FX-Risks Versus Technology

| 27-10-2017 | Treasurer Development | Minor Treasury @ Hogeschool Utrecht | Frans Boumans |

Today’s blog has been written by Daphne Piereij and Martijn Mullié, who are 2 students studying for the minor Treasury Management at the University of Applied Sciences in Utrecht. We welcome their contribution – it is good to see the youth engaging in Treasury matters! Here is their opinion on FX – risks versus technology.

“The one unchangeable certainty is that nothing is certain or unchangeable.” Those words were uttered by former US president John F Kennedy in a State of the Union address before Congress in 1962.

This still applies to the current state of the world. Especially within the financial markets and with FX Risks. Managing these risks have been completely revolutionized the past decades because of the new innovations in technology.

Traditionally traders manually update their volatility surfaces and bid-offer spreads, and that default pricing would have gone directly out to clients. More efficient is to use the electronic market data and automate much of that process, particularly in the most liquid currency pairs, creating a more transparent, data-driven practice.

According to McKinsey these are the trends in FX risk management with evolving technology and advanced analytics:

Big Data

Faster, cheaper computing power enables risk functions to use reams of structured and unstructured customer information to help them make better credit risk decisions.

In the future while this technology evolves and the quality of analytics of big data becomes better it will be easier to manage FX risks.

Machine Learning

This method improves the accuracy of risk models by identifying complex, nonlinear patterns in large data sets. Every bit of new information is used to increase the predictive power of the model.

Keeping in mind the words of former president John F. Kennedy the world will never be predictable and neither will the financial market. Because it’s not ran by machines but by humans, and humans are in general unpredictable. Which means this process has no end until the financial markets are managed by machines which are predictable.

Crowd Sourcing

The Internet enables the crowdsourcing of ideas, which many incumbent companies use to improve their effectiveness.

The internet can motivate people with challenges to work together to make algorithms for analytic functions so market data can be used more efficiently. It’s not always the most effective method to use the in-house developers to create algorithms. To make the most effective FX risk management algorithms is very hard and time consuming. Crowd Sourcing enables a whole different aspect to create algorithms, using more brains to create these immensely complicated methods to decrease FX risks.

Resources
https://www.mckinsey.com/business-functions/risk/our-insights/the-future-of-bank-risk-management
https://www.risk.net/risk-management/5276541/managing-fx-risk-how-to-prepare-for-the-unpredictable

Minor Treasury Management

More information about the minor Treasury Management at the University of Applied Sciences?
Please contact Frans Boumans.

 

Frans Boumans

Manager Minor Treasury Management @ University of Applied Sciences in Utrecht

 

 

How to connect to your bank electronically

| 26-10-2017 | François de Witte |

One of the main challenges in treasury is ensuring the connectivity with your banking partners. Currently corporates use the e-banking, or “electronic banking” channels. ‘Electronic banking’ can be defined as the way in which a company can transmit transactions and obtain reporting instructions to a bank remotely and electronically.

In the present article about bank connectivity, we will outline the current types of e-banking channels in the market, their advantages and the attention points.

Interactive banking channels

For interactive e-banking channels, typically the communication is initiated by the corporate client from a PC within the finance department and the instructions are transmitted to the bank through the internet.

Banks are developing their portals more and more: ING Business Payment, Connexis, KBC-Online, IT Line, RABO Corporate Connect, etc. They also provide a full range of services through them.

Illustration of the interactive electronic banking channel:

 

 

 

 

 

 

 

Currently the interactive- banking channels are widely used by corporates and other organizations, because they are easy to implement, user-friendly, enable to work on a standalone basis and less expensive. However, the drawbacks are that they are not always that suited for mass payments, and that each bank has its own system. Consequently, if you work with different banks, you will have different electronic banking channels for each bank, which adds to the complexity.

In some countries, the banks have put their efforts together to create a multibank interactive electronic banking channels (e.g. Isabel 6 in Belgium and Multiline in Luxembourg).

In my view, the interactive e-banking channel is best suited for corporates having not too high volumes of transactions and working with only few banks, or in countries were multibank electronic banking channels are available.

Host to host electronic banking channels

Some corporates or public institutions have very high volumes to treat, and will need for this a specific direct connection with their bank, a so-called “host to host” (H2H) connection. This is an automated solution for high volume data transfer between banks and their corporate clients.

Sophisticated H2H connectivity solutions give banks the flexibility to exchange information with their corporate clients in preferred file formats, agreeing on network protocols, and security standards.

