Blockchain in Financial Services | Alexander Morsakov | Skillshare

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Blockchain in Financial Services

teacher avatar Alexander Morsakov

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Taught by industry leaders & working professionals
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Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

7 Lessons (54m)
    • 1. Introduction

    • 2. What is Blockchain?

    • 3. Distributed Ledger characteristics

    • 4. Technologies underling Blockchain

    • 5. Why it matters for Financial Services

    • 6. Case studies

    • 7. Future Outlook

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About This Class

Distributed Ledger and Blockchain technologies present many opportunities that could transform the Financial Services industry and has the potential to drastically alter the way we interact and do business.

Distributed Ledgers technology (DLT) along with other emerging technologies will transform existing business models and create the new ones. These changes create a great potential for fintech companies to enter the market by leveraging emerging technologies.  

From this course you will learn the fundamentals of blockchain and Distributed Ledger Technology and why it can be a game changer for the Financial Services industry. The course will be interesting for students, Financial Services professionals and entrepreneurs.   

Meet Your Teacher

Alexander is an experienced Digital Payments consultant and Blockchain expert with more than 11 years working in the financial services industry. He is fascinated by opportunities that Blockchain and Distributed Ledger Technology could bring across different industries addressing real-world issues and inefficiencies

Alexander's objective is to improve the way how financial services work by contributing his knowledge and experience to fintech ecosystem growth.  

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1. Introduction: Hello and welcome to the Blockchain in Financial services course. I am Alexander Russakoff Experience, a digital payments consultant and the block shin expert. I'm fascinated about the opportunities that Blockchain and distributed ledger technology or the Deal T could bring across different industries. Addressing real world issues. Objective of this class is to give you an outlook on how Blockchain and guilty could change in the financial services industry in the first part of the course, will cover from them and tells off the block chain and distributed ledger technology in the second part will focus on why it could be a game changer for the financial services industry and explore some practical case studies. I do believe that this course will be interesting for students, financial services professionals and technology entrepreneurs. If we look back in the bust, it becomes very clear. The technology evolution is driving business transformation, for example, personal computers, a load consolidation of the workplace and massive data storage. Barrett with the Internet. It was the major communication revolution that the load business to operate more efficiently or smart Florence that made communications and removed work possible from any place on the world distributed Ledger Technology is one of the emergent technologists that could transform existent business model and create the new ones. Interest in the election technology is gaining the momentum on the marketplace. Companies across the broad set of the industry's I exploring Blockchain and Deal T early adopters are actively creating pilots to get and rail world experience and understand the impact on their business. More and more. Financial Services Organization Investing in the Blockchain solutions with more than 50% budget girls per year, they've opened innovation labs, sponsored hackathons, tim it with a fin tex, joined consortia and work with the regulator. Bodies paved the way for the Blockchain and guilty technology. More than 150 use cases has been identified. Toe undress issues and the name of new products and services across different industries. However, even this list will be always in complete as new innovators are finding No always deliveries technology. Let's get started with a Blockchain fundamentals 2. What is Blockchain?: in this chapter, I will explain you what is distributed ledger technology, Blockchain, Cryptocurrency and a smart contracts. Firstly, let's look at how we store and maintain information in our digital world. We went through a huge evolution path from a clay tables toe, the transfer off information into the digital court and storage in the cloud. The most notable innovation was the introduction of computer technology, which was initially simply used to transfer information from the paper to the digital court . Later, Internet and cloud computing have significantly reduced the cost of searching for information, working together and exchanging information at the same time, economic and social activities that centralized around the pillars that store data about customers and transactions such as banks, government agencies and social networks, economics and social interactions are also centralized and have a middleman. Organizations in the process that enabled trust between the actors, traditional systems and business processes rely on the central authority and here are here to generate trust and transfer value. For example, when money passes between the participants, usually in the form of digital entries in the database, Central Counter Party records and supervised the transfer to prevent cheating. But disciplines, then on the take costly, time consuming and double equated for consolation within their own systems. Maintaining procedural, organizational and technology infrastructure required to create trust has become an expensive tankan's human and in many cases and efficient. How the Blockchain is redefining the trust. Blockchain is often described as a transfer of trust in a trust lis world, refering to the fact that the entities participating in the transaction not necessarily know each other. Yet they exchange information with a certainty and nothing but a validation. In other worlds. Blockchain provides an architecture that the lows us to trust the outputs off the system without trusting any actor with them. Que feature of the Blockchain on distributed ledger architecture. ER is the lack off centralized operator and the middle man in the business process. This helps to reduce dependency on the trusted intermediaries such as banks, government agencies, lawyers, notaries and regulators. The terminology around the block chain can be confusing for a novice waving an expert. We're living in the digital age off the buzz awards, when even complex technological solutions are adjusted to the 5/4 or even less people often think of Blockchain and distributed ledger technology as the same. It's time to figure it out. What is the difference? Distributed Ledger is a type of database that the spread across multiple sites institutions within countries. It's decentralized in nature, eliminating the need for an intermediary to protest, validate ordered get transactions. Each party that could be an in the video organization is represented by the computer and call it a note instead of single trusted third party That validates all the transactions, as we have in a centralized system. A peer to peer network off computers running the computer protocol that validates transaction by reaching a consensus off notes. Blockchain is a form of distributed ledger, which maintains a secure record off historical transactions. These transactions, collected in the blocks chain that in the chronological order and distributed across a number of different computers or servers, create reliable provenance. Each note keeps its own copy off transactions off the network and notes works directly with each other to check a new transactions Validity through a process that called consensus Bitcoin was the first application off the block chain. Therefore, people often in a diverted lee use Bitcoin to me in the Blockchain. This is a big me steak. Blockchain is underlying technology for a Bitcoin network but has way more applications beyond Cryptocurrency financial services companies, social media, telecom providers and other organizations maintaining centralized platforms to run their business. This type of systems require that old other communication and information should boss through essential hop. You can't just send or receive any information without it going through that single point. For example, you cannot send money to your friend if your bank system isn't available. Unlike Central S Platforms, distributed, Ledger doesn't require information to pass through a single point. Instead, it based on many connect points known as peer to peer network. As he we see on the diagram. All block chains are disobeyed ledgers, but not all disability pledgers are the block chains. So therefore, distributed ledgers doesn't necessarily need to have a data structure in blocks and the quarter platform from Our Tree or Ripple are examples off non Blockchain based distributed ledgers. Why it's so innovative and what really it could bring for the financial services industry distributed ledgers such as Blockchain I accidentally useful for the financial transactions and that the management, first of all, it's a lows disintermediation from third party transit. Tentative. So what does it mean? We no longer need attentional gatekeeper, verify transactions and undertake ate their source on the block chain. This is done independently by multiple notes. That also eliminates transaction face that we pay to intermediaries, making the process cheaper. Multiple contributors can contribute simultaneously. It means that more than one contributor can modify the database