Deloitte EMEA Blockchain Lab Hungarian National Bank April 20 th, 2018

Transcription

1 Deloitte EMEA Blockchain Lab Hungarian National Bank April 20 th, 2018

2 Blockchain Basics Use Case Examples Financial Services Regulatory Overview 2 Copyright Deloitte EMEA Blockchain Lab

3 A decentralized, distributed ledger that provides a way for information to be recorded, shared and maintained by a community. ABC ABC ABC A n e t w o r k o f c o m p u t e r s, c o n n e c t e d v i a t h e I n t e r n e t, i n w h i c h u s e r s a t a n y o n e c o m p u t e r c a n r e c e i v e o r s e n d p e e r t o p e e r : V a l u e ABC ABC ABC I d e n t i t y D a t a 3 Copyright Deloitte EMEA Blockchain Lab

4 A blockchain is a series of interconnected blocks, with new blocks added on the end of the ever lengthening chain. ############# T ############# ############# r a n s a c t i o n s r e c o r d e d c h r o n o l o g i c a l l y a n d c a n n o t b e c h a n g e d o n c e a d d e d t o t h e c h a i n E a c h b l o c k c a n c o n t a i n t r a n s a c t i o n s, d a t a a n d a r e f e r e n c e t o t h e p r e v i o u s b l o c k c h a i n ( c r e a t i n g t h e c h a i n ) ############# F o r b l o c k s t o b e a d d e d t o t h e b l o c k c h a i n, i t m u s t b e a c h i e v e d t h r o u g h C o n s e n s u s 4 Copyright Deloitte EMEA Blockchain Lab

5 Blockchain technology has particular characteristics that sets it apart from other technologies. Value Transfer Data Immutability Auditability Consensus Storage Smart Contracts (Distributed Workflow) 5 Copyright Deloitte EMEA Blockchain Lab

6 T H E F I N A L I T Y O F E A C H N E W B L O C K I S A G R E E D V I A A S H A R E D C O N S E N S U S M E C H A N I S M P R O O F O F W O R K P R O O F O F S T A K E P R O O F O F A U T H O R I T Y P R A C T I C A L B Y Z A N T I N E F A U L T T O L E N C E Bitcoin Ethereum Ethereum 2018 Ethereum Private Only Hyperledger Perform a mathematical algorithm that is difficult to do, but easy to verify if correct Staking a token(s) to perform correct mining in return for rewards from the network. If you forge a transaction, your tokens are taken away as a penalty Round-robin validation of blocks by authorised validators/nodes 67% of the authorised validators/nodes must agree on the validity of a block 6 Copyright Deloitte EMEA Blockchain Lab

7 Technology Landscape

8 Ethereum Deloitte EMEA Blockchain Lab have built 6 blockchain projects on the Ethereum platform. - A reconciliation and payments system - DNV GL - certification platform - Bank of Ireland - MCC Regulatory reporting - A patients medical data sharing platform - Commodity Trading platform which focuses on trading deal flows - Irish Funds MMIF Regulatory reporting Deloitte EMEA Blockchain Lab joined the Ethereum Enterprise Alliance Additional Blockchain Platforms Bitcoin is a consensus network that enables a new payment system and digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. Hyperledger is a permissioned, shared ledger that is being developed in an open-source environment. Fabric is the most developed implementation, managed by several companies, most notably: IBM. MultiChain helps organizations build applications on blockchains and shared ledgers though managed permissions, rapid deployment, and data stream. MultiChain is developer friendly, customizable, and bitcoin compatible. R3 consortium's joint efforts have create an open-source distributed ledger platform called Corda, especially geared towards the financial sector. 8 Copyright Deloitte EMEA Blockchain Lab

9 Blockchain in Action

10 Why Blockchain? - Immutability Decentralised Network Data Storage Since the GFC Regulators, across the globe, have acted to increase financial stability whilst protecting the investor. This has resulted in an increasing regulatory burden which is impacting the bottom line. Increasing Regulatory Requirements A Varied Industry Response Additional Resource Add resources and teams to existing capability to meet the new requirements Offshore Re-engineer Shoe Horn Excel Move functions and teams to lower cost centres to help manage the cost of servicing Re-engineer internal processes for more effective regulatory processing Shoe horn new and regulation bespoke solutions into the legacy system architecture Develop working models in excel for the completion of regulatory reports Result Increasing Servicing Cost Lower Profitability No Real Customer Differentiation 10 Copyright Deloitte EMEA Blockchain Lab

11 Cost Challenges Process MMIF is the primary control for Irish Domiciled Funds into the Central Bank of Ireland. It is reported on a quarterly basis and populated via Microsoft Excel. As-Is Process Transfer Agent Domestic Regulator Regional Regulator Data Extraction Maker Review Control Checks Beta Checkers Submit via ONR Manual Processing Data Integrity Regulatory Changes Cost x = = x 60K = 840 K Total Irish Average time (in 11 Domiciled Copyright Deloitte EMEA minutes) Blockchain taken Lab to Funds complete process Total hours spent completing MMIF reports per Quarter Total hours available to complete MMIF reports Number of resources required for MMIF/qtr Number of resources required Annual cost for nonrevenue generating MMIF report**

12 Our vision is operational efficient regulatory reporting, providing insightful analytics whilst increasing transparency, auditability and overall industry safety. Domestic Regulator Regional Regulator - Access to submitted regulatory reports - Ability to run industry level analytics both domestically and regionally REGCHAIN Funds Blackbox Immutable Ledger Reports Engine Analytics Engine Smart Contracts Permissioned Blockchain Document Storage - Create an immutable repository for all fund information - A RegChain that is regulation agnostic - Central point of change for new regulatory updates Data Integration Services / Interfaces Admin 1 Admin 2 Admin 3 Admin N - Have a single view of data - Ability to receive industry level and firm level analytics in line with data privacy - Streamline regulatory reporting 12 Copyright Deloitte EMEA Blockchain Lab

13 Our vision is operational efficient regulatory reporting, providing insightful analytics whilst increasing transparency, auditability and overall industry safety. 6 Domestic Regulator Regional Regulator PoC Focus 1 Upload data to the RegChain 2 Encrypt and store data with IPFS REGCHAIN Funds Blackbox Immutable Ledger Reports Engine 4 Analytics Engine 6 4 Smart Contracts Permissioned Blockchain Document Storage Maker reviews data and runs report Executes requirements of the regulation 5 Checker reviews and submits to the regulator Data Integration Services / Interfaces 6 Regulator reviews filings and assesses industry analytics Platforms Admin 1 Admin 2 Admin 3 Admin N 13 Copyright Deloitte EMEA Blockchain Lab

14 Streamlining compliance with ancillary benefits for industry. The Benefits Process Efficiency Security Analytics To hack the proposed technical structure of RegChain you must: Access IFPS Decrypt the file Modify the file Encrypt the file Access to RegChain Modify Smart Contract Network accept modification 14 Copyright Deloitte EMEA Blockchain Lab

15 Thank you. Antonio Senatore Chief Technical Officer, EMEA Blockchain Lab Contact: This publication contains general information only, and none of the member firms of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collective, the Deloitte Network ) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication. As used in this document, Deloitte means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte USA LLP, Deloitte LLP and their respective subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2018 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited