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Blockchain Use Cases: Think of a "Public" Pub/Sub Queue

Requirements, challenges, and constraints met on the way to adopting the blockchain technology.

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Blockchain Use Cases: Think of a "Public" Pub/Sub Queue

  1. 1. Blockchain Use Cases Think of a “Public” Pub/Sub Queue
  2. 2. SWIFT Institute: “Little short-term payoff” ● “Impact and Potential of Blockchain on the Securities Transaction Lifecycle” ● Opportunity: Cost and risk reduction ● Challenges & Constraints ○ Regulatory support required, ○ Institutional board-level support necessary, ○ High investment with little short-term payoff ● Technical choices ○ Access Rights: Permissioned v. Permission-less ○ Deployment progress: Iterative v. ‘Big Bang’ ○ Business Process Re-engineering pre-requisites
  3. 3. Accenture: “Not mature enough” ● “Delivering an industry-standard platform through community collaboration” ● Opportunity to ● Benefits ○ Trusted information propagation ○ Full Traceability ○ Simplified reconciliation (settlement) ○ High Resiliency
  4. 4. SWIFT & Accenture: “Not mature enough” ● Requirements, Challenges & Constraints ○ Strong governance ○ Data controls ○ Regulatory compliance ○ Standards (or lack thereof) ○ Identity framework ○ Security & Cyber defence ○ Reliability ○ Scalability
  5. 5. A Simple Use Case A B D EF G H C ● Inter-organizational systems integration
  6. 6. Simple Use Case Blockchain as persistent “Public” Pub/Sub Queue A B D EF G H CPeer Peer PeerPeer ● Shared ledger, ● Events, ● Smart contract, ● Consensus network
  7. 7. Simple Use Case Technical Advantages ● Mutual Ledger ○ A single source for all messages from any actor to any actor. ○ Fewer point-to-point integrations and batch file exchanges. ○ Metadata source identified in the message itself. ● Distributed ○ Better availability ● Immutable Persistent Messages ○ One agreed source as part of overall Financial Services system upgrade replaces multiple file archives and simplifies audit processes. ● Real-time(ish) ○ Real-time(ish) settlement, rather than ‘tail-chasing’ batch files and lagging reconciliation.
  8. 8. Simple Use Case Technical Challenges ● Standardization ○ Most firms want to rent the platform, the business applications and the business process. ○ A Business Process Re-engineering challenge for vendors. ● Cross Institution Consensus Mechanism ○ Centralized platform ala clearinghouse. ○ Permissioning for security? ● ‘Mining’ Incentive and control ○ Built into ‘rented’ shared service like clearing houses. ○ BitCoin for all? Is it how you pay the rent? ● Integration ○ Blockchain integration to Systems-of-Record needed.
  9. 9. Adoption Too Big to Change? ● Predicted Large Financial Institution adoption cycle ○ Early Adopters ■ 2016: Demonstration, tutorials, Proof-of-concept systems ■ 2017: Proof-of-concept systems become pilots (low message volume) ■ 2018: Catch on to VC funded accelerators ○ Early Majority ■ 2018: Bank system refresh cycle funding ■ 2020: Funded projects to join emerging communities ● Disrupters - First Movers? ○ Facebook - Google - Amazon (any European or Japanese entity?) ○ Baidu - Alibaba/Alipay - Tencent (China) ○ Developing markets, not Developed markets?
  10. 10. Adoption Single Process ● Verified by Visa - 3DSecure ○ Multiple Acquirers, Issuers and Schemes - One Blockchain? ● Card purchase chargeback process ○ FDC + TSYS + Card Schemes ++, One blockchain?
  11. 11. Adoption Single Product ● Peer-to-Peer Lending ● One Chain to Bind them All ○ Multiple Lending Platforms (brokers), ○ Multiple Investors, ○ Multiple Partner Banks ■ Loan payment processor? ○ One blockchain for greater mix- and-match flexibility, asset ownership tracking, asset transparency?
  12. 12. Adoption Likely Industry Processes ● Virtually all securities processes ○ Trading & settlement, depository, lending, portfolio creation and balancing, securitization ● Global Payments ○ SWIFT rewrite of global payments and settlement systems based on need for more transparency and better security ● Regulatory reporting ○ Proof of delivery (nonrepudiation) and timestamping ○ Know-Your-Customer and Anti-Money-Laundering ■ KYC and AML components of all financial processes ● Regulatory arbitrage, avoidance? ○ Any process with highly variable regulatory and compliance costs?
  13. 13. Simple Use Case Likely Organizations ● Integrated Financial Institutions ○ “On Us” credit card processing? ○ Bank loan and payment processing? ● Multi-tenant banking platform vendors ● Payment card schemes (Visa, MC, etc.) ○ As trusted blockchain guardian ● Integrated Manufacturing ○ B2B partner negotiation - the old EDI

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  • julianthefrank

    Aug. 30, 2016
  • EricAxelrod

    Jul. 30, 2018

Requirements, challenges, and constraints met on the way to adopting the blockchain technology.

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