Decentralisation Of Financial Services Through Crypto And Blockchain - Juwan Lee @ TOKEN2049

[Music] can we all give this guy a round of applause because Andrew work is the best MC in Asia I'm so glad to be here today I will try to convince you that cryptocurrency and blockchain will have the most impact on financial services let me first tell you a little bit about an exchange a little plug we are an innovation platform for FinTech and sure tech AI blockchain smart cities and health tech and with that ecosystem we either create we either market or we invest in innovative products I would like to take this time to just do a little poll everybody has to participate so what percent of the banks are actually investing in blockchain for 2018 a raise of hand for a 33% okay 52% more and 91% well it's actually quite similar okay so the answer is actually 91% and in 2017 or the actual production that's going to be taking place is 14% so financial institutions and financial services is where most of blockchain is actually going to be implemented the financial service disruption evolution is coming in many ways everybody's familiar with FinTech this is about robo-advisor e it's about chatbots it's about very fancy apps that you have in front of you but what really is going to be the profound impact is going to be blockchain financial service projects are being focused on cost-cutting and efficiency gains and financial institutions are working actively with startups to develop private blockchain projects because they want control and they also want to be participating in this new technology just give you some reference of size i mean i'm everybody knows that the crypto world is still has a lot more room to grow but it's actually less than the size of JP Morgan and if you look at aetherium is actually about the size of Morgan Stanley so there's a lot more room to grow here so one of the things we wanted to do was to look at the actual development of blockchain and financial services and what we have to do was we actually looked at what's happening with the programmers and actual projects so when you go on github where all of these projects largely reside most of the activities taking place in San Francisco and London and in San Francisco most of those are projects with exchanges wallets interfaces with blockchain payment tools for cryptocurrency in London it's been largely focused on etherium which will be identity management and also with smart contracts open api's we also see in New York a lot of focus on financial services and in China especially in Shanghai and also in Beijing are the focus there has been on cryptocurrency and exchanges but really the scaling of them but there are many hurdles with blockchain what you'll see from this graph is that when you ask financial institutions today they're most concerned about scalability can this project scale just because when you look out there you really don't see large scale projects you don't see a lot of data they're concerned about this they're concerned about the industry standards they're also concerned because most of these financial institutions if you have ever worked with them have tremendous amount of legacy systems and if you have ever actually communicated with them it's been it's very hard to integrate the interoperability everybody talks about amongst different blockchain well that's nothing compared to the interoperability with the legacy systems of course security is very important so today I would like to share with you six major things behind the decentralization of financial services let me start with Financial Inclusion this is a three hundred and eighty billion dollar industry and you can kind of divide it into two points it is literally closing the gap for small business which is the credit gap and then the other part is bringing those who are not that are unbanked into the financial system and actually elevating their spending this is a very large opportunity especially in the emerging markets and we see the emerging market is a obviously one of the areas where Financial Inclusion is taking place because they have high mobile penetration low banking penetration and the infrastructure is much less developed and what we're seeing is incumbents actually exiting the market so what does blockchain do well you won't have to have actually a retail outlet no branches digital payments can take be taking place low cost and fees so all of these things are going to be possible but I think the thing that's most interesting is that if you have a mobile phone you want instant settlement so this is important and payments is one of the most important parts of this Financial Inclusion story which is basically why we're seeing that this is the six hundred billion dollar industry with 40 billion in fees everybody knows that Western Union money Graham has built a large infrastructure over the last decades and what we're seeing is that fees can range anywhere from 2% to 7% and a wire transfer can be as high as 15% so this is an amazing place to disrupt especially in the sportive payments because individual consumers as a meze face very high transaction costs long delays and really what we see is that uncertainty in this cross-border payment blockchain will reduce the processing time from this says days to weeks but it's weeks to days and from minutes to seconds smart contracts will actually contain the remittance information that will will allow and deliver the funds directly to the beneficiaries bank simultaneously saying and sending it to the regulator so this will create new business models and different ways of actually regulating so there's going to be a number of startups I won't go into all the details but there will be crypto based global payments companies large banks are currently in the process of testing various different applications in the consortium and of course ripple has created a global financial settlement solution and that is being now being uh they have 75 plus banks involved in that project trade finance is the lifeline of global trade this is a industry that if you look at the financing gap is about 1.6 trillion this is a very important aspect of the emerging markets the supply chain is cumbersome it's time-consuming and multiple platforms multiple check points delay the whole process you have potential for fraud so this is a an industry also very ripe to be implemented with bloc shame because blockchain will provide and introduce transparency traceability and immutability this is a project that is being that's already in place eight major european banks have come together and created a permission based trade finance platform you can access the on your mobile app available and simplifies the whole process of managing tracking and securing domestic and international trade trade transactions this is going to be available in the second quarter of this year I come from the asset management industry and I can tell you how difficult it is to deploy new technology asset managers are really just beginning to see the in exploring blockchain and its applications the buy-side has always been trailing the sale side in terms of implementing the technology because they expected the sell side to implement it first but the revenues have dramatically changed because cell size has shrunk dramatically now the revenue on the buy stock imputed sell side is that there are three times larger so the buy site has to now be much more proactive in terms of the development of technology but in this industry this industry is filled with a lot of partners because it's very much out sourced and you have to get cooperation from the partners and many market players to execute different types of strategies just a few of the problems we see of course the owner as kyc and AML onboarding process this to take cost a lot of money it takes a lot of time we also see from a portfolio management standpoint as a money manager myself I experienced the same thing where you have a model portfolio you're trying to you know distribute across a number of clients it's a time-consuming process because there's a number of different platforms and it's not that easy to do well blockchain can solve many of these points because with a distributed ledger portfolio managers can actually communicate portfolio changes and the in the clients and are enabled to see all the changes quite quickly yesterday we talked about or the there was a panel on decentralized exchanges and with the decentralized exchanges based you are basically it's a peer-to-peer environment where you can trade amongst yourselves we see that in this process there's very there's almost no personal information that needs to be shared and there's no central server but the downside is somewhat complex and also what we see is that it doesn't have tremendous amount of liquidity and finally I like to leave you with this kind of perspective can cryptocurrency become the fiat currency in Canada the Bank of Canada is already looking at this they've already developed a white paper they are looking at the merits they're one of the largest I guess most developed countries that's looking at this Estonia has already created or Plante's create his own cryptocurrency but it will be in token form not as a currency Marshall Island is the first country in the world that actually has recognized cryptocurrency and has created a digital form of this called sov and Venezuela has launched a new cryptocurrency in light of the various different difficulties they've had in the economy based on hyperinflation so in the future we believe that in 2018 or 2019 these large countries are exploring the potential for crypto currency as a fiat currency I think it's all possible not because of economic problems but it will be based on accessibility ease of use much cheaper to implement so in in summary what I like to say is that blockchain will be transformative most financial institutions will be in some way implementing blockchain solutions and that we will we are a major beneficiary of financial inclusion but I want to be clear that the most important thing I think with blockchain implementation is that we need to find real pain points not fabricate problems that we want to solve so I'd like to leave you with my final last quote from Abraham Lincoln which said I can't wait for the future but it just comes one day at a time thank you very much [Music]