The following figure illustrates this type of e-channel:

 

 

 

 

 

 

 

H2H e-banking channels allows for automated payments and collections, attended (where the client needs to take an action) or unattended (directly initiated by the IT system) connection / authorization. They can treat very high volumes, and to integrate the data into ERP systems.

However, they are also more expensive, because they require a specific IT set-up and usually the services of a middleware provider to ensure the connectivity between your ERP or IT system and the bank.

Up to some years ago, corporates had to set up H2H connections with each of their banks, but now several multibank H2H solutions have been developed by the TMS (Treasury Management Systems) providers or by other multibank providers such as TIS, MultiCash and Power2Pay.

In some countries, the banks have set up common interbank protocols enabling an easier and standardized connection. The best know is EBICS, which is currently in use in Germany and France.

In my view, the host to host banking e-channel is best suited for corporates having very large volumes of transactions and requiring a high level of integration with their ERP or IT systems.

SWIFT e-banking

SWIFT has extended from a bank-to-bank platform to a corporate-to-bank platform, and has also launched its own bank connectivity solution, SCORE (Standardized Corporate Environment). SWIFT enables hence to replace the various e-banking systems with a single, bank-neutral multibank e-channel. This means that treasurers and finance managers can connect with their banks worldwide in a consistent way using industry-recognized standards.

Outline of a SWIFTNET Multibank set-up (source SWIFT):

Companies can connect to SWIFT in many ways. One option is to establish a direct connection to SWIFT, but this can be a technically complex exercise. As a result, many of the companies connecting to SWIFT do so via a SWIFT service bureau. In such a set-up, most of the technical challenges are resolved by the service bureau

The third SWIFT connectivity option is Alliance Lite2. This solution enables corporates to connect to SWIFT in a quicker and less expensive way.

The SWIFT channel offers, beside the multibank character, many other advantages, such as the SWIFT standards, services beyond payments, such as FX and deposit confirmation and securities transactions, and an improved security / reliability compared to the classic e-banking systems

However, the Swift e-banking solution is not easy to implement, and can be quite expensive (in particular for the direct connection and the connection through a service bureau. Hence this solution is more suite for very large corporates and institutions, working with many banks.

Conclusion:

When looking at setting up the e-banking connectivity, several factors need to be taken into consideration, such as the number of banks and transactions, the complexity of the organization and the treasury. Smaller organization can perfectly work with the interactive e-banking channels, whilst larger and more complex organizations need to consider the multibank H2H connections or a SWIFT setup.

In the framework of PSD2, with the XS2A (access to accounts), banks in the EU/EEA will have to provide access to authorized third parties. I expect that thanks to PSD2 the cost of multibank e-banking platforms will go down, which is good news for corporates.

 

François de Witte

Founder & Senior Consultant at FDW Consult

Foreign currency hedging, a protection of cash flow

| 25-10-2017 | Rob Beemster |

Currency volatility is a well-known uncertain component of international business. In the pre-euro era one could suffer severely by currency movements of its European neighbours. Corporations, dealing within euro countries, have diminished the currency exposure.

A historical overview of the euro versus the us dollar

Looking back over the last 60 years, we can see that from 1958 till early 1970s there was  stability due to the Bretton Woods golden standard. At the end of this, the Vietnam War made it impossible to keep the dollar relation to gold. Early 1980s, the Reagan administration introduced a new economic policy; Reaganomics. Lower taxes and high governmental expenditure. This created a huge mess in America’s monetary situation. Interest rates went to enormous heights, the dollar climbed to unknown levels against the yen and European currencies. American exporters could not sell their products due to this high dollar.

Why the attention to Reaganomics? Well, the Trump administration is a vigorous trailer of the Reagan policy. Lower taxes might be introduced soon and Mr Trump also wants to invest heavily in infrastructure. Obvious, some similarities with Reagan. The new helm of the Federal Reserve Board will soon be appointed. When the board will have more hawks than doves, interest rates might raise sooner than expected. This might have consequences for the dollar and we may see here a reflection of the early 1980s.

 Trump and the us dollar

It is known that President Trump regularly protests to so-called currency manipulators like China and Germany. Their trade policies are in his view unacceptable. Due to this view of Trump on currencies, it will be questionable whether he would tolerate a higher dollar at all. The highly unpredictable Trump policy makes it impossible to judge in what direction the dollar will manoeuvre.

