Blockchain and distributedledger technology in finance
- research based analysisIlkka Lähteenmäki
- 20+ years in banking- Inc. 10+ years of financial research- 2011-2016 in Danske Bank
- Head of business development in PB- Head of strategy planning in FIN
- Partner in two start-ups- Since Oct. 2016 research network of FinTech- Together with the Bank of Finland and
Ministry on Finance a FinTech Institute- Ph.D. about banking development &
partnerships- 7 journal & conference publications
• Independent think tank• Academical foundation• FinTech research and business development hub• Researchers, incumbents, start-ups, regulators• Bank of Finland and Ministry of Finance• Coordination, education, research• Up-to-date Finnish FinTech status• International co-operation
Our research network
FinTechcausationresearch
Aalto Hanken
Lappeenranta Universityof Technology
University of Oulu
Hanken
University of Tampere
University of St.Gallen
FinTech
ManagementMentalModel
Customers,Data,Insurance
Customervaluecreation
FinTech causation research
Financial business:- Business models- Competencies- Competition- Co-operations- Management- Customer experience- Value creation- Partnerships
SummaryCurrent bankingprocesses:- Rife with problems- Regulatory costs- Inefficiency- Digitally wrapped- Centralized- Exclusionary
Blockchain or DLT?- to do more with
less- streamline their
businesses- and reduce risk in
the process
Blockchain- contracting, clearing, settling,
and record-keeping tasks - forge agreements, make
transactions, and build value - to verify their identities,
establish trust, or perform the critical business logic
Industry change- DAOs
DLT- identity and reputation, moving
value (payments and remittances), storing value (savings), lending and borrowing (credit), trading value (marketplaces like stock exchanges), insurance and risk management, and audit and tax functions.
Business model changeand ecosystemimplication
Blockchain in current banking processes
Source: Boston Consulting Group
Blockchain is not hype anymore
Source: IBM Institute 2016
R3CEV
Trade finance
The new platform helps optimise internal processes for banks and reduces the risk of documentary fraud, but the key cost efficiency is in speeding up the time it takes to complete a trade transaction – from as many as 20 days, to just a few hours.
Loading the goods, issuing invoices, dealing with home bank, getting recommendations checked, sending the paperwork and getting it endorsed by the importing bank. In the worst case scenario, it can take 20 days. Since all this is physical, it’s really difficult to accelerate that process.
Significant part of the change is made by start-up firms
Status right nowsolutions for authentication, blockchain-as-a-service, open-source blockchain, application development, mobile wallets, compliance, trading and investment
FinTech synergy
API andopen banking
3rd partyapplications
FinTech
Banking-as-a-service
Platformeconomy
Genericplatforms
IoT
Banking-in-a-service
DAOs
ReplacedBankingServices
Value delivery level
Blockchain and DLT as an architecture
Managers’ mental model is the mostcritical obstacle
DOT-model(Holmlund-Strandvik-Lähteenmäki, 2015, 2016, 2017)
Do not neglect Bitcoin
Banking is only contextual
https://smartlog.kinno.fi/
Customer value creation
Value creation spheres
False True
Value:- Value-in-production- Value-in-use- Co-creation- Service dominant logic- Customer dominant logic
History view
Salaries online
ATMs
Tele-banking
PC-banks
Internet banking
Mobile
60´s
70´s
80´s
90’s
2000’s
2010’s
Apps
50´s
FinTech
Screenscraping
Thanks!
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