Tag Archive for: banks

Blockchain and disruption in the financial world: Will banks survive?

| 4-3-2019 | Carlo de Meijer | treasuryXL

The world of banking as we know for many years is in a fundamental transformation process, triggered by new technologies. The most important is blockchain that is said to fundamentally change the way financial transactions are handled today. It is forecasted that this technology will have significant consequences on how traditional banks do business in the future, enabling new business models, deliver new value propositions and solve longstanding challenges, with the well-needed transparency and security in transactions that nowadays involve multiple parties and large amounts of data.

Though this technology is currently still at a nascent stage, blockchain is proclaimed to be a game-changing, disruptive innovation that holds the capability of completely shaking up the landscape of banking in the coming years. Others even proclaim that blockchain will make banks (entirely) obsolete.

Questions that arise are: how will blockchain technology drive disruption in the banking industry, what are the main areas that will be touched, and how will the banking ecosystem look like in say five to ten years from now.

But what is disruption (not!)?

But before answering these questions, it is important to agree what disruption really means. Since the word disruption was launched in the nineties this term has been used for so many things that it has lost their original meaning. Everything that is ‘new’ is described as disruptive and/or innovative.

It was the US professor Clayton Christensen who introduced the idea of disruptive innovation in 1997. According to him disruption means “any innovation that transforms a complicated, expensive product into one that is easier to use or is more affordable than the one most readily available”.

Disruption has three components: responding to competitors effectively; identifying new growth opportunities; and, improving understanding of what customers want.

“A disruptive business is likely to start by either satisfying the less-demanding customers or creating a market when none existed before. So, when mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred”.Clayton Christensen

It is however very difficult to know in advance what real disruptors are. The process is often very long. It could take years before the true effects of disruption are presenting themselves in the market.

Though the classic examples of disruption involved technological advancements, disruption is not all about technology. Not every successful business or product needs to disrupt. But disruption is any time organizations find a more efficient, better way of doing things that attracts customers.

What makes blockchain (so) disruptive for banks?

What makes blockchain so disruptive for the banking industry? Why is this technology forecasted to revolutionising the way banks are nowadays doing business? The answer to this question lies in the three specific in-build properties of a blockchain: Decentralized, distributed and Immutability. These differ completely from those of banks that are centralised organisations.

Decentralized network

Blockchain operates on a decentralized network, that is acting on a peer-to-peer basis. It handles all operations similar to a bank, but without any central authority that monitors all data. So it potentially cuts out the middleman, giving back the power to the owner of the assets (i.e. data or tokens carrying some financial value).

All information is stored across its network via blocks. These blocks, that are time-stamped and linked together with all past and current transactions, are permanently recorded and consistently reconciled and updated in a cryptographically secure way. By storing data across its network, blockchain eliminates the risks that come with data being held centrally.

Distributed ledger

A second property of blockchain is the distributed ledger, that allows sharing of a ledger of activity – such as arbitrary data or virtually anything of value between multiple parties. What makes blockchain so important is its ability to automate trust and transparency among all parties using it. Because the ledger is distributed among all transaction participants, it exists simultaneously in multiple places. Each of the computers in the distributed network maintains a copy of the ledger to ensure transparency and also prevent a single point of failure and all copies are updated and validated simultaneously. This makes it extremely difficult to manipulate entries or tamper with the data without the other parties noticing.

Immutable records

A third unique property is its immutability. By design, blockchains are inherently resistant to modification of data. All blockchain networks adhere to a certain protocol for validating new blocks. No changes can be made once the system is set with the initial standards. Once recorded, the data in any given block cannot be altered without the alteration of all the subsequent blocks, which requires the consensus of the network majority.

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

 

Carlo de Meijer

Economist and researcher

1 year to Brexit – the banking exodus?

| 09-04-2018 | treasuryXL |

If all goes as stated, then the United Kingdom will be leaving the European Union on 29th March 2019. There has been fierce competition within the EU to entice banks away from London and to settle within the Euro zone. In London there is a fear that there will be a banking exodus –  an industry that has prospered and made London a global centre. At till now banks have been able to sell their services into Europe via London, that this is envisaged to change. So, how are the major European cities faring in their campaigns?

What is at stake?

The scenarios of job losses are varied – 10,000 job in banking, 20,000 in further financial services. Others speak of job losses totaling more than 200,000. The large US investment banks retain more than 80 per cent of their European staff in London. The main target appears to be the Euro clearing role – a settlement service mainly in financial derivatives denominated in Euro’s that is now performed in London.

