Blockchain: What happened during my stay in South Africa? (PART IV)

|13-1-2017 | Carlo de Meijer |

chains-iiAs you may remember I travelled throughout South Africa in december 2016. Being back home I was curious to learn if there were developments in the blockchain area. A first article was about a number of interesting reports that were launched and start ups. The second article dealt with banks and consortia. I focussed on central banks, market infrastructure and card schemes in a third article. In this last article I want to conclude my ‘blockchain journey’ with information about regulators and advisory companies. 

REGULATORS

EU Commission Launches Initiative to Boost FinTech and Blockchain Startups

The European Commission (EC) unveiled a new initiative aiming to support Europe’s FinTech and blockchain innovative entrepreneurs. The Start-up and Scale-up Initiative aims to combine all the possibilities that already exist in the EU, but plans on including a new focus on venture capital investment, insolvency law, and taxation.

With the unveiling of the Initiative, the Commission is hoping to bring together several factors to enable blockchain and FinTech startups to develop and grow their business across Europe. Aside from the proposed factors mentioned above other features that the Initiative is proposing include improved access to finance and simpler tax filings. Through the Initiative startups will also gain access to improved innovation support through reforms to Horizon 2020, which funds high-potential innovation through a dedicated SME instrument. The initiative will also connect startups with potential investors, business partners, universities, and research centers.

ADVISORY COMPANIES

Deloitte invests in blockchain Startup SETL

Professional services firm Deloitte has made an investment in London-based financial services blockchain startup SETL. By harnessing the capabilities of SETL’s blockchain, Deloitte can provide their clients with even more practical and transformational solutions.  News of the investment follows the announcement last month that Deloitte, SETL and Metro Bank had successfully trialed a contactless payment card using the firm’s distributed ledger technology. SETL is one of a number of startups worldwide looking to apply the technology to payment and settlement, and it recently became part of a regulatory sandbox initiative launched by the UK’s Financial Conduct Authority.

Deloitte has bet big on distributed ledger technology. To date, the firm has partnered with a range of startups in the space to develop blockchain prototypes. They have already been investing heavily in real-world applications, such as identity management, cross-border payments, loyalty, trade finance and a number of others. Deloitte is currently setting up an EMEA financial services blockchain centre in Dublin that will house a team of 50 developers and designers and is working with five prominent blockchain companies – BlockCypher, Bloq, ConsenSys, Loyyal and the Stellar Development Foundation – on a wide-range of proof-of-concept applications across the financial sphere.

PwC launched its Vulcan Blockchain Platform

Pricewaterhouse Coopers (PwC) recently launched its Vulcan Digital Asset Services based on blockchain technology. The Vulcan offering marks PwC’s continuing commitment to bringing blockchain technology to financial services and other industries. The Vulcan platform that connects identity, money and assets, allows users to spend, share, trade or track any physical or digital asset cheaply and quickly. It enables fintech start-ups and existing technology companies to gain access to PwC’s global client base and co-develop new product offerings. Vulcan’s digital currency services include digital asset wallets, blockchain-based payments (global payment processing), a digital asset exchange (investment and trading services), and rewards and loyalty programs. In addition, the platform provides governance and assurance services, including anti-money laundering, know your customer and reporting tools to ensure regulatory compliance.

PwC is already conducting several pilots in different industries that capture digitized assets and issue customer reward points as digital money. A global banking group and a central bank are piloting the system while an airline and three multi-national banks are also exploring it.

All parts of this article can also be found as a combined article on my LinkedIN page.

carlodemeijer

 

Carlo de Meijer

Economist and researcher

 

 

 

More articles about blockchain from Carlo de Meijer:

 

Treasury education & training. What’s next?

| 11-1-2017 | Theo Paardekooper |

studies

 

De treasury functie heeft zich de afgelopen jaren verder ontwikkeld. Zowel in technische zin als ook functioneel wordt de positie van de treasurer verruimd. Dit vraagt om uitbreiding van kennis en vaardigheden. Op de website van treasuryXL is informatie te vinden over education & training. De markt vraagt echter om meer. Academische titels vormen een entreebewijs voor de volgende stap. Wellicht een goed voornemen voor 2017. In deze bijdrage derhalve een korte introductie van de mogelijkheden.

Internationale Setting

Het in de UK gevestigde ACT, the Association of Corporate Treasurers zet de wereldstandaard in treasury opleiding. Via de ACT is een Certificaat in Internationaal Cashmanagement te halen, dat wereldwijd een goede reputatie heeft. Dit gaat echter alleen over cashmanagement.  De ACT staat bekend om haar treasury opleidingspogramma’s t.w. Certificate of Treasury fundamentals (3-6 maanden), Certifcate of Treasury ( 6-12 maanden), Diploma in Treasury Management (12-18 maanden) en Advanced diploma MCT (15 maanden).  Het behalen van het diploma in Treasury Management geeft de titel AMCT (associate member) en het eindstation is het advanced diploma in MCT (Master in Corporate Treasury).

Het is mogelijk om de studie voor het diploma Treasury management (managerial level) te starten zonder de voorgaande 2 diploma’s te hebben behaald. Op basis van praktijkervaring kan een toelatingstest worden gedaan.

AMCT en MCT zijn met name zelfstudie opleidingen. Zowel het studiemateriaal als de examens zijn vrij gedetailleerd. Kosten voor het MCT programma bedragen GBP 10.000,=  + aanvullende kosten zoals voor het ACT lidmaatschap. De kosten voor AMCT bedragen GBP 2460,=. Hierbij is alleen sprake van online thuisstudie.

The Dutch way

20 jaar geleden heeft thans emeritus hoogleraar Van der Nat de post-doctorale studie Treasury Management aan de  VU te Amsterdam opgestart. Kosten van het 2 jarige programma bedragen EUR 23.500,=.  Het programma voorziet in 6 uur college per week (middag en avond) gegeven door diverse hoogleraren en experts uit het bedrijfsleven. Het curriculum is onderverdeeld in 4 onderdelen t.w. Treasury en markten, Financiering en financieel management, risk management en organisatie, governance en control. Het Certificate in International Cashmanagement van ACT is een keuzevak in het curriculum. De studie geeft structuur en overzicht van alle (praktijk)kennis van diverse treasury disciplines en kent een sterke wiskundige basis.

Naast reguliere tentamens wordt de opleiding afgerond met een scriptie. Succesvolle afronding geeft recht op de titel RT.

theo-paardekooper

 

Theo Paardekoper 

Independent treasury specialist

 

 

 

Meer artikelen over opleidingen en trainingen:

 

 

Brexit and the effects for treasurers

| 10-1-2017 | PowertoPay | sponsored content |

brexitBrexit is an ongoing issue in not just the financial world, but in the entire world. A topic which had lots of speculations, rumors and uncertainties. Although 2017 is going to bring us more clearness around Brexit, the exact date when Brexit is actually happening is still unknown. Theresa May, Prime Minister of the UK, said she will put Article 50 into motion by the end of March 2017. If she is able to put this article into motion, the actual process of withdrawal must be completed within two years. Anyhow, Brexit has its effects on the economy.

Netherlands and Belgium

Zooming in on the Netherlands and Belgium, Brexit will leave its marks as well. Because of extended research, Rob Rühl, director of Next Markets, is able to tell treasurers an update on what Brexit means for them. He is going to share his findings on a free Treasury Seminar, which is going to be held in the Netherlands and Belgium in the beginning of March. This seminar is hosted by payment specialized companies PowertoPay, TreasuryServices and the internationally known SWIFT. Since the results of article 50 going into motion or not are approaching, Rob Rühl will be able to update treasurers according to the latest developments. It’s important for treasurers to keep up with the latest developments to optimize their payment flows and thus to keep their businesses optimized. Or as Hans Leybaert, CEO of PowertoPay, looks at it; by focusing on smart Fintech solutions, platforms and ecosystems, you can create broad business opportunities that matter. Not just Brexit is interesting for treasures, but also think of topics as bank independency, cash management and Basel III which are important to learn about. More info and signing up for the seminar:  http://info.powertopay.com/sign-up-page-seminar

powertopay2PowerToPay

Claire van Ingen – Online Marketeer

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Optimize proceeds from business transfers

| 9-1-2017 | Peter Schuitmaker |

werken-aan-waardstuwersPrior to the sale of an SME, the shareholder/director is often advised to make early steps to prepare for a business transfer. This would increase the value at the moment of the sale, thus resulting in higher proceeds from this sale. At this point, many questions arise, like ‘what should be done?’, ‘how does this work?’ and ‘what are expected results?’. The lack of clear answers is a major cause for not making right choices and taking adequate steps in practice. Which leads to disappointing outcomes at the time of sale. Timely preparation for a business transfer is supported by four major pillars: working capital management, investment policy, cost effectiveness and business rigidity. My third book, titled “Werken aan Waardestuwers? Over waarde en klinkende munt!” (in Dutch) is about this topic.

 

In this book, the valuation process and the transaction process are elaborated. The valuation process induces the company’s value, as perceived by the buyer, which is fundamentally different as perceived by the seller as a result of the information asymmetry. The transaction process induces the company’s selling price, which is fundamentally different than the company’s value.

Werken aan Waardestuwers

In my book ‘Werken aan Waardestuwers’, the case of Charles’s (Dutch: Karel) carpentry KaKaBo is elaborated. KaKaBo is specialised in the production and installation of hardwood cabinets for high-end office environments. Charles plans to sell the business in three years and evaluates the company’s financial position and performance. From this evaluation, Charles learns that the financials appear to be fine: the EBITDA = 12,5%, the Income before Taxes is 6,5%, the Debt Service Capacity is 3,5 and the Solvency is 60%. At this point, Charles feels comfortable. But the valuation of the company, based on the Adjusted Present Value DCF method, gives rise to an uneasy feeling: the economic value of KaKaBo’s shares at the expected time of sale not much more than it’s book value. And the expected selling price, as a result of the transaction process, is even less than it’s book value. So, obviously, some work needs to be done.

