Where do blockchain opportunities lie? Top FinTech influencers weigh in
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Whether we like it or not, blockchain and the future of FinTech are interconnected. Smart contracts and the transition from corporate to individual data ownership and privacy are just two of the changes that we’ll have to adjust to but in order to figure out how to use them to our benefit, we need to keep the conversation going. Today, we invited FinTech influencers Brett King and Mike Quindazzi to talk about where FinTech is headed.
Blockchain and the future of FinTech are interconnected
It’s safe to say that blockchain is more than just a trend; some people are going as far as calling it a necessity. It has taken a lot of industries by storm but its biggest impact has been on the financial system.
Mike Quindazzi, the No.1 FinTech influencer of JAX Finance 2018 believes that “entrepreneurs’ best opportunity in blockchain may be in improving the infrastructure itself.” What else needs to happen for blockchain to really become “the beating heart” of the finance industry? Let’s find out.
Have a look at the interview series with last year’s top FinTech influencers:
In the first part of this interview series, we asked two FinTech influencers if blockchain is the future of FinTech, what happens if this technology becomes “the beating heart” of the finance industry and we invited them to weigh in on the value that’s stored in smart contracts.
The World Economic Forum wrote in a report published a couple of years ago that “blockchain can reshape financial services.” Do you agree with this statement? Is blockchain the future of FinTech?
Brett King: It’s definitely part of the future. The trend is toward real-time capabilities across the financial services space, along with agency-based commerce and alternative value and payments systems based on crypto currencies and IoT. None of these capabilities are easily supported by existing bank core systems and payments architecture, so blockchain is definitely part of the future.
Mike Quindazzi: Blockchain technology can absolutely reshape financial services, as much as the technology has the potential to reshape many other industries. From a 10,000 foot view, the protocols that underlie the services and content we utilize on the internet are limited in capabilities, and with the incentive of cryptocurrencies, there is potential for a migration of top developer talent from the largest tech firms to the decentralized application ecosystem.
Additionally, given the amount of investment incumbent financial services companies are committing to the effort (personnel, development, etc), as well as patents filed, it appears to already be happening. The question of whether the startups or the incumbents will win has yet to be decided.
What will happen if blockchain becomes “the beating heart” of the finance industry? What are the benefits?
Brett King: Real-time experiences are also going to detach KYC and identity from bank products and services as these will be embedded in the moment. The benefits of this will be highly contextual and responsive bank utility available when and where you need it.
Mike Quindazzi: Any evolution in infrastructure must support the service and product expectations of the marketplace. Perhaps the most notable change in the financial services space would be the transition from corporate to individual data ownership and privacy. This in itself will fundamentally change the relationship between a bank and its customers, as well as industry revenue models.
Beyond this, you’ll see intermediaries from our traditional financial services model get squeezed out as blockchain technologies reduce overall risk to any transaction. Additionally, blockchain technology’s standardization of information will enable broader adoption of adjacent new age technologies such as RPA and AI. These technologies leveraged together will move traditional financial services off of spreadsheets. This will require more training and retraining of personnel. Financial services margins are changing and these technologies are going to be necessary to remain competitive in this technological paradigm shift.
How much value is stored in smart contracts? What can they actually do and what are the misconceptions about them?
Brett King: Smart contracts can be of any value. Today we’re seeing smart contracts built around solar panels for the sun exchange (for example) that manage the generation assets and energy production on the blockchain. JP Morgan are managing part of their contracts via AI, especially for repetitive legal stuff. AI will result in most of procurement and the value chain eventually moving to autonomous smart contracts — misconceptions are that this is a long way off.
Mike Quindazzi: In a word, endless value. Smart contracts are only limited by the programming language of the protocols they are written on and the creativity of the development community that writes smart contracts.
How can entrepreneurs leverage blockchain this year? How can they capitalize on this technology?
Brett King: ICOs will continue but the biggest thing in 2018 is seeing lots of early proof of concepts moving to production. We need a ton of resources to transform existing bank architectures to blockchain. Not consultants. Real blockchain coders.
Mike Quindazzi: Given the breadth of use cases, I think the answer here mirrors that of the opportunities for smart contracts. The limits are set only by the creativity of developers and their ability to identify real friction in existing services. Entrepreneurs’ best opportunity in blockchain may be in improving the infrastructure itself.
In other words, future iterations of new protocols can be improved on what we have today that increase transaction throughput and speed, and lower costs. Solving those riddles today can elevate any opportunities that the technology has to achieve broad adoption moving forward.
In the second part of the interview series, the FinTech influencers will weigh in on the culture shift that goes hand in hand with the FinTech movement, its most mature sub-segments, open APIs and more.
If you’d like to know more about the latest trends in finance and meet the top movers and shakers in the global financial scene, join us in London between April 9-12, 2018.