 The highly volatile euro/us dollar

The dollar has fluctuated severely since the euro introduction in 1999. ECB’s first President, Mr Duisenberg was facing tough times as the euro went from its introduction level of 1.17 to the low of 0.8350 a couple of years later. His world trip to recommend the euro as world reserve currency  has realized a demand from authorities to stock euro’s in their currency reserve system. The aggressive build-up of FX reserves by Asian monetary authorities has helped to revitalize the euro. Duisenberg made it happen that the currency went up from low 0.80s to almost 1.60 against us dollar in a couple of years. This occurred not so long ago!

 Two examples of neglected currency risk

1, many corporations have changed its landscape to the global market. A lot of exporters are billing their products in euros. A currency risk is obvious when these companies focus on one target area. Clients may find the products too expensive when euro is rising. So one runs indirectly a currency risk. Many countries have linked their currency to the dollar, so a change in the euro/us dollar may have consequence on your sales.

2, trading with China and agreeing to do the transfer in dollars, does not really mean that the risk exposure is in dollars. The transfer risk is in dollars, but the real currency risk is in yuan. Say, the European importer buys goods from China and both have agreed to do the payments in dollars. The Chinese counterparty will adjust the price of the goods when yuan moves against the dollar. The European corporation should install an us dollar/yuan currency risk hedging policy.

Don’t underestimate the course of currencies

Being an active international corporation is not easy, many components are changing markets constantly. Internet makes markets more transparent then ever thought, automation changes the landscape, consumer behaviour is sometimes not logical and newcomers/interrupters create new markets. Within this one has to deal with currency volatility. But this is a component one can conduct. Foreign currency strategy is essential for any internationally active corporation. Currency volatility cannot be underestimated and needs control.

Barcelona valuta experts can help you to create a decent foreign currency strategy. Call us on +31.654981315 or mail us via [email protected] for more information.

 

Rob Beemster

Owner of Barcelona valuta experts BV

GDPR and its effect on your business

| 24-10-2017 | treasuryXL |

As if the finance industry is not already facing enough challenges swimming though the sea of regulatory acronyms – BASEL iii, EMIR, MIFID ii, SOX, KYC etc. – a new directive is due to come into force on the 25th May 2018, namely GDPR.

GDPR (General Data Protection Regulation) is an EU directive concerning personal data of EU residents that is held by companies. It is intended to give EU residents more control over their personal data by dictating how that data is held by companies. Any data that could be used to determine the identity of an individual must comply with GDPR. Furthermore the definition of personal data has been expanded from the usual name and address information to including such things as IP addresses, cookie data, photographs, minutes from a meeting where people are named etc.

The law states that any company that stores or processes personal data about EU citizens within EU states must comply with GDPR. Main criteria for compliance include:

  • A presence in any EU country
  • No presence in the EU, but processes personal data of EU residents
  • More than 250 employees

At first glance most small businesses would be exempt but, there is a provision in Article 30 that shows this is not completely true. The following explanation has been externally sourced:

The only time the articles allow concessions for organisations with fewer than 250 employees is in Article 30 – Records of processing activities. Most organisations will have to maintain a record of processing activities that contains the name and contact details of the controller, the reason for the processing, a description of the type of personal data or category being processed, how long the data will be kept before it will be deleted, and some other requirements.

 Point 5 of Article 30 states that the requirements will not apply to an enterprise or an organisation employing fewer than 250 persons unless the processing it carries out is likely to result in a risk to the rights and freedoms of data subjects, the processing is not occasional, or the processing includes special categories. Therefore, a company that processes data on a regular basis or processes special category content such as racial, political or genetic (and others listed in Article 9) material, even if quite small, will not be excluded from this requirement.

Source: https://www.fsb.org.uk/first-voice/act-now-to-comply-with-new-gdpr-rules

Even sole traders hold data, not just of other companies (trading partners) but also of individuals. As a sole trader it is possible to think that the law does not apply to them, but a more prudent approach would be to review all data held. Data can be held in a myriad of locations:

  • Hard drives
  • USB sticks
  • Dropbox
  • Cloud
  • Evernote
  • Whats App

Having discovered all the data the you hold on others, it is then necessary to design a method to protect that data. Just applying a password protection to your computer is not enough – additional security can be provided by encrypting data.

The rights of the individual are clearly defined by GDPR – these include:

  • The right to be informed
  • The right to restrict processing
  • The right to refuse to become a data subject
  • The right to be forgotten
  • Data portability

The penalties for companies failing to comply with GDPR and failure to disclose data breaches include fines equivalent to 4% of global annual turnover for the preceding financial year or EUR 20 million, whichever is the greater.