The book describes the choices and concrete steps, which are taken by Charles. He improves the working capital management and reviews and adjusts his investment policy. This has an immediate effect on the cash-cycle of KaKaBo: an immediate cash-in, which adds to Charles’ proceeds.

Furthermore, Charles detects and eliminates some cost inefficiencies. This certainly proves to be not an easy job but effective nevertheless. Besides, Charles evaluates the dependencies on internal and external stakeholders. And above all: his role as dominant player in the operation. By this he achieves a more moderate risk-perception as seen from a buyers’ point of view. At the end, this leads to excess economic value of 67% over the company’s book value. And an expected selling price of more than 50% over it’s book value, due to better business transfer financing opportunities.

“Werken aan Waardestuwers” (ISBN: 9789082615616) is expected to be sold via bol.com in February 2017.

peterschuitmaker

 

Peter Schuitmaker

Registered Advisor for Business Transfer and Succession

Loopbaan in treasury: een doodlopende weg?

 | 6-1-2017 | Pieter de Kiewit |

man-op-weg Het blijft een terugkerend thema als meerdere treasurers samenkomen of als ik over loopbaanplanning spreek: is blijven in treasury een recept voor vastlopen in je carrière? Bouw je door op hetgeen je hebt bereikt of doe je een stap terug/opzij om er weer twee vooruit te maken? Zonder uitputtend te willen zijn zal ik veel genoemde reacties beschrijven.

Zeker een doodlopende weg!

Gemiddeld genomen maken academisch opgeleide treasurers sneller carrière dan collegae die niet naar de universiteit gingen. Zij zien hun studiegenoten parallel starten in accounting, control of audit en hiërarchisch gelijk met hen opgaan. Tot de treasurer het plafond bereikt en de anderen stappen blijven maken. De treasurer ontdekt dat hij niet wordt betrokken in zoekprocessen voor andere financiële beroepen waarvoor hij wel in aanmerking wil komen. Op een DACT bijeenkomst van enkele jaren geleden gaf 80% van de treasurers aan, volgens eigen inschatting, te kwalificeren voor de positie van CFO. Persoonlijk vind ik dat dit wel getuigt van enige zelfoverschatting. Feit is wel dat treasures gemiddeld genomen smallere skills in de financiële discipline hebben maar ook bijvoorbeeld in peoplemanagement. Veel van hen komen in een situatie waar ze geen gevoel voor de business kunnen opbouwen. Feit is dat veel eindverantwoordelijk treasurers momenteel al lang in hun functie zitten. De weg lijkt dood te lopen!

Doodlopende weg is onzin!

Voor elke treasurer die lang op dezelfde stoel zit, is er wel één die een doorgaat met loopbaanopbouw. De belangrijkste assen waarlangs dit lukt zijn de functionele en de branche as. Functioneel verbreedt treasury zich nog steeds. Traditioneel zijn balansfinancieringen en geldlogistiek dominant, momenteel zijn werkkapitaal, project, trade finance en treasury technologie sterk groeiend in onze portfolio. Bij het verder volwassen worden van de discipline hoort ook de meer branchespecifieke treasury. Albert Heijn, de Gemeente Amsterdam en de BAM kunnen tegenwoordig specifiekere eisen stellen aan de treasurers die zij aannemen. Verder is er een grote groep die, al of niet in het kader van een management traineeship, een tour door treasury maken. Deze laterale stappen of stappen vooruit kunnen overigens over het algemeen alleen binnen dezelfde onderneming worden gemaakt. Maar komen zeker wel voor! Het afdwingen hiervan vergt vaak wel bewuste planning, bijvoorbeeld in opleiding of in relatiemanagement.

Mijn mening?

Mijn mening is dat het gedeeltelijk een semantische discussie is. In de top van een organisatie zijn minder stoeltjes te verdelen dus ook voor andere disciplines geldt de doodlopende weg. Ik zie dat er voor elke 9 controllers 1 treasurer is en dat deze treasurer minder loopbaankansen heeft dan elk van de controllers. Treasurers zouden, als ze willen, harder kunnen klagen. Anderszins zie ik dat een aantal, vooral jonge, mensen meer hiërarchiegedreven zijn en pas later ontdekken hoe belangrijk de inhoud van het werk voor hen is. En de aantrekkelijkheid van treasury wordt door een meerderheid van mijn gesprekspartners gezien. Het is een mooi vakgebied! Mijn mening is dat, ondanks de realiteit van de huidige arbeidsmarkt, ieder die een goede volgende stap in zijn treasury loopbaan zoekt, deze kan vinden.

Ik sta open voor brainstormsessies!

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

treasuryXL Resources (part II): education & training

| 5-1-2017 | Annette Gillhart |

workshop Financial SystemsIn december we called in your help to refer to our page ‘Resources‘ and complete our list of associations. We have received interesting suggestions which will be added to the list shortly. Today we would like to give you an overview of the treasury education and training organisations that we have listed on this same page under the tab ‘education and training‘. Of course you are again most welcome to send in suggestions, as we do not claim that this list is complete.

