1. The Current Landscape of Transaction Banking
The New World of FinTech
February 23, 2016

2. New Technology
 New Technology Significant change in
transaction banking as we know it today
 Trying to follow the new technology is like trying to
drink from a fire hose

3. Transaction Banking Ecosystem
 Current transaction banking ecosystem dates back to
Renaissance Italy
 Little change over the years
 First notable change – the telex after WWII
 Creates new business line - Payments

4. Transaction Banking Ecosystem
 The entrance of SWIFT with first SWIFT messages
exchanged in 1977
 The introduction of the Internet
 Complexity of Transaction Banking ecosystem
 Clearing houses (CCPs)
 Depositories (CDPs)
 US - CHIPS, Fed Wire, ACH, DTCC
 Europe – CHAPS, FSP, CLS, TARGET 2, STEP2, Euroclear

5. New Entrants into the Ecosystem
 Bitcoin
 Satashi Nakamoto – January 3, 2009 “Bitcoin: A Peer-to-Peer
Electronic Cash System”
 Bitcoin Blockchain

6. Blockchain goes Mainstream

7. What is the Blockchain?
 Blockchain is a decentralized distributed ledger which
keeps track of all the transactions taking place across a
peer-to-peer network(s) on which it operates and
facilitates an internet of value exchange. Think of it as
an operating system for interactions. It has the
potential to vastly reduce cost and complexity in
getting things done.
 Blockchain Marriage of computing power and
finance

8. Benefits of Blockchain
 Reduces Complexity of Transaction Banking
ecosystem
 Removes CHIPS, Fed Wire, Target 2, Step 2, CLS
 Reduces capital requirements
 BBVA/Oliver Wyman report predict it will reduce
expense - $15 to $20 billion per year

9. New Players New Thinking –
Collaborative Engagement
 Collaboration/Partnership between banks and Fintech
world
 R3cv
 Linux Hyperledger Project

10. Bank/Fintech Collaboration

11. Making it Work
 Blockchain Meets CARL and CARLA
 CARL
 Compliance
 Audit
 Risk
 Legal
 CARLA
 Anti-Money Laundering/Combating the Financing of Terrorism
(AML/CFT)
 The controlling foundations within which Transaction
Banking must work

12. Many questions to be answered
 Open vs Closed Network?
 Public or Private distributed ledger?
 Permissionless vs Permissioned?
 Authentication of transactions by the Proof of Work or
Consensus?
 Scalability?
 Sidechains?
 Bitcoin Core – Segregated Witness?
 Bitcoin Classic – Hard Fork?
 Legal underpinning of a transactions? How will title to
assets transferred over a distributed ledger be proved?

13. Cheat Sheet
Definitions and Sources of Information:
 http://www.coindesk.com/information/bitcoin-glossary/
 http://www.coindesk.com/research/banks-blockchain-report/
 http://www.coindesk.com/state-of-bitcoin-blockchain-2016/
 http://www.coindesk.com/

14. wknapp@gtbinsights.com
W: (617)738-7014