymity Fungibility Cost Volatility Deflation

“A mysterious new technology emerges, seemingly out of nowhere, but actually the result of two decades of intense research and development by nearly anonymous researchers. Political idealists project visions of liberation and revolution onto it; establishment elites heap contempt and scorn on it. On the other hand, technologists – nerds – are transfixed by it. They see within it enormous potential and spend their nights and weekends tinkering with it. Eventually mainstream products, companies and industries emerge to commercialize it; its effects become profound; and later, many people wonder why its powerful promise wasn’t more obvious from the start. What technology am I talking about? Personal computers in 1975, the Internet in 1993, and – I believe – Bitcoin in 2014.”

Marc Andreesen (Inventor of Nestcape and founder of Andreesen

Horowitz)

32

Smart Contracts – Crypto 2.0

33

Crypto 2.0 allows for Ledger entries to contain or reference business logic –programmable entries that could facilitate, verify,

• r enforce the negotiation of or the performance of a contract!

Transactions (Sending value to the contract) Events (Sending information to the contract) Transactions (Sending value to the contract) Events (Sending information to the contract)

Securities Lifecycle...

34 Security Issuer (Corporate, etc) Registrar / Transfer Agent CSD Market Maker/Dealer Exchange Clearing House Investor (Buyer) Investor (Seller) Executing Broker (Buyer) Executing Broker (Seller)

Issuance Dealing

Clearing Broker (Buyer) Clearing Broker (Seller) Custodian (Buyer) Custodian (Seller) Global Custodian (Buyer) Global Custodian (Seller) CSD

Regulator Clearing and Settlement

Securities Lifecycle...

35 Security Issuer (Corporate, etc) Registrar / Transfer Agent CSD Market Maker/Dealer Exchange Clearing House Investor (Buyer) Investor (Seller) Executing Broker (Buyer) Executing Broker (Seller)

Issuance Dealing

Clearing Broker (Buyer) Clearing Broker (Seller) Custodian (Buyer) Custodian (Seller) Global Custodian (Buyer) Global Custodian (Seller) CSD

Regulator Clearing and Settlement

1. Greater Transparency 2. Faster Processing

• A. Decreased RWA (Balance sheet

usage)

• B. Decreased operational Spend

(and risk?)

Securities Lifecycle...

36 Security Issuer (Corporate, etc) Market Maker/Dealer Exchange Investor (Buyer) Investor (Seller) Executing Broker (Buyer) Executing Broker (Seller)

Issuance Dealing Regulator Blockchain

Securities Lending? Depositary? Administration Services? Secure Data?

Other Use Cases

37

 Trade Finance: invoices/documents sent on such a protocol? Could the documents be verified by a digital signature releasing instantaneous payment automatically? Would that eliminate the need for Guarantee’s/Letters of Credit?  Financial Derivatives: Could the derivatives contain and modify under certain conditions with no intervention (knock-out options)?  Exchanges: Do you still need an exchange to trade on? Could a protocol be adapted to create a decentralised exchange where one could offer to buy or sell any asset at a particular price, and that price would only be matched if another participant was interested

Conclusions & Questions

38

 Approach everything from the perspective of your customer  Pull the value chain apart to find where people are experiencing pain  Make sure the interface is usable  Don’t bother with improvements that your customers don’t value  Find new or low end markets to disrupt in  Don’t get hung up on your original idea – PIVOT  Shrink the distance between users (consumers) and users (producers)  Can you reconceptualize parts of your value chain as an algorithm?

39