As our list is rather long we will start with 3 organisations:

1. Alex van Groningen

Since 1994 Alex van Groningen is one of the leading partners for finance professionals. They also built several major communities with their partners. Within those communities knowledge, network and career meet, support and enforce each other. More than 100.000 professionals meet online and in class rooms.

Training programs comprise amongst others Financial analysis, Strategic financial management, Controller in one week and Business valuation.

2. NCOI

Education and training for working people in The Netherlands.

NCOI stands for keeping skills on a high level or improving these skills and their target group is the working population. Every year they enlarge the knowledge, skills and competence of thousands of working people. Their approach is strongly related to the working practice and offers a high extend of flexiblity to combine job and study. They offer various starting dates, different study types, top lecturers, group lessons and a valuable diploma.

A short summary of the programs they have for treasurers and finance professionals (courses are in Dutch):

Masterclass Financing & Treasury, Module treasury management, Master Finance & Control

3. NIBE-SVV

NIBE-SVV offers education and training for bank, insurance and stock exchange professionals throughout The Netherlands. According to their information they are the leading institute for finance professionals. Courses and programs are matched with the existing knowledge and competences of participants.

Their approach is practical and they provide profession-oriented training on MBO (intermediate vocacional education) , HBO- (higher vocational education)  and Master level.

They offer the following programs for treasurers and finance professionals (in Dutch):
Introduction riskmanagement, Financial riskmanagement, Cashmanagement, Financial risk and regulation, Foundation of financial risk, Cashmanagment and Tradefinance

 

The complete list of education and training organisations on our website can be found under ‘education and training‘.

For more information about a particular organisation and the most recent programs please visit their websites.

Have you been following an interesting and valuable training lately that you want to tell us about? Please feel free to share it with us and the treasury community!

 

annette-gillhartAnnette Gillhart – Community Manager treasuryXL

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Blockchain: What happened during my stay in South Africa? (Part III)

| 4-1-2017 | Carlo de Meijer |

chains-iiIn december 2016 I travelled throughout South Africa. My main focus was on the country, the people, the safaris, the Big Five and not on blockchain! Being back home I was curious to learn if there were developments in the blockchain area. A number of interesting reports were launched and there had been growing blockchain and distributed ledger activity in the financial industry from start-ups, to banks, central banks, the market infrastructure and consortia. 

In earlier articles on treasuryXL I focussed on new reports and startups (Part I)  and on banks and consortia  (Part II) while in today’s article I want to write about central banks, market infrastructure and card schemes.

CENTRAL BANKS

Central banks in Japan, Sweden and Singapore, among others , have launched blockchain efforts, with the European Central Bank (ECB) announcing a new research undertaking in partnership with the Bank of Japan on 6th December. The US Federal Reserve recently launched its first major research paper on blockchain.

Japan’s Central Bank Staff are Running Blockchain Trials

Japan’s central bank is researching and testing blockchain to study the possible use of distributed ledger technology for market infrastructure. They are “test-driving” blockchain technology to understand the innovation, according to its governor Haruhiko Kuroda. Speaking at a financial forum centered around digital innovation and Fintech, the Bank of Japan’s governor underlined blockchain as having the potential to “significantly affect” the basic pillars of financial activities – money and ledgers.

ECB and Bank of Japan research DLT for market infrastructure

The European Central Bank and Bank of Japan agreed to launch a joint research project to study potential use cases of blockchain technology for market infrastructure. This initiative comes after the ECB revealed that it is open to taking a closer look at exploring the potential for blockchain technology as a means to further innovation among central banks around Europe. The bank is toying with the idea of tapping DLT, among other options, for its revamp of the Target2 real-time gross settlement system and Target2-Securities platform. If this is to happen, more research into the technology is needed, prompting a collaboration with the Bank of Japan which will see findings released next year.

Bundesbank and Deutsche Börse test blockchain for securities settlement

Germany’s central bank has teamed up with Deutsche Börse to develop a functional prototype for blockchain technology-based settlement of securities. The prototype thereby enables the settlement of securities in delivery-versus-payment mode for centrally-issued digital coins, as well as the pure transfer of either digital coins or digital securities alone. In addition, this technology is capable of settling basic corporate actions such as coupon payments on securities and the redemption of maturing securities, using code from the Hyperledger Project as a basis. Both parties now plan to work on it over the next few months to test its technical performance and scalability. According to the Bundesbank, the project is aimed at providing a basis for further exploring the use of the tech in the securities trading space.

French Central Bank Pilots Blockchain

According to a report issued by the Banque de France it was announced that they tested blockchain technology for potential uses in managing SEPA Credit Identifiers, or identification markers used to establish the identity of creditors within the Single Euro Payments Area. This marks its first publicly acknowledged blockchain trial by the central bank. The trial was conducted with blockchain startup Labo Blockchain in collaboration with the Caisse des Depots et Consignations.

