Where Finance Finds Its Future

One reason institutional money is now being invested in crypto-currencies is that it is safe to do so. Fireblocks, the provider of an institutional-grade safe custody and settlement platform for digital assets, can take a good measure of the credit for what is happening. Dominic Hobson spoke to Michael Shaulov, CEO and co-founder of the firm, as it completed a US$133 million Series C fund-raising that also saw giant global custodian BNY Mellon take a strategic stake in Fireblocks. Hosted on Acast. See acast.com/privacy for more information.

Central securities depositories (CSDs) were imposed by regulators in the 1990s to solve the securities settlement problems of the 1980s. They have succeeded admirably in that task but so far only a handful have sought to move decisively beyond it and embrace the new opportunities created by the tokenisation of financial assets on blockchain-based networks. Instead, the majority of CSDs have appealed to their origins in the minds of central bankers and securities market regulators of a generation ago. Ironically, the trust imparted by their record of success and regulated status are precisely the qualities that would enable CSDs to exploit the tokenisation markets. Hosted on Acast. See acast.com/privacy for more information.

As blockchain technology emerges from the Trough of Disillusionment (© Gartner) and ascends the Slope of Enlightenment (© Gartner) the original promise of what it can deliver once it reaches the Plateau of Productivity (© Gartner) is being rediscovered. Capexmove, a London-based business applying blockchain initially to the debt markets, emphasises the savings in external and internal reconciliation, internal controls, internal audit and regulatory compliance as the various parties start to work off a single source of information that is always up to date. Reliance on smart contracts to automate asset servicing and compliance checks delivers further economies. Cuneyt Eti, co-founder of Capexmove, told Dominic Hobson how the Capexmove debt tokenisation platform saves issuers, investors and intermediaries time and money. Hosted on Acast. See acast.com/privacy for more information.

Personal lines insurance is a byword for low levels of customer satisfaction, and none attracts less enthusiasm from buyers than motor insurance. The scope to cut prices through automation and improve customer service by moving away from form-filling and call centre queues, is correspondingly high. Peppercorn Insurance is a start-up that aims to cut motor insurance premiums and lift service levels by using artificially intelligent (AI) machines as digital agents to sell and change insurance policies and even handle claims as well, around the clock. Nigel Lombard, the founder and CEO of Peppercorn, is now on his third InsurTech start-up. Dominic Hobson asked him what distinguishes digital agents from chatbots, whether he plans to sell the software to other insurers, and about his long-term ambitions for the business. Hosted on Acast. See acast.com/privacy for more information.

Questions posed from the October 2020 discussion and will provide the framework for the March 2021 discussion:How can a DataNet be realised most efficiently?What role can government play in accelerating progress towards widespread adoption of digital IDs?What can we learn from a comparison of the digital ID schemes in those jurisdictions which have adopted them already?How can Open Data initiatives best be harnessed to the adoption of digital IDs?What factors will encourage banks to take digital IDs seriously (in those countries where they have yet to do so)?Which types of organisation are best suited to issue digital IDs and manage the associated information flows and data storage?Where should liability for inaccurate, misleading or fraudulent identification information lie?Is an internationally agreed set of digital ID and data profile standards desirable and, if so, how can they best be achieved? Hosted on Acast. See acast.com/privacy for more information.

With all the excitement being generated by institutional investment in crypto markets, it is easy to forget that a strong business case has to be implemented as well as advanced. Institutional investors entering any market need to be confident they can buy the assets, safekeep them, collect any entitlements and sell them .The recent investment by Ruffer in Bitcoin has captured headlines, but institutional money has followed the crypto-currency markets for years. Asset manager Fidelity launched a digital asset custody service as long ago as 2018. Mainstream banks, including BNY Mellon, Northern Trust and Standard Chartered are now following suit – precisely because their buy-side clients want to invest in the asset class.However, while crypto-currency investing appeals to institutional asset managers as a commodity play and an inflation hedge, and their custodians are scrambling to support them, the crypto-currency markets are far from mature. In fact, they are full of complexities and risks that do not stop at volatile prices. Chief among them is compliance risk. It is easy for investors that do not understand such risks to lose their reputation as well as their money.In this Future of Finance webinar Dominic Hobson will discuss with three crypto-currency converts, all of them veterans of the traditional capital markets, how they are enabling institutional asset managers and their advisers to strike the right balance between risk and opportunity in the crypto-currency markets. Hosted on Acast. See acast.com/privacy for more information.