What can you do to prepare for GDPR?            

All companies that handle client data have a duty to protect that data. That means you need to locate, identify, control and delete data if so requested by the individual. Furthermore, individuals have the right to know how and why companies are using their personal data and if that data is shared with any third parties.

This means starting with a thorough examination to find and identify all third party data that you hold and why. This data then needs to be examined and protected. Data should be held at 1 primary source – ensure data is not duplicated. Clients need to be informed of the data you hold on them.

Whilst this is a considerable challenge, there is a potential advantage to be gained by clients knowing that you are complying which could lead to a rise in the trust they have in you and your organization.

Remember – you only have about 150 working days left to implement!!

Will the ECB taper off its Quantitative Easing programme?

| 23-10-2017 | Lionel Pavey |

On the 26th October the ECB will have their next meeting. One of the main topics will be regarding the current QE programme and a possible announcement over its extension into 2018. Currently the ECB has, after 2 ½ years of QE, purchased more than EUR 2 trillion of mainly Government bonds. At present their monthly purchases amount to roughly EUR 60 billion per month.

A poll organized by Reuters would seem to indicate that the monthly programme would be tapered down to EUR 30-50 billion per month and possibly last for another 6 to 12 months from the start of 2018. Inflation is expected to be around 1.5 per cent till at least the start of 2019 – below the ECB target of just below 2 per cent.

However, under the current rules that govern the QE progamme the upper limit on outstanding purchases is around EUR 2.5 trillion. Taking the existing monthly purchases through to the end of 2017, implies starting 2018 with a balance of at least EUR 2.2 trillion – leaving just EUR 300 billion of headroom for future purchases. If it cut monthly purchases in half, the scheme could be extend to the end of the 3rd quarter in 2018, but no further.

Can the ECB continue QE longer than expected?

The constraints imposed on QE mainly relate to the purchase of Government bonds – maximum 33 per cent of each countries outstanding debt and maximum 25 per cent of any bond issue. The provisions written into the Maastricht Treaty clearly state that the ECB may not finance member states. QE also purchases non-bank bonds (covered bonds, corporate bonds and asset backed securities) which are subject to different criteria – maximum of 70 per cent of any bond issue.
At present, the ECB only holds about 13 per cent of the eligible bonds leaving a large headroom for future possible purchases.

It is conceivable that the ECB could reduce its purchase of Government bonds and simultaneously increase its purchase of corporate bonds, thereby maintaining liquidity to its QE programme. The major drawback is that it would reduce the amount of freely tradable corporate bonds in circulation and have an effect on their price.

What does this mean for interest rates?

As long term debt instruments use Government bond yields as the basis for calculating their yield, when the ECB stops buying Government bonds, the yields on all other debt instruments will increase. At the moment the benchmark (German 10 year Government bonds) yield around 0.4 per cent per annum and the 10 year Interest Rate Swap yields around 0.9 per cent per annum. In 2014 (the year before QE started) German yields averaged 1.25 per cent even though they were in a downward trend the whole year. Assuming the yield spread between Government bonds and Interest Rate Swaps (IRS) remained constant, this implies 10 year IRS moving to at least 1.75 per cent. This would still be below the long term average since the inception of the EURO in 1999 that stands around 3.35 per cent, but a significant increase from the current level of 0.9 per cent.

What happens when the next crisis arrives?

The ECB is not the only central bank to use a form of QE. The Fed, Bank of England and Bank of Japan all have their own versions. When these countries also taper out their QE, naturally there will be a corresponding rise in interest rates. However, if a new financial crisis was suddenly to happen (not unthinkable at the moment) all 3 of these central banks can reapply QE to stimulate their economies. An additional increase to their balance sheets can be accommodated.

Unfortunately for the ECB the very criteria that now applies would make it impossible to restart QE. The ECB could not just increase its balance sheet – current criteria and regulation make that impossible. Any attempt to change the rules would be met by objections from national governments within the EU and legal action. The Bundesbank were very vocal in their objections to the implementation of QE in 2015 – those protests will not have softened by now.

This shows the constraints prevalent upon the EURO – monetary policy is the only tool that the ECB has at its disposal. One policy can not be used to fix all the problems present with the economies of all member states.