MARKET INFRASTRUCTURE

SWIFT unveils blockchain proof-of-concept (PoC) for bond trading

SWIFT recently unveiled its first proof-of-concept (POC) for managing the entire lifecycle of a bond trade based on blockchain technology. The internal POC demo tackles the issue of asset servicing across the full lifecycle of a bond trade, from issuance to payment of coupons and maturity. For the tests, Swift set up five separate nodes on a simulated network, stretching from Swift offices in California as the ID provider to an account servicer in Virginia and three investing banks in Sao Paolo, Frankfurt, and Sydney. SWIFT expects to see a number of other POCs come to fruition in Q1 2017.

SWIFT intends to sketching out a roadmap of key initiatives planned for 2017. These include working with vendors and member banks to deliver a blueprint for a SWIFT-run distributed ledger and the development of a DLT sandbox. For the latter, SWIFT intends to collaborate with member banks on a select number of use cases for the future application of distributed ledger technology as part of their Global Payments Innovation initiative.

ICAP to process foreign exchange trades on blockchain in 2017

ICAP, a UK-based operator and provider of post trade risk mitigation and information services, has announced plans to start processing foreign exchange trades on blockchain. For that, ICAP brings along its subsidiary Traiana and has teamed up with Axoni, a US-based technology company to supply the code to customers in March 2017. Traiana will thereby act as a messaging hub for forex, fixed income and swaps deals. They thereby provide services to monitor pre-trade risk and automate post-trade processing of financial transactions in listed and over-the-counter trading markets. Also, it will reconciles transaction, reference, market and portfolio data before it is transmitted to regulators, clearing houses or back to financial institutions.

Everex trials blockchain remittance in Thailand

Everex, a financial inclusion blockchain development company seeking to improve access to financial services and markets for un- and under-banked population across the world, has tested blockchain remittance. Over 100 migrant workers transferred money instantly over blockchain to their homes in Myanmar in the last months. Therefore, over 850,000 Thai baht (around USD 24,000) were transferred using the Everex wallet, a mobile and web based app that sends digitized national currencies using Ethereum blockchain.   Overall, average transaction took less than a minute and recorded savings of over 7% in remittance cost and currency exchange rates.

CARD SCHEMES

MasterCard files blockchain patents focused on payments and transacting

MasterCard has filed to the US Patent and Trademark Office (USPTO) four applications related to its work (focused specifically on payments and transacting) with blockchain and distributed ledger technology. The applications focus on methods and systems for authorizing, processing and securing blockchain-based transactions. MasterCard is arguing that a combination of blockchain and its existing payment technology could bring great benefits for those making digital payments. Publication of the applications comes weeks after the credit card company released a set of experimental blockchain APIs.

Lotte Card rolls out biometric authentication based on blockchain in Korea

Lotte Card, a large card issuer company in Korea, has adopted a biometric-based authentication system service in its payment app jointly with Blocko, a blockchain startup. Blocko is the provider of Coinstack, a blockchain-based development platform, and has a large number of references in providing blockchain technology in Korea.   Financial organizations in Korea, including banks, card companies and Korea Exchange, are actively adopting blockchain technology, but this is the first case in Korea of commercialized blockchain technology combined with biometric-based authentication system.

carlodemeijer

 

Carlo de Meijer

Economist and researcher

 

Safety of payments

| 3-1-2017 | Lionel Pavey | GT News

Fraud and cybercrime protection is of major importance for corporate treasurers. In the past year a new risk had to be added to the list: connectivity. Reports of banks being hacked and losing millions through unauthorised payments appeared more and more frequently and since protecting payment connectivity workflows was not a high priority item on the list of treasurers, it created damage in the industry.
GT News deals with the topic of how to protect payments in their article’ ‘Five tips for keeping your payments safe‘ on december 21st, 2016. We asked our expert Lionel Pavey to comment on the article and give us his own view on how to protect payments.

Safety of payments

As even medium size companies can easily have over 100,000 bank transactions per year, it is imperative for a company to ascertain the validity of all payments so that no fraudulent payments take place.

Authorisation Matrix

It is necessary to embed a clearly defined matrix within the company. This should follow a six-eye principle and be traceable within the payment system – invariably a bank payment system. The matrix should include the names of all those authorized; the amount they may authorize; the distinct legal entities they may represent etc. This data also needs to maintained and secured away from the payment centre (IT or legal department). If a new person needs to be added to the list who implements the procedure – Treasury or IT?

Types of payments

There are various workflows that will generate payments and these should be mapped and a complete process should be designed for each one – procurement system and creditors in the book keeping; financial obligations from the existing financing operations (loans, bonds etc.); tax on wages; social premiums; Value Added Tax (BTW); manual payments normally arising from expense claims and incidental purchases outside the normal procurement channel.

Validity of payments

Normal payments relating to creditors are relatively easy to follow – authorization has taken place in 2 different areas (procurement and book keeping). VAT requires data from book keeping for both debtors and creditors. Tax on wages and social premiums are normally presented just once a month either through the administration/controller channel or directly from HR. The biggest area of concern relates to manual payments.

