1. Distributed Ledger Technology
in the Financial System
EMRE TEKISALP, COLUMBIA BUSINESS SCHOOL
INVESTMENT THESIS, APRIL 2016
@etekis | etekisalp17@gsb.columbia.edu

3. Financial transactions are settled with the help of
intermediaries
◦ P2P Wire Transfers: Banks, Central Banks, Clearing Houses
◦ International Payments: Correspondent Banks
◦ Securities: DTCC (USA)
◦ Contracts: Notaries
Source: Ripple

4. Financial Institutions are hoping that distributed ledgers
will solve a multitude of problems regarding settlement
Financial Institutions are facing:
◦ Increased regulatory costs
◦ Competition from fintech startups
◦ Antiquated systems with high maintenance
costs
◦ Lack of financial inclusion
◦ Competition from alternative financial
channels
“Measured as a percentage of revenues, financial
services firms spend more on IT than any other
industry. Banks’ IT costs equal 7.3% of their
revenue’s, compared to an average of 3.7%
across all other industries surveyed”
Source: Deutsche Bank, 2012
“Distributed ledger technology could
reduce banks’ infrastructure costs attributable
to cross-border payments, securities trading and
regulatory compliance by between $15-20
billion per annum by 2022”
Source:Santander, 2015

5. Source: CBInsights

6. Many “potential” use cases.
Payments and Capital Markets have seen most traction
Syndicated loans Trade finance Supply chain provenance
US Treasury repo Clearing / settling OTC derivatives and FX Cross-border payments
Identity / data authentication Private stock / equity issuance
2 Capital Markets
& Securities
1 Cross-border
Payments

7. It’s clear that problems exist with both use cases, but not
clear if blockchain is the technology banks need
CROSS-BORDER PAYMENTS CAPITAL MARKETS & SECURITIES
Problems
Blockchain can
solve
• 2-4 days to settle transactions
• Antiquated messaging (SWIFT) causes
problems
• Estimated costs of $1.6 trillion
• Increasing burden of post-settlement
back office work
• 1-3 days to settle securities
transactions
Case against
Blockchain
• <10 banks provide most of global
liquidity
• Fees total $50 billion only for SMBs –
which is revenue for banks
• DTCC can upgrade to a more efficient
relational database
• $550M investment for T+2
• $1.8B for T+1*
What’s everyone
waiting for?
COMPETITION
COST EFFICIENCY
(and more competition)
*2012 DTCC & BCG study

8. As the solution is not clear, many players are trying out
a ton of different technologies and use cases
Payments Security Settlements ContractsCurrency
Bitcoin
Permissioned
Blockchain
Proprietary
Use Cases
Technology

9. 3
Transform Banking
•Regulatory Strategy
•Partner Consortium
Thesis: Early winners will be the ones that lead three
sequential pillars and establish a new ecosystem
Payments Security Settlements ContractsCurrency
Bitcoin
Use Cases
Technology
1
Establish
Platform
•Developer Traction
•Flexibility 2
Consumer /
SMB Products
•Global Use Case
•Technology Hidden

10. Promising Startups in Each Pillar
Cloud and API infrastructure for
hosted blockchain applications
Your global investment vehicle: access
US ETFs wherever you are in the
world through bitcoin
The global settlement network: cross-
border payments infrastructure for
banks of the modern era
• >30 clients, many of the leading
players in the field
• Holistic one-stop SaaS service for
all Bitcoin/Blockchain enabled
applications
• Betterment for the rest of the
world
• Huge untapped market of retail
investors in emerging markets
• Bitcoin is less volatile than >50% of
currencies
• Vetted by leading banks as leading
cross-border solution
• Leading regulatory strategy
• Already in use by cross-border
financial institutions
$3.5M
Seed raised to date
Pre-seed
Raising ~$1M
$38.6M
Series A raised to date
Redwood City, CA New York San Francisco
Platform Consumer Banking

11. Questions, thoughts?
EMRE TEKISALP
@etekis | etekisalp17@gsb.columbia.edu