David Shin, Barclays Investment Bank’s Asia Head of Client Coverage, Agency Derivatives Service wrote a post on LinkedIn Pulse on how blockchain technology can improve efficiency and reduce cost for the banking industry.
According to him, it is the investment bank and not the commercial/retail bank that is most receptive to transformative change to reduce cost, help manage risk while scaling quickly in changing market and regulatory conditions.
He provided the following parallels in explaining his points:
- Securities = Digital assets/tokens
- Trades = Transactions in the Blockchain
- Positions = Valuation based on price feeds/market data
- Booking systems = User Interface/Blockchain
- Settlement/Payment systems = Ripple
David is a supporter of banks collaborating together in a blockchain consortium to create what he terms “walled garden where the wall is low enough for users to look at some things BUT high enough where they can’t just walk in.”
With the blockchain consortium, the high cost functions of exchange, validation, settlement and reporting can be shared between the various stakeholders.
In his post, he suggested that assets are to be digitally standardised and represented in a consortium blockchain where the assets can then be exchanged, priced and settled. He proposes Ripple as the settlement/payment systems as he reckoned that Ripple can handle this part without the need to reinvent any additional technology protocol.
David is a very active proponent of the digital currency space in Asia being the founder of PayWise Limited and also founding member of the Bitcoin Association of Hong Kong. For further details of his model, do read his LinkedIn post.
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