The Bankers’ Plumber on FinTech: 3 Things I have learned in the last week

SIBOS, probably the largest global gathering of the FS profession, took place in Geneva last week. Not surprisingly, this was a catalyst for many announcements on matters FinTech.

FinTech is a tricky subject to keep up with and that effort has something in common with trying to stay on top of things clearing, Dodd Frank and EMIR; you can lurch from a sense of understanding and command to being completely perplexed in the space of an afternoon.

With that said, here are some observations that I think are think are worth knowing about:

Why blockchain won’t disrupt banks first: this from Oliver Bussmann, until recently CIO at UBS. His post offers some useful insight into why change is hard for the banking community; “community” being the obstacle in terms of having to cooperate and involve regulators.

Distributed ledger technology could damage financial market integration – ECB: At SIBOS a member of the ECB Executive Board made this comment in terms of his opinion that mass adoption of Blockchain technology will need a lot of testing. Today’s infrastructure, for all its faults, is the result of a lot of cooperation and refinement.

Banks test blockchain for reference data management: This is one part of the work of R3Cev the industry consortium looking to use new FinTech solutions to simplify the FS infrastructure. Their technology effort is led by my friend and very talented colleague, Richard Brown. What his team are up to is worth knowing about it: the team has some über smart minds and it is working cooperatively across a very broad base.

Lessons learned: Oliver Bussmann is both connected and clued up. My view: he is not quite right. The part of banking that involves exchange of assets, be that money or securities, will be slow to evolve exactly because of the reasons Oliver cites and the caveats that the ECB exec raised.

There are many banking processes which do not involve the exchange of assets per se, such as trade finance and reference data. These processes can and will benefit from early use of the Blockchain.

Assets are important too and there is potential there; we will all have to work very hard to unlock that potential. More on matters money next week.

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