Industry sign banking indiana presentation fast
[Music] 31 good afternoon to all of you when we speak about blockchain the first question that comes to our mind is it a myth is it practical is it one of those ideas which come once in a while and we will forget about it I think we don't know which way it will go but the reality is this animal called blockchain do you call it a technology which is going to drive individual efficiencies or whether it is going to bring about a greater collaboration between either like-minded or even competing entities the jury is yet to come out so I would I would just take you through very quickly about what we believe what is the role that take has been playing in the banking industry to begin with and therefore the impact of that in the business models when it comes to banking as we perceive it it is it is something which is more personal and our organizational see you I'm sure like similar to various other business models things are pivoting even as we speak this is this has been our evolution till now if you look at the early I am I'm not talking about very much it is more from the time the old private aged banks and the new private age band starts playing this role that the first part which was which was driven by distribution earlier the epitome of distribution was the number of branches that any bank would have it changed the regulator was extremely stingy when it came to giving licenses in that period and that's where technology started playing a big role you whether you call it P ATMs core banking which brought about a network of for the employees and internet banking as an axis of your banking services from the comfort of your home there are the first era which crowd and technology started becoming center stage it also meant automation and a great degree of efficiency that tech was I would call it the classic backroom boys making it a reality it moved into the world of products on the business side we call it the products and the consumer story the linkage has became much more from an inanimate thing it became a much more valuable story theta started playing a role so it's not the data is a new animal it has been there for quite some time that you have a database which is classically a lab driven standalone but brings in all the maurizio systems and gives us stocks giving a single view started with simple Mis became decision supporting systems to the extent of even building models so that is a second era and on the tech side you are talking about virtualization not cloud but early stage virtualization and banks started using it again automation efficiency making things faster and faster as we speak from 15 horn words we have been in the world of digital the things are becoming a bit more nebulous the definition of digital for each one of us was very different we look at it from our own perspectives and we see how to play that game but what is reality is this combination like the Brahma Vishnu Mahesh we have this trio of mobile phones becoming cheaper and powerful so for a change the technology that is available with the consumers is either as good or sometimes even better that what organizations have the second is cloud what used to be our primary source of strength which is our data center and the infra that used to create is suddenly becoming commoditized commoditize and much better much secure ability to plug in so that's these are the two things and the third what both of them create together which is the data exhaust every transaction that you do which used to be a classic end of day process in the second leg started becoming instantaneous started creating value of its own in the earlier presentation you're watching the who I guys whether it's a machine language or an AI starts becoming valuable then you're able to play around with the data so so that's the era and what is it going to be now is it going to be what we spoke about the AI as other machines go starting for themselves or is it the ability of blockchain so if you notice all the three they were in the world of organization or the enterprise as the center and trying to deliver value but as we're getting to the next phase is it going to go beyond us so that's the big debate as far as blockchain is concerned and that's that's where I think it's coming in for us blockchain is not cryptocurrency at least we have not been thinking exactly the regulator's made sure while while it has its own potentials that atrophy we do not think of it as a cryptocurrency for us it is an underlying distributed ledger one more technology which is being made available to the community of banking and why would the banking alone but the various stakeholders are involved and wherein participants who are working on a sequential model can suddenly become working on a shared model that a much larger scale so your ability to access view confirmed at a core of it still lies transactions still lies authenticity still lies at sets which can be tracked so from from a white-wine the world will talk about blockchain coming in as killing the intermediary all together and making a p2p transaction or a b2b transaction independent of all of us involved very very enigmatic and classic assumption but I think some of the guys or the various players in the world will be picking it up is what is it that you can do what is it that you can do to dramatically change the way you operate at the efficiency level and the way you operate the business model level so at a logical level greater transparency hopefully lesser frauds much faster efficiency in speed again I like to talk about the trade story that's where we are able to see money flowing there so the increased efficiency and speed of some of the transactions dramatic amount of reduction of cost because you're not actually building pipes you're using a combined the uber ization if you have to say as we become whether it's a cloud or a hybrid cloud using multiple data centers and then finally trust because there is only one single source of truth those are the underlying principles of a DLT that we would like to build on what is it changing and which is a core point is banking go get impacted by banking wood industry get impacted because of some of these issues this is what I'm speaking about the early phase was driven by the enterprise if you go back to theory it is a michael Porter's law of competitive advantage how good can you be there are you position which markets are you operating on so this was primarily under technology part of it a centralization we Moodle the second one where we are deciding whether we should be in bed with people like the googles in the workshops or should we be completing the death how do we coexist with platform players like the PEI dreams of the world what is it that they bring to the table so that that's that's in my mind enterprise still continues to be strong but you're starting to talk to the various other players the third world which is in theory a comprehensively decentralized driven by the participants rather than by the middleman is what blockchain is all about now is that where we are going how would we be ready for ourselves what is it that we will do is we what you want to check a quick example a typical enterprise would be a bank like ours which