Manual payments

These generally relate to purchases (normally one-off). The obvious question that arises is why is there a need for suppliers that are not in the existing procurement system? It is not impossible to ensure that there are preferred suppliers for all normal desires. Another source is repayments to debtors that are not balanced off against outstanding balances. If a company does not have dedicated software relating to the financing operations who, beyond the Treasury Department, can verify the amounts and dates? The area that requires the greatest vigilance relates to expense claims. Just because a line manager authorizes an expense claim does not mean that it is always compliant with company policy – this is an area where the onus should be on the controller to validate the integrity of the expense claim. Is the expense a genuine expense made in direct relationship to working for the company? An employee away on business and staying in a hotel is entitled to a meal at the expense of the company, but what is the policy towards alcohol and entertainment? Is the amount being claimed excessive and work related?

Integrity of bank systems

How secure is the bank system? When a batch is prepared for payment and an authorisation code produced, how is the code produced – what are the underlying factors that generate the code? Is it possible to alter the beneficiary’s account number after the batch has been produced? Would an alteration be seen by the system, resulting in an incorrect authorisation code? Banks generally do not provide a lot of information as to how their system generates codes.

Reconciliation

Who can extract data from the bank systems? Does this occur daily? Are all entries processed the following day in the book keeping system? What happens to items that are not immediately reconciled?

Conclusion

With regard to standard procurement, it should be easy to construct a solid working system that can be followed at all times. Manual payments are a weak link and a serious amount of time and effort has to be used in constructing a strong framework that has to be enforced and maintained at all times.

Lionel Pavey

 

 

Lionel Pavey

Cash Management and Treasury Specialist

 

Blockchain: What happened during my stay in South Africa? (Part II)

| 30-12-2016 | Carlo de Meijer |

chains-iiIn the past three weeks I travelled throughout South Africa. My main focus was on the country, the people, the safaris, the Big Five and not on blockchain! Now being back home I was curious to learn if there were developments in the blockchain area. 

A number of interesting reports were launched, amongst others by Euroclear and Deloitte. And there has been growing blockchain and distributed ledger activity in the financial industry from start-ups, to banks, central banks, the market infrastructure and consortia. But also from advisory companies, central government bodies and others.

In my first article on treasuryXL, earlier this week, I  wrote about two reports and startups. I want to focus on banks and consortia in this second article about blockchain developments.

BANKS

BNP Paribas completed its first blockchain-based live cross border B2B payments

BNP Paribas has completed its first live cross-border B2B payments between corporate clients using blockchain technology. The transactions, conducted on behalf of packaging outfit Amcor and trading cards group Panini, were cleared in various currencies between BNP Paribas bank accounts located in Germany, the Netherlands and the United Kingdom. For the ‘cash-without borders’ project, the payments were fully processed and cleared in a few minutes. This highlights the potential of the technology to eliminate delays, unexpected fees and processing errors, and pave the way for real time cash management. The bank has strong commitment to follow closely and further accelerate their participation in a number of market initiatives aiming at improving the corporate payments experience using blockchain technology.

Citi backs blockchain startup

Citi has invested in blockchain venture Cobalt DLT, ahead of what the company expects will be a second round of funding in 2017. Cobalt DLT is a blockchain startup aiming to bring distributed ledger technology to the processing of foreign exchange trades. Transactions in the FX market are notoriously inefficient and costly. Currently, foreign exchange trades need multiple records for buyer, seller, broker, clearer and third parties and then reconciliation across multiple systems.   Cobalt is now building a post-trade processing network based on distributed ledger technology. The Cobalt DL solution has the potential to significantly improve post-trade services by cutting costs and reducing risk for our industry. Cobalt DL’s FX solution is set to launch in 2017, with 15 institutional participants committed to using the service.

 CONSORTIA

While the number of consortia in the blockchain arena are further growing, the bank-backed R3CEV sees some cracks in the consortium. Some of its biggest founding members parted ways. Big names like Goldman Sachs and Banco Santander are leaving the R3CEV consortium. And new reports are surfacing suggesting that others such as JP Morgan, Morgan Stanley, Macquiries, US Bancorp and National Australia Bank may follow soon.

The R3 consortium has its first Spanish-speaking Latam member

But there is also some good news. Creditcorp, a Spanish-speaking Latin American financial institution, has joined the R3 consortium to design and apply distributed and shared ledger-inspired technologies to global financial markets. The bank provides corporate and personal banking, brokerage services, and other financial services across its six principal subsidiaries in Peru, as well as other South American countries including Bolivia, Columbia and Chile, and is listed on the Lima and New York stock exchanges.

R3 and Calypso to develop blockchain trade confirmation system

Blockchain consortium R3 continues to press ahead with new initiatives, partnering with Calypso Technology to develop a multi-party trade confirmation system running on its Corda distributed ledger-based smart contract platform. Calypso will be the first application partner to adopt the R3 platform, utilising the technology to enable counterparties to see all trade tickets on the distributed ledger so they can be sure they are matching against the correct trade.

