Olga Arzhaeva - Impact of Blockchain on firms Internationalization

Okay, great guys. Thank you for being back. Now we're going to move on with our special guest Olga Arzah. She is actually helping Napole presenting on our stages our great speakers. She going to talk about the impact of blockchain on firms internationalization.

This means how the big firms, big corporate can use blockchain to expand, to grow and to reach the final mass adoption that we hope to see very soon. Olga, thank you. The stage is yours.

Thank you so much for the presentation. So I will briefly introduce the topic. As Godenso said basically in my research I tried to explore it from theoretical point of view and later see the practical evidence of how application of blockchain can help businesses expand abroad. So I did also a special focus on small and medium enterprises because small and medium enterprises play a very important role in u economy. Just let me change the slide quickly.

As we see from uh statistical data yes perfect 90% of businesses worldwide are represented by small and medium enterprises. Basically what it means it means that we should pay a lot of attention to those companies and as we see also from other statistics they generate almost I would say 50% of revenues. So I decided to make like this focus on those enterprises just to see how application of blockchain which is basically the new technology which we try to apply to all the sectors can help us ex like expand the businesses and also go to foreign markets. As you see also mentioned here like three main problems of small enterprises are probably the one is firstly related to financial costs. So of course to expand a small business we should encounter numerous factors as take a special specialist related to compliance specialist at know finance department.

I would name all of them because you know better than me that and blockchain basically as I will explain later as well helps us to automat automatize those processes and make them more efficient. The second point is compliance and here I will move to the very important point liability awareness. So as I said I try to apply theory and later see on practice how it basically works. Liability awareness just in a few words is then consumers from foreigner markets do not trust the businesses which come I don't know for example from Italy to France. So I assume that trusting a business in France is better than go to I don't know Italian business provider and basically this departs from the fact that first of all we do not really know which information is provided.

So I see the website I seen the information somewhere but I don't know how verifiable it is. And here comes the blockchain. Uh especially supply chain management and financial operations in this sense can help us to make all those points very transparent. So I can check the data data once it's put it on the blockchain we can never change it. So we mitigate liability awareness in this sense and obtain supply chain transparency and also of course we can improve our audit.

What do I mean? Many companies coming back to the argument of small and medium enterprises should refer to large audit firms or probably even not large ones but it's still like a very long process. The argument becomes even worse when they think about the process of collecting all the information. So I should come at an auto finance department. I should come to logistics department and to many others just to collect the documents to be sent to the firm.

With blockchain and with all smart contracts which we implement to the organization, we can automatize this process which will take us I don't know a matter of minutes without sending the mails to all of our colleagues. the role. Let me see. Sorry, it's not working again. Yes.

So here I also tried to explore business models in blockchain which we can apply and how it change basically the businesses and the very important point here is probably you can see from the slides is the role of DAO. So I try to like draw this parallel between how decentralized finance decentralized organizations work and how we can try to implement more or less the same structure in existing businesses. Of course the answer we cannot change everything very radically. So it's a matter of time to move to this more decentralized more trusted environment. But one thing is really clear that implementing all those smart contracts and other tools which we explored also during these three days at the conference here to the businesses we can be much more efficient.

We can be much more decentralized and in this trust. The next point which I also tried to you see to to explore is transaction costs. Transaction costs can be divided to more parts. So the first one is of course beginning costs. So when I go to suppliers abroad I need always to discuss the business terms the business contracts and here we come back to this connection between liability awareness and transaction costs.

In this case, I will have to pay people who represent my company abroad. Take example of the France again. So I need lawyers. I need my business representatives just to stipulate the form all means. Coming to the decentralized form of businesses, we can make all those processes much more efficient.

And another important point about transaction cost is of course information. So here I try to explain in my research that the search of information and the points we want to deliver to our audience in this case potential customers can like incur significant costs to the companies because previously mentioned we provide all the documents but we still do not like deliver the trust from our audience. Management inellulation theories is another very important argument. All classical management theories assume the development of the company as a really smooth one. So for example we take the period of time of five, seven or 10 years.

So the company is based in Italy. We first go I don't know from Rome. We take the smaller local market. Later we go to the national market and later we start to develop to international one. This is not really applicable in current economy and that's very relevant point in case of blockchain because companies tend to jump all those stages and come immediately to the international markets.

So here is also provided some statistics. we have the new phenomenon of burn global firms which at least 25% of sales within two or three years. So it's a significantly different thing to be considered that we do not develop in this like stage bystate process but we have a new management model which is called Dista which basically explores that is is cyclical round. So the firm can internationalize go to the foreign markets probably it will fail we also assume this so we don't take only the successful cases and after that it will go like another round with probably another markets so we should always take in mind that we cannot explore anymore any research especially in application to blockchain just by saying what we developed gradually and in my personal opinion that's very important point also for this conference in a sense that we saw a lot of tools we saw a lot of opportunities from defi from uh quantum discussed previously. So that can be like this potential push which will make our firms go to international markets and acquire international clients.

