satoshi nakamoto : a bank employee in 2016

Why are financial institutions investing in blockchain?Koen Vingerhoets

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The fairytale of Satoshi Nakamoto, the Unicorn and the Big Bank.

“What if… Satoshi is a bank employee in 2016?”

Introducing S. NAKAMOTO : bank employee

And a rather anonymous Big Bank

Satoshi is full of ideas & knowledge… but who listens?

“Join our 2016 Idea Competition and fly to Silicon Valley!”

Satoshi joins the competition with her idea…

“Blockchain: a shared, resilient & protected ledger for anything”

Satoshi has to explain it often to her Big Bank colleagues

Both Business & IT are interested but… also involved.

Three key drivers of “blockchain”

- Cryptography science has made the recording of tamper-proof data in a chain of digital blocks possible;

- Game theory explains how trust in others can be replaced mathematically via multiple actors that force self-interested rational behavior;

- Software engineering connects it all over the internet to achieve scale.

The blockchain is, from a technical point of view, A unique, public and transparent distributed

ledger That stores all transactions immutably and Permits predefined actions on data in those

transactions In a cryptographically secured environment.

The blockchain is, from a business point of view, A shared platform On which parties who don’t know or trust each

other Are able to collaborate with respect for privacy Without relying on a possibly corrupt

administrator.

Satoshi gathers a team of believers

The “Blockchain” idea ends in the top 3!

Our brave Satoshi has to present “blockchain” …

… to the Big Bank’s Board of Directors.

To make banking better for

our customers

- Efficiency

- New markets

- Ecosystems

With blockchain !

To be completed (ask team for ideas)

Even in fairytales, people have to work…

Satoshi elaborates her idea in the early hours of the night.

The great day arrives… and this is what she said.

“Dear management, colleagues, I am Satoshi Nakamoto.”

Why? The customer experience!

- People buy a house, not a mortgage or an insurance product (despite our efforts to sell products)

- Then they have to visit a big bank to get the money they need for the house of their dreams.

- Then they need an insurance to protect our money and the house of their dreams.

How? Blockchain as catalyst.

- Efficiency gains in our own internal and intra-bank processes : less reconciliation, less (manual) checks,…

- New offerings for our customers, exploring markets we didn’t enter before

- Ecosystems to join or to build with a shared ledger of secured, trusted data

What? Some blockchain ideas

- Efficiency - Car Loan & Mortgage- X-border X-currency realtime

payment

- New offerings - A Trade Finance for the SME

market- Store secured documents in a

vault

- Ecosystems could be the most powerful (side)effect of blockchain

- Ecosystems

But… Some challenges lie ahead!

- Collaboration between banks?

- Integration with legacy systems?

- It’s just a newborn idea, we’ll have to learn the possibilities

- Extra security or disruptive tech?

- No clear regulations (yet)- Why choose blockchain for

FinTech?

And… what if we don’t?

Just imagine someone uses blockchain- To exchange value over the

internet- Between unknown parties- Without central

regulation/steering

Satoshi NakamotoBank Employee

How to pay for services? How to insure goods?

We are still here!

What can our customers do?What’s our efficiency gain?

The new fabric of trust.

Who is who on our systems? Who to trust in misfortune?

Identity is the new money.

Logical steps for financial institutions in distributed ledger tech

IT research : scalability, resilience,…

Legal research : legal/compliance/risk, regulator,…

Three drivers for financial institutions1. Efficiency gains (eg. Santander estimates $20 Bn / year)2. New Business (eg. Digital Trade Chain wins EFMA award)3. Ecosystems

Three drivers for blockchain ideation4. Cryptography science5. Gaming theory6. Software engineering & internet

Three hurdles to tackle7. Collaboration8. Regulations9. Integration

More info, questions or remarks?Koen.Vingerhoets@kbc.be (@IthronKoen)

Distributed Ledger Technology Adviser @ KBC Bank & InsuranceDisclaimer : I am not Satoshi Nakamoto