is driven by regulation regulation provides trust trust and there is this constant so at the end of the day we are one of the biggest intermediate is that you can ever see take savings use that as a capital and lend it and basically make money of the spread and there is a lot of this transaction and the third party word which is comes in p2p lending the regulator has approved that but it's still a network based model wherein you're still talking about middlemen coming and putting together the uber ization equivalent in the banking world so we can see how it is progressing you are seeing the ups and downs in various markets banks like us will be watching it very closely would we apply for a license would be taken or not million-dollar question finally the crypto lending part of it can this entire story be put on a blockchain platform and thereby be can there be a lending mechanism which can be built around it can that token or can those coins or the assets which are getting digitized can you build a collateralized asset model that wingo some early steps we are seeing in the European markets but still very very early they're just hybrid kicking it out maybe they will pivot as we go along so that's that's what we are seeing the four banks like us we have been able to straddle the first and the second part we are recognizing the fact that we'll have to coexist with the second but as far as the third one is concerned it will still be seen as a technology that we would like to use and pick up the elements of it and not actually getting into cryptocurrency is going into this high energy consumption modules or looking at a consensus spec an ism which is what is the heart of it so how do you modify it so technically speaking banks will not be playing the blockchain game it will be more a modified algorithmic and a tech kind of a game which will get played out now and this is what is happening I mean it's not something we are not doing anything from scratch this is not a zero to one kind of model people are experimenting we are in that first phase so these are the consortiums that are getting formed and that's the operative word from an enterprise you are getting in the consortium like-minded people both within the banking industry and within the various other ecosystem partners whether it be logistics whether it be the government when it comes to customs or whether it comes to shipping companies I think I think how do you build that consortium is a big story easier said than done it's a struggle when you want to come and set up standards and interoperable guidelines which are some of the bigger issues and how can multiple banks which think at a local optima or a primary efficiency how can they bring and put a collective good but we have seen other we have seen in PCI playing some really good models and there is something which we believe could work it's not getting limited to banks alone corporates are trying to pay a fee that is a Singapore corporate who is actually picking up and saying I don't care what happens to the banking world but I would like to map my flows and put blockchain as and so he's looking at it as an internal efficiency can we stay away would the like we are seeing this happening in the commodity sector whether it be oils the auto industry that there is not the differentiation is not mega the pricing is not a big deal there again blockchain is coming in so what you're sensing is anything which is commoditized large very low margin very fast movement going into a consortium story once again government mixed reactions ideally wherever we're having a chat with mr. Nandan Nilekani in one of the conference that said if you had a choice would you ability other system on a blockchain 100% I mean that's that's how it would it work I mean look at some of the controversies it but trying to rebuild that engine once again on a technology which is still sort of finding its field would be different ballgame but that that's one story so can the government start at least pooping those assets which are undisputable ability to distribute DVD can we can be asset that this particular land belongs to so-and-so so I think this ecosystem will also fall in place again some discussions of government they are watching it carefully they're saying let some of the early shoots happen we will step in at the right time and as far as we're concerned at least from a banking in the trade perspective we want customs and we want the excise duty departments to come and because they form a very big chain in the entire story so how do we do that how do we influence that and this is happening again in Europe e Trade Connect does not facilitate transaction it's just an authentication mechanism and finally third parties the tech companies are trying to do this again a one-upmanship this is how this entire model works starts as an open source some of the big guys try to get into it try to navigate the discussion on the direction and that will keep happening so which amongst these will drive is there a one-upmanship happening will it be a much more open so that's how this is defining and as far as again our perspective is concerned we would want to still speak with a consortium approach in fact let me let me just highlight it as we go along in the next step regulatory very good interaction so the regulator and his only advice was as long as you are bringing in greater efficiency greater trust Trust reducing fraud do not talk about anything which is going to impact asset liability management so you might do all the transaction block chain but you'll do that one end of the day transaction on a swift which they understand which they can regulate so so it will always be two steps forward one step backward we will not create a fiat currency but let's see how that model eval works out so and this is what we are seeing in the various others also the Singapore and the Hong Kong government coming together and both the regulator's chatting up and trying to build a corridor which is like a private loop or for that matter digital currency some some governments have been extremely I think the like devian or the Etonian government is actually trying to put some of the stuff together but I think we are a long way off in fact if they facilitate something for a squatting sector we are on a good wicket and that's something which we should be exploring as we go along our own understanding of blockchain I personally believe trade finances are only justified use case which will give you our way where people will allow us to impact because it's a genuine problem across first it's tough you can you can start it off as a domestic market and then move it out into the international and as multiple consortiums are getting created how is it that we can do an interlock between this con system that's a very big story payment and core banking the visas and the masters or the rupees of the world are exploring what is it that this new tech but it's very similar to the other you build so much of legacy system they're trying to let go of that and explore completely new is gonna be different so it's not going to come from one of the incumbents if someone is willing to look at it from a very different perspective maybe I saw maybe when fiat currency comes in as an