JPX to form Japanese blockchain consortium

Japan Exchange Group (JPX) is to form a consortium of financial institutions to run trials of the use of blockchain technology in capital markets infrastructures. The exchange will seek participation from a wide range of Japanese financial institutions in order to gather broad industrial expertise ahead of testing in spring 2017. They will consider a structure for efficient information sharing between the DLT engineer community and financial institutions through efforts such as training on DLT technology. The Tokyo Stock Exchange together with the Osaka Exchange and Japan Securities Clearing Corporation (JSCC) will lead the coalition which intends to create a test environment for Proof of Concept (PoC) using Hyperledger fabric, the open source DLT platform, in cooperation with IBM.

Blockchain applications, consortium for Malta Stock Exchange

Malta Stock Exchange (MSE) has announced plans to research and develop into the blockchain technology, and to establish its own consortium. MSE’s committee will be run by MSE board members, blockchain experts and its chairman. The consortium will be sharing knowledge and establishing connections or joint-ventures with each other to assist fintech companies based on the blockchain technology, to grow by supporting them in designing and implementing blockchain applications. Furthermore, with this consortium, the Malta Stock Exchange could be planning its first blockchain application. It is very likely their first application on blockchain will replace standard stock exchange platforms.

South Korea rolls out blockchain consortium

The Korea Financial Investment Association (FIA), along with 21 financial investments and five blockchain companies, have teamed up to form a blockchain consortium. The group has signed a memorandum of understanding (MoU) to collaborate on projects and share their expertise on blockchain technology. Moreover, the group aims to create business opportunities for the consortium as well as establishing a platform with the member companies. Its future research projects include the establishment of a common platform for personal authentication due in 2017, researching into clearing and settlement automation in 2018 and 2019, and a platform for over-the-counter trading for 2020.

Microsoft creates Asia’s first blockchain consortium on Azure

Microsoft has teamed up with AMIS and the Industrial Technology Research Institute of Taiwan (ITRI) to form Asia’s first and the most advanced consortium blockchain network on Azure. The consortium includes members such us: Ubon Financial, Cathay Financial Holdings, MegaBank, KGI, Taishin, and CTBC Bank. Aim is to further develop blockchain opportunities in the Taiwan financial market.

The pilot blockchain project is developed using ITRI’s technology (to create an internal application program interface (API)) and Microsoft Azure. AMIS chose Ethereum, to develop a permissioned blockchain, an infrastructure specific to the needs of Taiwan’s financial market. As part of the project, ITRI provided its advanced technology to create an internal application program interface (API), while Azure provided high-speed cloud computing to ensure high security and efficiency for the blockchain infrastructure.

XBRL and ConsenSys work on deploying blockchain tokenization standards

XBRL US, a US non-profit consortium for business reporting standard, has teamed up with Consensys, a blockchain technology company, to work on deploying blockchain tokenization standards. The working group aims to establish a standardized method to represent a token across all blockchain networks in order to eliminate transactional friction and reduce processing costs; enable automation and provenance tracking; and allow interoperability of transactions on a global scale.

The working group will establish goals and action steps by early 2017, and is requesting participation from individuals representing technology, finance, and accounting to provide their expertise in developing tokenization standards that can be used worldwide, for all asset classes.

Source: LinkedIN/Carlo de Meijer

carlodemeijer

 

Carlo de Meijer

Economist and researcher

 

 

Blockchain: what happened during my stay in South Africa? (Part I)

| 28-12-2016 | Carlo de Meijer |

chains-ii In the past three weeks I travelled throughout South Africa. My main focus was on the country, the people, the safaris, the Big Five and not on blockchain! Now being back home I was curious to learn if there were developments in the blockchain area. 

A number of interesting reports were launched, amongst others by Euroclear and Deloitte. And there has been growing blockchain and distributed ledger activity in the financial industry from start-ups, to banks, central banks, the market infrastructure and consortia. But also from advisory companies, central government bodies and others.

In this first article I will focus on two reports and on startups.

 REPORTS

  1. Euroclear Report: Blockchain Settlement – Regulation, Innovation, and Application 

A new report by Euroclear has looked at the regulatory and legal aspects of the use of blockchain technology in post-trade settlement in a European context. The report found that central securities depositories (CSDs) would play an important role in a blockchain-based settlement system. It also stated that regulators should not fear the use of smart contracts and distributed ledger technology any more than any other automated computer-based process prevalent throughout the settlement industry.

As ‘custodians of the code,’ CSDs could exercise oversight of, and take responsibility for, the operation of the relevant blockchain protocol and any associated smart contracts. CSDs may continue to perform an important role as trusted, centralised FMIs (financial market institutions), providing gatekeeping services and oversight of the relevant blockchain.

With the implementation of a DLT-based settlement process there is no need to change the existing regulatory architecture. The authors believe that a blockchain-based settlement system would not present a weaker cybersecurity proposition than any present system, which is not immune to cybersecurity. By allowing regulators to participate as a node in the blockchain system, they could have complete oversight of all the transactions occurring within the settlement system and receive transparent transaction data in real time.

