24 Jul3 things Digital & Blockchain I learned this week. Stuff worth knowing from The Bankers’ Plumber
“It’s gonna be great!” If the Donald were to tweet on Blockchain, those would be his words. Like the rest of us though, he would not be clear on when and we would all be a little vague on that phrase so beloved of our colleagues in Agile development; “the definition of done”.
Despair not though, because we are taking some important steps on the way. In the last week, three stories caught my attention:
Vulnerability: it is not yet clear that the Blockchain, in its several possible forms is immune to bad actors. In a disturbing story, hackers exploited code weakness in Ethereum to steal $40m. Now, as a long time banker, what troubles me is whether it is possible to trace the culprits or not. In days past, a bank robbery meant stealing cold, hard cash, which understandably was hard to trace. Now, in these digital times, we are talking ledger. I am a simple guy and am thinking double entry book keeping, which has me thinking it ought to be able to catch a digital thief. Somebody or some bodies balances must go up when others go down. Disturbing,
Design matters: our IT friends are renowned for being rather geeky and in their own world. A rare skill is the ability to be able to talk to the business community in terms that the non-tech folks can understand. The consortium R3Cev has the very able Richard Brown as its CTO. Richard’s most recent Blog Post offers a real layman’s explanation of the potential pitfalls around Blockchain. Specifically, he looks at the need to share data within a group which might change over time.
The value of immutable data: Immutable means there is no debate that something is 100% authentic and untampered with. On a recent BA flight, I read a great article in their Business Life magazine. “The Blockchain effect” is worth a read generally. What caught my eye, perhaps because I was flying at the time, was a reference to a software company in the aviation business; Chain Technology, which is trying to become a central hub of all that vital reference data we need to share to get on a plane. Add to this the efforts to tap into national ID databases for customer on-boarding (see recent posts).
Lessons to be Learned:
Money on the Blockchain will be a vital enabler. Before we get there though, we need to see some more experimenting. These recent robberies on a ledger system need explaining. I hope we will see some more detail.
Design is crucial! The late Steve Jobs was renowned for being obsessed with details, including things unseen, caring deeply about the insides of his creations. Any comparison to Apple, Steve Jobs & the brilliant Jonny Ive is dangerous; R3 is in designing industrial products rather than retail ones. In Richard Brown they have a designer who is immensely thoughtful and able to explain the value of his team’s work to the world at large. I recommend following his Blog.
For the new digital world, Blockchain and national ID sources offer huge potential to simplify the process of sharing information and cutting out the effort of doing that. Exciting times.
About the Author: I help banks master their post trade processing; optimising, re-engineering, building.
I understand the front-to-back and end-to-end impact of what banks do. That allows me to build the best processes for my clients; ones that deliver on the three key dimensions of Operations: control, capacity and cost.
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The Bankers’ Plumber’s Handbook
Control in banks. How to do operations properly.
For some in the FS world, it is too late. For most, understanding how to make things work properly is a good investment of their time.
My book tries to make it easy for you and includes a collection of real life, true stories from nearly 30 years of adventures in banking around the world. True tales of Goldman Sachs and collecting money from the mob, losing $2m of the partners’ money and still keeping my job and keeping an eye on traders with evil intentions.
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Cash & Liquidity Management
An up to date view of the latest issues and how BCBS guidance that came into force from Jan 1 2015 will affect this area of banking. Kindle and hard copy.
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