 

 

Lionel Pavey

Cash Management and Treasury Specialist

 

Voorlichtingsavond PGO Treasury Management & Corporate Finance

| 20-10-2017 | Robert Dekker |

Logo - VU AmsterdamOp donderdag 9 november 2017 vindt de voorlichtingsavond voor de Postgraduate opleidingen, waaronder de opleiding Treasury Management & Corporate Finance, van de School of Business and Economics van de Vrije Universiteit Amsterdam plaats.

Deze voorlichtingsavond is bedoeld voor geïnteresseerden die per 1 februari 2018 willen instromen. Dat kan, omdat wij de opleiding modulair georganiseerd hebben, dat ons in staat stelt 2 keer per jaar studenten te laten instromen namelijkper 1 september en per 1 februari.

Een ieder die geïnteresseerd is in de opleiding is van harte welkom om een indruk van de opleiding te krijgen en kennis te maken met de programmadirectie, docenten en (ex-)studenten.

De ontvangst is om 18.00 uur in de Foyer van de Agorazalen. Vanaf 18.30 uur vinden de voorlichtingsrondes plaats. Om 20.30 uur begint de voorlichting voor de opleiding Treasury Management & Corporate Finance. Na afloop is er gelegenheid om vragen te stellen.

Programma
18.00 uur > Ontvangst met koffie/thee en broodjes
18.30 uur > Voorlichtingsronde 1
19.30 uur > Voorlichtingsronde 2
20.30 uur > Voorlichtingsronde 3 – Treasury Management & Corporate Finance (RT)
Na afloop > Gelegenheid tot vragen stellen

Locatie
Vrije Universiteit Amsterdam, Agorazalen, De Boelelaan 1105 (hoofdgebouw, 3e etage)

Aanmelden en informatie
Wij weten graag vooraf op hoeveel mensen we kunnen rekenen. Aanmelden kan via VU PGO voorlichtingsavond

Voor vragen/contact
Nicole Lijs
Postgraduate opleiding Treasury Management & Corporate Finance
020-598 2171/ [email protected]

Robert Dekker – Program director postgraduate program treasury & corporate finance at the VU University

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Introduction core team Treasurer Development

| 19-10-2017 | treasuryXL  | Treasurer Development |

Earlier we informed you about the Treasurer Development initiative. The members of the core team of Treasurer Development aim to contribute to raising the professional level of corporate treasury and increase acceptance and recognition of corporate treasury. Starting point for them is the treasurer as a person.

 

In the kick off meeting a core team was created; these are the members:

  • Janneke Nonkes, former group treasurer and coach
  • Robert Dekker, manager of the post graduate Register Treasurer program at the Free University in Amsterdam and treasury consultant at KPMG
  • Frans Boumans, responsible for the minor treasury management program at the University of Applied Sciences in Utrecht and former banker
  • Pieter de Kiewit, recruitment consultant and owner of Treasurer Search

All core team members work independently in this initiative. They do not represent each other or treasuryXL as a core team member. They aim to inspire, inform and deliver positive criticism. The opinions expressed by a member of the core team are attributed to that person and these opinions are independent and not necessarily shared and/or endorsed by all the other members. treasuryXL  is the communication platform for Treasurer Development. Blogs, discussions, round table meetings, curriculum build-up and adviser are all results that can and will be the result of Treasurer Development.

First initiative coming from Treasurer Development is a cooperation between Frans Boumans and treasuryXL. All of us will start blogging on related topics. Janneke and Pieter will develop a free of charge telephone quick scan in which treasurers can brainstorm about their career development. Robert will inform you shortly about curriculum developments in the Register Treasurer program. Both the Hogeschool Utrecht and the Vrije Universiteit will want to brainstorm with you about guest lecturing, internships and graduation projects.

So far, the first responses on this initiative are very positive. We are open for suggestions and look forward to informing you further.

treasuryXL

[icon icon=”envelope” color=”” size=”tiny” with_circle=”0″ link=””] [email protected]
[icon icon=”phone” color=”” size=”tiny” with_circle=”0″ link=””] 06-21303744

 

Alternative Payment Providers

| 18-10-2017 | treasuryXL | The Paypers |

Traditionally, banks provided the infrastructure to enable payments to take place. Nowadays, there are many different third party online payment services that compete directly with the bank models. We came across an interesting article detailing the rise of a mobile payment platform with a large customer base in China, which is bigger than well-known services such as Paypal. It is part of the Alibaba Group who already have a large presence in Europe via AliExpress – after making a large impact on European online shopping, will they make an impact on the payments systems?

