Entrepreneurs and technology challenging the Banks?


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Presentation at Tieto’s Banking Day June 2014 in Stockholm Sweden

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Entrepreneurs and technology challenging the Banks?

  1. 1. Entrepreneurs and technology challenging the Banks?
  2. 2. ”Bitcoin has made me interested in issues like finance and money – things that I never thought about before. Now I am really curious and questioning why things are the way they are in the finance world….and wondering what can I do to change them.” - Bitcoin 2014 Conference Attendee
  3. 3. In just a few years in Sweden alone… Company Founded Business Klarna 2005 E-commerce payment services MyLoan 2006 Loan broker Trustly 2008 Online payments TrustBuddy 2009 P2P lending FundedByMe 2011 Crowdfunding, crowd equity Tink 2012 Personal finance Safello 2013 Cryptocurrency exchange KnC Miner 2013 Cryptocurrency mining equipment ?? 2014 ?
  4. 4. Share of wallet is rapidly shrinking Nordic Banks Pay, Save, Lend, Insure Nordic Entrepreneurs International Entrepreneurs
  5. 5. Increasing competition for investors through crowdfunding Massolution 2013 Millions of dollars 2015e USD 17 bln Crowd equity rising
  6. 6. And in the US and UK… •P2P lending •>USD 3.8 bln in personal loans since 2007 • USD 750 mln growth each quarter •Now offering business loans •Strategic alliance with Union Bank
  7. 7. From Africa to Eastern Europe to ?
  8. 8. The future? Facebook + banking license?
  9. 9. People • “Net generation” • 24x7 “mobile” workforce • Knowledge via MOOCs Technology • Broadband • Mobile hardware • ICTs • AI • Robotics Open Source • Software •Hardware Convergence of….. Finance • P2P lending/microfinance • Crowdfunding/equity • Cryptocurrencies
  10. 10. Institutions Emergent Collective vs E.g., Central Bank ~ Long-standing financial institutions and regulations E.g., Bitcoin Community ~ Emergent collective of users across globe connected through internet Challenges to institutions? Teigland, Yetis, Larsson, 2013 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707
  11. 11. Challenging the fiat money system? In just five short years… Bitcoin •Open source project in Jan 2009 by “Satoshi Nakamoto” •Developed by self-organizing community of 1000s strangers across globe •Approx USD 8.4 bln in circulation (June 2014) and 70,000 daily transactions •SEK 55 bln of Bitcoin vs Swedish Crown of 91 bln SEK Teigland, Yetis, Larsson 2013 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2263707
  12. 12. Cryptocurrencies reshape global finances Currency Code Year Est. Founder(s) Active Website PoW PoS Bitcoin BTC or XBT 2009 Satoshi Nakamoto (pseudonym) Yes N/A Yes No Ripple XRP 2013 Chris Larsen & Jed McCaleb Yes ripple.com No No Litecoin LTC 2011 Charles Lee Yes litecoin.org Yes No Peercoin PPC 2012 Sunny King (pseudonym) Yes peercoin.net Yes Yes Dogecoin DOGE 2013 Jackson Palmer & Billy Markus Yes dogecoin.co m Yes No Namecoin NMC 2011 N/A Yes dot-bit.org Yes No Mastercoin MSC 2013 J. R. Willett Yes mastercoin.o rg No No Primecoin XPM 2013 Sunny King Yes primecoin.or Yes No
  13. 13. Rise of local currencies
  14. 14. Bitcoin – so much more than a “coin” From dumb to smart money Underlying Bitcoin protocol holds real transformative power Transfer property rights (e.g., shares, certificates, digital money) fast, transparent and very securely. http://thenextweb.com/insider/2014/02/15/bitcoin-platform-currency/
  15. 15. Changing regulations
  16. 16. How should banks react?
  17. 17. “Keep your enemies close…”
  18. 18. Remember.. you can’t control networks If you try to stop this, something else will rise and take its place? What will this be?
  19. 19. What does the future hold? • Will we see a parallel to other industries, e.g., music, software, newspaper, books? • Will “trusted” third parties no longer be needed since trust can be mediated through networks, which are self-regulating? • What basic assumptions will no longer hold, e.g., do we need money?
  20. 20. The genie is out of the bottle….
  21. 21. "...when the rate of change outside an organization is greater than the rate of change inside, the end is near...." - Jack Welch
  22. 22. Some questions… •How to learn about new developments such as crowdfunding, P2P lending, cryptocurrencies, mobile payment systems? •How best to engage and with which developments? •How to turn threat into opportunity? •How to let go of control…..
  23. 23. Robin Teigland robin.teigland@hhs.se www.knowledgenetworking.org www.slideshare.net/eteigland @RobinTeigland Photo: Lindholm, Metro Photo: Nordenskiöld If you love knowledge, set it free… “We ain’t seen nothin’ yet….”