  1. Deloitte Survey: Corporate Executives Having Hard Time Wrapping Heads Around Blockchain

According to a recent Deloitte online survey of more than 300 senior executives at large US companies in order to find out about corporate sentiment towards blockchain technology, understanding of the technology is uneven and many senior executives (39 per cent) still know little or nothing about it, while others place it among their company’s highest priorities.

The survey revealed that blockchain investment and adoption patterns may be more complex than many observers believe. For instance, despite the relative immaturity of the technology, 21 percent of Blockchain-informed senior executives across a wide range of industries indicated that their firms have already brought blockchain into production, and 25 percent plan to do so within the next year. Key findings from the survey showed that 28 per cent of respondents had invested $5 million or more in blockchain technology, while 10 per cent had invested $10 million or more. Looking forward, 25 percent of respondents expect to invest more than $5 million in Blockchain technology during the next calendar year.

Many of these blockchain-informed executives (more than a quarter) see the technology as crucial for their company and their industry. Fifty-five percent of this group said their company would be at a competitive disadvantage if it failed to adopt the technology. Forty-two percent of those surveyed who claimed some knowledge of Blockchain believe it will disrupt their industry.

 

STARTUPS

Goldman, JPMorgan take a stake in blockchain startup Axoni

Goldman Sachs and JPMorgan Chase have announced finalizing an investment that is said to be in a range of USD 15 million to USD 20 million) in blockchain startup Axoni. The Axoni deal represents the latest Wall Street effort to gain traction with blockchain technology. Axoni is a New York-based technology company that helps banks and other institutions develop blockchain software to run capital markets processes. Furthermore, other financial institutions including inter-dealer broker ICA,  Plc’s venture arm,  are also interested in investing in the startup.

Over the past six months, Axoni has run a number of high-profile experiments with some of the financial industry’s largest players, in areas such as post-trade processing of credit default swaps and foreign exchange.

Digital Asset rolls out blockchain platform allowing confidential trades

Blockchain startup Digital Asset Holdings (DAH) has developed a platform to allow traders use blockchain technology without giving out confidential information on their trades. The new platform provides a solution to confidentiality issues holding back adoption of the blockchain technology in financial markets. They solve the privacy issue by dividing the distributed ledger of transactions into two components: one where participants can confidentially store their transactions data, and another that is shared by all participants without the confidential data.

Moreover, the new platform will form the basis of the technology that DAH is building for financial institutions including Australian stock exchange ASX and US post trade services provider the Depository Trust and Clearing Corporation (DTCC).

Manifold Technology rolls out easy-to-use blockchain platform

Manifold Technology, a US-based fintech, has made its patented blockchain platform available allowing non-technical developers to build enterprise-ready, blockchain-enabled applications. The platform has already been used by the Royal Bank of Canada for a rewards program, and by R3CEV consortium member banks to demonstrate instant trading of fixed income assets. The fintech’s platform can handle more than 10,000 transactions per second in operational environments, surpassing the largest credit card companies that can handle between 2,000 and 8,000 transactions per second.

Stellar’s blockchain powers ICICI Bank’s money transfers in India

Stellar, the open blockchain platform and non-profit payment protocol has partnered with ICICI Bank to bring low-cost, near instantaneous remittance solutions in India, the Philippines, Africa and Europe. Besides the bank, other three new partners in some of the largest remittance markets in the world were revealed by Stellar including: Philippines-based financial inclusion-focused fintech startup Coins.ph, pan-African fintech company Flutterwave which is notably plugged into the popular M-Pesa network, and French remittance provider Tempo Money Transfer, a licensed money transfer operator in Europe. This will allow Stellar customers be able to move money from France to Nigeria to Kenya to India in real-time and securely.

Overstock Issues Shares Using the Bitcoin Blockchain

Overstock.com, the online retailer, has become the first publicly-traded company to issue stock over the Internet, distributing more than 126,000 company shares using the blockchain technology. The company announced in October that it would allow its stockholders to purchase shares of its preferred stock. The company is making the offering to demonstrate its tØ platform, while providing its stockholders the opportunity to participate and trade exclusively using the platform.

Fintech Firm Wyre Raises $5.8 Million for “Fastest Blockchain Cross-Border Payments Platform”

San Francisco-based Fintech startup Wyre has launched its blockchain remittance platform alongside a successful $5.8 million funding round. Wyre intends to add its blockchain solution as a layer on top of existing blockchain-based platforms adopted by payment giants around the world. Fundamentally, the Wyre platform works by taking deposits from large payment companies via an API. These transactions are sent over Wyre’s ledger. Wyre then delivers the funds as per the transaction’s instructions, “typically in less than six hours”. Wyre’s focus lays in the cross-border payments corridor between China and the United States.

Sources: Euroclear Report: Blockchain Settlement – Regulation, Innovation, and Application, Deloitte Survey: Corporate Executives Having Hard Time Wrapping Heads Around Blockchain, Carlo de Meijer/LinkedIN article

 

carlodemeijer

 

Carlo de Meijer

Economist and researcher