With a customer base 400 million strong, Alipay alone represents 50% of all online shopping in China. As the number of Chinese tourists in Europe increases by 100% annually, this tool is offering a wealth of business opportunities for retailers and e-merchants.

An ultra-simple virtual wallet

From taxi fare to the water bill, to purchases in small shops, or traffic tickets—online as well as in the physical world—Alipay can be used for almost any transaction. Such incredible flexibility puts this e-wallet at the centre of daily life in China. Witness the staggering figures: over 175 million transactions per day, peaking at one billion orders processed on 11th November 2016, dubbed “Singles Day,” a huge shopping fest organised by Ali Baba since 2009.

Please read more by referring to the original article on The Paypers.

Cybersecurity & corporate treasury – not your favourite, but beware!

| 17-10-2017 | Pieter de Kiewit |

We all have these topics we know are important but never get the highest priority. Until it is too late. Cybersecurity is one of them. Do you want to be the treasurer named in the newspapers? Finding examples and input on-line is not hard. Only this morning these articles popped up through LinkedIn:

“Hackers steal $60 million from Taiwanese bank using bespoke malware”. This is about SWIFT, technology used by many in the corporate treasury environment. This is not to shame SWIFT, what can happen with them, most likely can with other service providers.

Input from this mentioned article specifically has a focus on corporate treasury. What I think is interesting in their input: it is not only about malware. They also mention “social engineering”.

Now what to do? We all know many service providers step forward to guarantee security. Your time and budget is always a restraint. 100% security is an illusion. We will not decide for you. Perhaps we can help you start by browsing through who is offering solutions:

  • The ACT is organising an event at the end of this month:
    “This highly interactive two-day course will take you through the process of building a secure treasury environment. It covers all the essentials, from the creation of a framework of policy and delegated authority, to the way treasury should be organised to ensure maximum control of its activities. You will learn about front, middle and back office functions, regulatory requirements, controls and security essential to managing treasury and you will debate the key issues of control failure. You will learn how to create a secure environment in which treasury transactions can be managed and carried out with minimum risk of fraud or error. You will, be able to judge the adequacy of any security arrangements and make or recommend necessary changes. You will also learn how to effectively plan and execute a risk- based treasury audit that adds value and helps identify early warning signals of potential problems.”
  • Software suppliers like Reval are stepping in, offering technology connected to consultancy. Their article is an easy read, gathering a first glance.
  • And of course consultants are happy to step in. This article of PwC might give you a first idea. Consultancy fees are quite steep. A known sales strategy of consultants is describing scenarios that make you stay awake at night. Are you willing to take the risk or consider “an amateur”.

We will further inform you about the topic in the future. We wish you low risk and high wisdom.

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

 

IBM: International Blockchain Model of the future?

| 16-10-2017 | Carlo de Meijer |

According to a recent Juniper Research study “Blockchain Enterprise Survey”, IBM is seen as the number one provider of blockchain to business, well ahead of its competitors. These results are based on a survey of 400 business users from organisations actively considering, or in the process of deploying blockchain technology. Of the surveyed 43% ranked IBM first, followed by Microsoft (20%) and Accenture.

IBM is better positioned than competitors as far as its blockchain credentials are concerned. The study noted that IBM’s high-profile research development efforts and use of Hyperledger “helped push it to the number one spot”. IBM has been making considerable steps forward not only by research. Also with the development of a great number of projects aimed at broadening the scope of distributed ledger technology to include industries other than the financial services, including asset tracking, logistics, healthcare and the music industry.

Though this blog will especially focus on IBM, I will start showing the main differences between its main rival, Microsoft and that of IBM in their blockchain approach.

IBM versus Microsoft: different approaches

IBM and Microsoft are now intensively working to become the dominant commercial blockchain-as-a-service (BaaS) platform. They are positioning themselves in the middle of a “frenzy” of blockchain projects and partnerships.

While Microsoft has been adding blockchain modules to its cloud platform Azure already since 2015, IBM launched the first commercial application of blockchain named IBM Blockchain just in March this year. Both systems seem similar on the surface: modular, operate in the cloud, based on open-source code, with massive ecosystems. Both are decentralized ledgers that can be used to manage and validate almost any type of transactions.

Different visions

But on closer inspection it is clear they have different visions for blockchain technology. Both are They thereby are taking decidedly different paths. These two big tech corporates are …

Read the full article of our expert Carlo de Meijer on LinkedIn

 

Carlo de Meijer

Economist and researcher