Blockchain benefits for small and medium enterprises. The most important argument and here I provided like four main points which we have discussed previously. What impressed me personally when I was conducting the practical side of my study that in application to traditional financial structures let's take I don't know Italian banks nowadays the settlement process of like funds. So I as a customer come to the bank and I say I want to acquire share the fund. The bank processes this request but the funds which arrive in my account it may take up to five working days.

So that's a crazy amount of time. If we tokenize assets and that's another like huge argument. We can improve this efficiency up to 24 hours. So it's five times better. You see the result yourself.

This is actually crazy because just thinking about blockchain and unfortunately there is this perception which I have encountered many times during my research that we say blockchain is made just for defi. The blockchain is made only for firms which want to decentralize and do not like use traditional sims that exist as banks and so on in our processes. That's completely not like that because blockchain is a distributed ledger technology. What is ledger technology used for? As I would say from its meaning, ledger is applicable first of all to the banks.

So if you think about it once again, we would say that banks which may use first the blockchain to make their own processes much more efficient and later will rely on the banks which will be processing our transactions in a much lower time periods. Another important point here is access to defy fundraising. So here probably it's a bit controversial in the sense that I'm not saying anymore we should rely on additional structure here for now we assume just as again as a small exception because we don't have yet a structure which is well developed so we need to try to access the fund in different way we do not need to again incure all those costs of compliance to go and say my company wants to do an IPO So to make the company grow until IPO level I would need a initial amount of time which I don't know probably my company won't even survive until this stage. So I say I want to do ICO and we have a lot of services now developing based on blockchain and related to web free world which can help the companies fund raise the money and of course get this potential and opportunities to exit of foreign markets. So faster settlement I said it and cost effective crossber payments I think it's quite a like clear argument of course using blockchain as we discussed also with different specialists here during our panels in previous days I would not incure all those transaction costs related to SAPA and other like settlement systems I would just transfer the funds immediately on the blockchain so I will reduce my cost significantly.

Last but not least, coming back to practical findings. As I said, the first settlement which was reduced from 5 days to 24 hours, timestamping secures intellectual property, another very important argument. So if I would say that I do not want any more to rely on authorization services, I can enhance like my efficiency. efficiency in what sense? So I have my documents verified on blockchain.

How blockchain works we know all perfectly. Once I settle my transaction once I settle my document on the blockchain I cannot change it. So I can just here give an example of medanom which made it non-financial declaration on the blockchain and basically it makes a post. So here is my declaration here is a blockchain here is like my hash it cannot be changed. So once I put it there, it's like that and will never be changed.

So this is another very important point in this case. Smart contracts, we have discussed it uh a lot. And last but not least, adoption trends and barriers. A very interesting argument which I was also exploring later is how the companies should be involved in the educational process. In Italy there is this phenomenon as we all know we rely first of all on small and medium enterprises and second of all the people who work in small medium enterprises probably not always have enough expertise in the field to understand how the technology can be used.

So all the companies which are developing like in the web free world here and trying to offer their services first probably should go through this stage of making their customers understand what basically they offer not that I just go to the customer and say I I don't know offer you to tokenize your services but I need first to go through like initial stages and say what is basically tokenization how can I improve and we see a lot of companies if you will just make a case I don't know go through linking go through any other platform that we try to post and we try to post not just like for marketing purposes that like I know see my companies offer those and those services but we make this educational process so other businesses other entrepreneurs can see those be interested and say like hey I can use defy structure I can use I don't know notification on business on the blockchain for my business and it can be really beneficial. But of course the huge argument is that sometimes even if we try to implement all those to our enterprise structure, we may like encounter this pressure from the employees side. Employees probably won't understand yet user interfaces which can be complex sometimes. But here we move on more technical argument which was also explored uh during like previous speeches with us. So user interface is one of the most important things to be developed nowadays for blockchain field.

And I want to move to one very interesting argument. I'm a co-founder and co-president of Italian blockchain student association. We are quite new. We have launched just a few months ago. So we're still a small group of really crypto enthusiasts.

We want to move. We want to try to expand our community across Italy. So as you see now we comprise of three biggest universities. That's Louis Poly Techchnical De Milano and Bonei. In Bonei we have the special blockchain club.

In Louis we have Andromeda partners which is now developing also blockchain and we hope to find new collaborations because I believe also in the context of this event I'm really happy to have this opportunity to present either my project but also just to mention a few colleagues of mine Luca Pier Marini who is I think at the same time now moderating the blockchain institutional panel with representatives of Tesa with Mastercard. So I see this like relation between younger generation at this event and the older professionals with more expertise so we can share between ourselves our like opinion our experience and make everything develop. So please make sure to share our initiative blockchain studentization Italy. Probably follow us on LinkedIn and here is also cure code to my profile if you wanted to connect if you want to discuss something later. Thank you very much for attention and as also moderating.

I think in few minutes we'll proceed with the next speech. So see you soon.