alternative this could be one of the basis securities big story happening but again the lack of standardization across organizations will ensure that it happens first within the banks as an efficiency mechanism and then maybe play it out as we go later on so let me not talk about more of it but consortium lending is here again the corporate banking we have never seen major innovation happening under corporate banking side other than maybe al Treasury function which is running like a back office so can multiple banks come together and look at at the corporate side or the SME side the consortium lending assets being very clear reducing frauds matching cash flows a typical NPA kind of a story when you see is what you call as the the TPA account wherein all the money should flow through can we build a mechanism that all of us could access it and the primary lending institution effectively plays the role of a convener and the rest of the stuff is available to us so and asset registry the V the V Han which is our auto repository or the Land Registry how can multiple governments come onto it can we do an automatic API ping and get out of that can that be on an blockchain and candidate authenticity so these four points the fact that I cannot change a document the fact that I trust that there is only one single source of truth the ability to bring a consensus either by a consortium or by building in a PKI infrastructure use the same banking crypto infrastructure on top of the existing DLT and finally the security I mean this is an ongoing battle maybe we are there tomorrow someone else will come and attack it so that they will keep on so these for anything that comes in will help stand alone great mechanism to do wreak in
in NBC I where I am one of the board members we've been trying to build a comprehensive back-end settlement today each of the banks puts a lot of money as a settlement fund can the SGI be converted to a blockchain guarantee can be seamless can we do multiple settlements in a day without going through the big la Gola which behind all of us trying to put an equivalent of taking credit so those kind of efficiency mechanisms are very much here to say and those are the cases that we are bullish about yes still in the first plot proof of concept with a early bit of commercialization our own experience has been we are being able to do a few trade transactions here and there one bilateral with an Emirates Bank of Dubai we're able to do a remittance transactions nothing is building up as a volume so let me not say get that we are all talking about something that is happening it's a work in process hopefully this next two to three years will bring in and and the challenge is not technology the challenge is bringing like-minded people putting them together and deciding what are the interoperable laws and stuff like that hope and let's forget about the other two maybe we will talk about it when the time comes it this is the other one as we are speaking because the underlying DLTS can be completely independent whether it be a called our hyper ledger or an ATM different people in different parts of the world or operating on a different technology so what is it that can bring about an interoperability between these multiple networks unlike a visa or a master which dominated the whole world here a wall run might work on XY said a we trade will work on ABC system how that next loop happen when you do a domestic one you're not going to go and tie it without the bank so can two organizations tie-up with each other and thereby maybe this is something which our organization like Swift should look at it very carefully because this is a threat to their models so how do we play in that game so we are still in the stage one model each one of us trying to build our own respective networks and that too in the early stages once that gets me materialized maybe certain corridors whether it's the Middle East corridor or the u.s. corridor some of these will automatically adapt following the same trade flows and then hopefully some industry Kenosha's will happen but I think these two will even as we speak we are seeing the European guy is much more interested to work with us they believe India and China the big markets so India is something which is much more open so at least this part stage 1 and stage 2 might happen in a bit of a tandem or with a bit of a little lag in our own bank just to give you a very quick trade finance we have almost some 250 odd clients who have signed in ran option you can I blockchain which is like a proprietary system or they can do the classic trade system what we are realizing is as you're making if it is an honest that is both the buyer and the seller or on our own they have a bank account with us when the transaction will happen seamlessly but that's not where the value is the value is in an interoperable model which is what but but this is a very validated process we've been trying it for the Philosopher's - five six months whether it's an open account or an Elsi are the obvious things find ways of automatically seamlessly putting it into NTC but you let you notice there's not a business model change it's a purely a simple technological efficiency to bring about a faster tact and maybe within our own ecosystem we'll be better off what are we trying to do which is similar to the others is to bring like-minded people come together so eleven of our banks have come together we are in very hot discussions I think some of us are within this room each one of us trying to interpret it the way they want to drive it but anything which is a commodity of anything which is a transaction related where you could form rules are getting forms so first is and this company then effectively becomes a network operator which is owned by the banks and is also used by the banks so what is it that you will keep the din your bank what is it that you'll put into VI C if something's are working closely with IBA working with banks like s bas D or C axis so this is one area where we really it's a very positive sign that is genuine cooperation happening we are exploring way where would we compete where would we collaborate so that story is coming out so these are some of the banks so we have a good mix of private public sector as well as some of the foreign banks were very keen because they understand the international trade force very well we're in the process of getting the corpus forming the company and then getting the necessary approvals to put in place reasonably amber in terms of the various signals but it's more the conceptual selling the second phase is typically trying to get into what are those laws and regulations that we can put as a programmable story and then build it up via still technology ambolyn it actually plays in three ways there is an application provider in this case it's Infosys which is playing the lead because of being a core banking supporter second we have any cloud you run it out of your data central render for cloud and finally the DLT which could also be open and running out of time so these are some of the stuff that we are doing happy to we have the page here we'll be able to share about it and that's the story that's the story in terms of what we intend to do in Big [Applause] [Music]