The Netherlands has certainly tried to attract interest from foreign banks and has many good qualities. Most of the population speak English, and there is a good infrastructure. Tax incentives are offered to qualified foreign workers, together with a global port in Rotterdam. The Netherlands Foreign Investment Agency is actively engaging with foreign companies, extoling the virtues of the country. Recently, Unilever took the decision to place its headquarters in Rotterdam – even though they have had a head office there for close on 100 years. Whilst there is already an appreciable physical presence of foreign banks on Dutch soil, there have yet to be any big announcements about a bank moving from London to Amsterdam or Rotterdam.

Germany, and specifically Frankfurt, have also been hard at work. The economy minister for the state of Hesse, claims that more than 20 financial institutions have chosen for Frankfurt. As of today, their names have not all been revealed. Frankfurt is an established financial centre, though discernably smaller than London. As well as banks, there are also regional corporate treasury centres, prime brokers, legal services and other ancillary groups.

Paris – that has been chosen for the European Banking Authority – is also in the picture but does not appear to be attracting the financial institutions. If banks follow the London model, then they would rather be closer to the central bank – the ECB – and that is headquartered in Frankfurt.

Relocation of the financial industry from London to Europe will be good for local employment. It is not just the direct banking industry that will be of benefit to the local communities. The support services are very significant and must also be factored into any equation.

With now less than 12 months to go till Brexit, the race will be heating up to woo the banks as the prize is very enticing and the gains to local economies very large!!

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Banken en Financiële Markten in Vogelvlucht – E-learning uitgelicht

| 02-11-2017 | Financial Training Hub |

Zonder banken en financiële markten zou onze huidige economie en welvaart niet mogelijk zijn. En of u het nu leuk vindt of niet, banken waren en zijn onmisbaar voor onze moderne maatschappij. Iedereen doet, al dan niet bewust, dagelijks zaken met of via banken. Sinds de jaren ’80 heeft er een ongekende schaalvergroting plaatsgevonden in de financiële sector. Door deze schaalvergroting hebben banken zich ontwikkeld tot gigantische financiële supermarkten die een zeer uitgebreid aantal financiële diensten en producten aanbieden. Banken zijn tegenwoordig IT-bedrijven waar een grote groep specialisten werkt met beperkte financiële vakkennis.

Een groot deel van deze specialisten en de meeste bankklanten weten niet wat banken doen en waarom ze een sleutelrol spelen in onze economie. Wat is de invloed van banken op ons dagelijks leven en waarom zijn ze zo belangrijk? En: hoe is het mogelijk geweest dat banken een ongekende crisis op financiële markten en onze economie hebben veroorzaakt? Wat gebeurt er op financiële markten en waarom? Welke rol speelt de Europese Centrale Bank en waarom staat de huidige rente zo laag?

Met het volgen van deze gemakkelijk toegankelijke e-learning maakt u een vogelvlucht over de financiële wereld waardoor u algemene kennis en inzicht verkrijgt over diverse onderwerpen waaronder: monetair beleid, betalingsverkeer, banksoorten en activiteiten, kenmerken van financiële producten, prijzen en prijsvorming, benchmarks, motivatie en organisatie van handel, financiële risico’s, toezicht en compliance.

Deze e-learning bestaat uit vijf sessies

  • Kernactiviteiten van Banken
  • Dienstverlening en Banksoorten
  • Activiteiten op de financiële markten
  • Motivatie en uitvoering van handel
  • Banken, operationeel risico en compliance

Elke sessie bestaat uit een presentatie met uitgebreide begeleidende teksten en een quiz met ruim 20 meerkeuze vragen. Een aantal presentaties bevat korte videofragmenten.

Studieduur

De geschatte tijdsduur voor het doorlopen van iedere sessie plus het maken van de quiz is  2 – 2,5 uur. Het doorlopen van de volledige e-learning-module zal ongeveer 10-15 uur kosten.

Doelgroep

Deze e-learningmodule is geschikt voor alle medewerkers binnen de financiële sector en andere geïnteresseerden.

Over deze module

Deze module is gecreëerd door Financial Training Hub en wordt op het platform van Financial Training Hub aangeboden. Na afronding van deze e-learning heeft u voldoende kennis om bij de Financial Training Hub op diverse onderwerpen een meer specifieke traditionele training te volgen op aanvraag.

Korting

Deze online training bestaat uit 5 sessies. Elke sessie bestaat uit een presentatie met aanvullende tekst (notes) en een bijbehorende quiz. Deze training kost EUR 89.

Ontvang via treasuryXL korting op deze e-learning en/of de e-learning MiFID II/ MiFIR.
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