Questions posed from the Payments Part I discussion in June 2020 and will provide the framework for the February 2 discussion:Payments still create significant costs in capital held for liquidity purposes. In what ways can the cost be reduced?Cross-border payments are still not instant in most cases. How can a genuinely global instant payments network of networks be built?The value of mobile telephone networks in connecting everybody to everybody is rich in further potential value for payments. How can it be realised?What do payments market infrastructures and payment markets participants need to do to be ready for the Internet of Things?What is the optimal method of achieving universal adoption of Digital Identities by consumers and companies?In payments, are blockchain technologies and APIs rivals, complementary or entirely separate technologies? Hosted on Acast. See acast.com/privacy for more information.

Questions posed from the Open Banking and Open Finance discussion Part 1 in October 2020 and will provide the framework for the Open Data Part II discussion on 2 March.Why is data such a powerful tool for consumers?How exactly does consumer control of data put companies under pressure to cut prices, innovate and personalise?Is the data of sufficient quality and extent to achieve the vision of a digital economy driven by consumers granting access to their data?Are banks (and energy and telecommunications companies) resisting Open Data?What other sectors are vulnerable to an Open Data economy?How should price comparison websites evolve their business model?Can consumers be confident their data is transferred and held securely?Why is consumer uptake of Open Banking in the United Kingdom so slow?What other forms of data will become available (e.g. mobile telephone data, Internet searches etc.)?Which countries are getting data regulation right (if any)?Do we need a new international body to co-ordinate national data regulation? Hosted on Acast. See acast.com/privacy for more information.

Topics for discussion include: The relative importance of cost-cutting versus improved customer service Whether finance is especially well-adapted to RPA and AIWhether the projected savings are being achievedAttitudes of employees towards the technologiesImpact on levels of employment and skillWhether the IT department is a source of resistance to RPA and AI and MLHow it alters the threat of cyber-attacksCurrent natural language processing capabilitiesDifficulties in working with legacy systemsWhether RPA, AI and ML are merging into a single form of intelligent digital automationWhat RPA and AI cost Hosted on Acast. See acast.com/privacy for more information.

Programmable money is one of the technologies to have emerged from blockchain. In fact, its origins in the trustless promise of primitive blockchain are not hard to discern. It is, in essence, tokenised cash controlled by a smart contract rather than a bank or central bank. The smart contract decides, for example, to make a payment automatically when an invoice is received, and nobody can stop the payment from being made or reverse it once it is made. This creates an obvious hazard – if a smart contract can move money, it will be attacked by hackers – which some crypto-currencies experienced. Significant sums were lost or stolen as a result of vulnerabilities in smart contracts. There is a view that the current DeFi token boom, also driven by smart contracts, will end the same way. Yet programmable money is not dependent on blockchain technology and the possible applications are too intriguing to be constrained by any label. Payments could be triggered as soon as goods arrive at the factory or the doorstep. Digital services could be switched on as soon as a payment is received or postponed to a future date when payment will be received. VAT could be routed directly to HMRC at the point of sale rather than collected and paid on quarterly basis by a complicated accounting process. Programmable money has a multitude of applications to the Internet of Things, from refilling the empty refrigerator to paying for temporary insurance on a motor car. In theory, these benefits can be obtained by programming alternatives to fiat currency running on public or private networks, and the use of programmable money for peer-to-peer transactions on permissionless networks is a dream that has yet to die. But the adoption of programmable money would almost certainly be accelerated by the issuance of a central bank digital currency (CBDC) on a permissioned network. Central banks would not want to be involved directly in the operation of smart contracts, though they could set standards, and build them into a programmable CBDC. So the programmable money revolution could take more than one form, and happen sooner rather than later. The panellists at this Future of Finance webinar will explore what programmable money could do to our existing financial system and what sort of system or systems it might create. Hosted on Acast. See acast.com/privacy for more information.