WEBINAR: BLOCKCHAIN FOR BANKING IN INDIA MAY 26TH, INDIAN STANDARD TIME (IST) THE WEBINAR WILL START IN A FEW MINUTES.

Transcription

1 WEBINAR: BLOCKCHAIN FOR BANKING IN INDIA MAY 26TH, INDIAN STANDARD TIME (IST) THE WEBINAR WILL START IN A FEW MINUTES. FOR MORE INFORMATION: OR SEND US AN TWITTER:

2 WEBINAR- BLOCKCHAIN FOR BANKING IN INDIA Ketan Warikoo 2

3 AGENDA Introduction to blockchain Challenges to banks in India Blockchain and banks! 3

4 PRE-HISTORY Coders vs Bankers Issues with banking- Disjointed Slow & Expensive Inaccessible 4

5 BLOCKCHAIN, BITCOIN: WHAT S THE DIFFERENCE? A lot. Takeaway: Bitcoin is passe, long live the blockchain 5

6 THE 5 SECOND PITCH Blockchain is a distributed ledger designed for exceptional integrity. 6

7 WHAT S SO GOOD ABOUT BLOCKCHAIN? 5 things 1) Decentralized, not fragmented 2) Permissioning 3) Authentication is in built 4) Transaction validation 5) Integrity is DNA What does all this mean anyway? 7

8 LET S TAKE A STEP BACK What is currency? The story of Yap Implications: Currency system of credit accounts and their clearing Transaction validation need not be centralized 8

9 SO AGAIN, WHAT S GOOD ABOUT BLOCKCHAIN? 1) Decentralized, not fragmented 2) Permissioning 3) Authentication is in built 4) Transaction validation 5) Integrity is DNA This paradigm is not new! 9

10 PERMISSIONING 1) Decentralized, not fragmented 2) Permissioning 3) Authentication is in built 4) Transaction validation 5) Integrity is DNA Bitcoin blockchain- everyone on network is an admin and a member Bank s blockchain- RULES. 10

11 PUBLIC KEY CRYPTOGRAPHY 1) Decentralized, not fragmented 2) Permissioning 3) Authentication is in built 4) Transaction validation 5) Integrity is DNA Public key cryptography is a mature technology How public key cryptography works 11

12 TRANSACTION VALIDATION 1) Decentralized, not fragmented 2) Permissioning 3) Authentication is in built 4) Transaction validation 5) Integrity is DNA - Ensure an original copy concept for a digital token. - Make sure its spent only once- CHRONOLOGICAL. 12

13 LEDGER IMMUTABILITY 1) Decentralized, not fragmented 2) Permissioning 3) Authentication is in built 4) Transaction validation 5) Integrity is DNA Trusted record 13

14 BANKS IN INDIA ARE BEING SQUEEZED FROM ALL SIDES NPAs 14

15 HOW CAN BLOCKCHAIN HELP? Broadly across the following activities: 1) Anti Money Laundering (AML) 2) Know Your Customer (KYC) 3) Remittances 4) Payments 5) Clearing and settlement 15

16 CURRENT SCENARIO: AML Techniques used Custom software + PEP lists, SAR, legal frameworks Challenges Several frameworks to deal with Non-compliance can be very costly High turn around times, poor recovery Costs Global spending on AML will grow to more than $ 8 billion by 2017 Long term spending CAGR of almost 10%, 53% rise from Can blockchain provide a cost effective AML solution that allows for recoveries too? 16

17 CURRENT SCENARIO: KYC Techniques Used Paper reporting, e-kyc Challenges KYC formats are not uniform. Turnaround times in days Poor experience for large clients Crowded vendor market Costs $ 60 million average cost for top level banks to maintain KYC How will blockchain integrate with existing KYC processing and would that help make KYC interoperable? 17

18 18 *Details on Payments, Settlement & Clearing in the report CURRENT SCENARIO: REMITTANCES Techniques used Wire transfer via messaging providers and correspondent banking Issues Traditionally big contributor to bottom-line, now alternatives abound For consumers- cost TOO HIGH, speed TOO SLOW For banks- costs related to incremental innovation and maintaining outdated processes Costs Banks have to pay intermediaries Global cost of remittances 7.3% at end of 2015 Are networks like SWIFT outdated and how can blockchain reach a similar scale?

19 USE CASES BEING EXPLORED Focus Method Company A Technology Platform Blockchain-as-a-Service Company B Cross border payments Instant transfer that integrates AML rules Company C Asset trading Instant settlement without CCP Company D Loans and documentation Origination, KYC and asset recovery Company E Bank accounts Blockchain based ledgers 19

20 COVERAGE FOR BLOCKCHAIN Big banks consider using Bitcoin blockchain technology How will blockchain change banking? How won't it? Blockchain won t kill banks: Brock Pierce UBS working with blockchain prototypes + hundreds more The DTCC and 4 top banks used blockchain tech to trade credit swaps In India. Blockchain knocks on doors of Indian banks 20

21 ACTION NEEDED IN INDIA Consenus Knowledgebase Consortiums Pilot and POCs 21

22 WHAT IS NEXT FOR BLOCKCHAIN? IoT Smart Contracts Machine to machine payments 22

23 TABLE OF CONTENTS Foreword Blockchain, the next disruption? The vision The implementation Blockchain and digital identity in India Blockchain today Blockchain for banking Why blockchain Use cases Blockchain players in India Conclusions 23

24 SUMMARY The technology is here to stay, and no longer anti-establishment Not a panacea, still blockchain is a disruptive force Early action needed from all FIs Banks stand to lose the most if they sit this one out Establishing knowledge base and POCs biggest priorities Streamlined banking Quick & Cheap Easy access 24

25 Q&A Thank you for listening! 25

26 IMAGE CREDITS Image- Photo credit: btckeychain via VisualHunt / CC BY Yap Image- IOT- 26