at the same time from any location. Blockchain validates that elections and all contributors can see the history off the changes. Another unique feature is that it creates Ramos redundancy. If note or any contributor is compromise it, the rest of the network remain secure. Single faults will not break the system because of multiple backups. With up to date data are Desprez it with network DISIP. It pledge technology and the Blockchain promoting Trust him on the contributors. Each participant could continuously loaded the ledger. It brings greater transparency that making fraught any manipulation more difficult. Cryptocurrency was the first application of the Blockchain technology, the best known so far. So let me shed more light on it. Gripped the currency is a digital currency designed to work as a medium of exchange and store it on a distributed ledger, the use cryptography to secure and verified transactions, as well as to control creation of the new unions off a particular Cryptocurrency Cryptocurrency can be obtained, store it and transaction electronically. It facilitates peer to peer exchange without necessity to go through 1/3 party intermediary . Every transaction is a record on a distributed ledger that consists of senders and recipients, Public kiss a wallet, addresses and the amount of coins transfer it Transaction also needs to be signed off by the sender with their private key. The fundamental difference to conventional financials is that sponsor owned by those who hold the case and the Cryptocurrency wallet is a software or hardware device that stores public and private case and the trucks with the various block chains to enable users to send and receive Cryptocurrency as well as to monitor their balance. Bitcoin is the first and most known Cryptocurrency to date. At the same time, there are more than 1000 of different cryptocurrencies encrypted tokens available on the market. I see a big opportunity for the banks in the nearest future. You have a roll off assuring and safeguards in Cryptocurrency wallets instead of bank accounts. Central banks could also create a digital Fiat currencies. That will be another step off the Cryptocurrency evolution. Okay, let's define what a smart contract, whether you were born in U form or renting this bare room contracts I integral to any official agreement. The volume and complexity of traditional contracts can be overwhelming, involving high administrative cost and dependence on 1/3 party systems living in a digital world. It's becoming critical to find the way to make reliable and digital business agreements. So smart contracts is a computer protocol, which stores and carry out the contractual closest on a distributed ledger. Smart contracts not only define the rules and the penalties around the agreement in the same way the traditional contract us but also automatically enforce those obligations. The contracts waits for external triggers, such as market prices to violate pre defined conditions and self execute up in the fulfillment of conditions. Smart contracts present many exciting, transformative opportunities for the financial services industry. For example, it could keep a track off every close in every contract that they were agreed by a bank. It would know what it says and make sure it's never breached, and the most amazing that the protests would happen automatically without the need for detail searches an intensive input from human being. And that's all for this chapter. So we defined what this Blockchain distributed Ledger Cryptocurrency in the smart contracts in the next chapter will learn more about parameters and the different types of disability watchers, so stay tuned. 3. Distributed Ledger characteristics: Welcome back in this chapter, I will give a brief overview off distributed ledger parameters that they find its various applications. Any distributed ledger and the Blockchain can be described by the six core characteristics . Oh, parameters. Let's start with the object. It could be any unit off value or count, such as Cryptocurrency, vote or talking. Link it to riel asset or commodity like gold. Identification is the characteristic that defines whether participants need to identify themselves and to what degree, for example, but disciplines could be anonymous Upsell on animals. All the third parameter is consensus. They're several metals or algorithms that distributed ledger used to reach an agreement between the participants. For example, Bitcoin is based on proof of for call Graydon the choir. Huge energy consumption. Other algorithms, a less resource hungry in the work. Foster distributed legis may have a different access parameter. It can be public and open for new participants. Private Limited. Pending on the application by design permission. Distributed ledgers are more concurrent with the existing banking system and therefore provide more utility to the financial institutions. Data model is another parliament that define if it has to recognize it or share it data model. Distributed ledgers have different structure. It can be either Blockchain has graph or another that the structure let's focus on access. Characteristic distributed alleged, can either be implemented as public, private or hybrid solution. Public Blockchain network is completely open, and anyone can join and participate in the network. Anyone can read information on a Blockchain. Anyone concerned transactions to it, and anyone can participate in the consensus process. Bitcoin and Ethereum are the largest public Blockchain networks today. Private look chains require permission and access and operate under the rules off with centralized organization, a subset of private protocol. It's Federated or Consortium model. For example, it could be a group of banks that want to transact with each other, participating in the Federated Decentralized Ledger. Similar to Preval. Blockchain consortiums often faster, most callable and offer greater transaction privacy than public block chains. Let's have a look on two main approaches. How to implement distributed ledger solutions depending on the data model parameter, the 1st 1 you swear the assets or financial products are recognize it and the values transferred via the distributed ledger. Another one where data is distributed or mutual ISAT between the participants to improve coordination between the actors. Integon eyes the data model assets a digitally recorded on the ledger as stockings. Once parties agreeing on transaction digital assets, I exchanging between the wallet and transfer off ownership is taken place. Settlement is immediate and final payments whose case is the best example off recognizing model. How assets mechanization can bring a valley to the financial services. For example. Previously illiquid assets can now be converted in dates, recognize it form and cheaply and efficiently Fraction eyes It traded and slathered on the chain rather than gold through the lengthy process off clearance and settlement through third parties like cleaning houses. This can also on Lok liquidity for the small business and then to Brenner's share it or mutual eyes. The data model is more relevant for identity and K Y C use cases. They store it on the block chain in the mutual fission disciplines in the business process have controlled access. Does the same data Blockchain solution. Orchestrate the business process and the identity like actions, statuses and decisions. As you can see, Depending on the application distributed, ledges on the block chain may have a various combinations. Office parameters that we have touched on in the next chapter will learn more about technologists on the line distributed ledgers, the defining features. 4. Technologies underling Blockchain: Welcome back and thank you for watching discourse in this chapter will explore three technologists that underline Blockchain Blockchain, made possible by a combination off. Three technologists peer to peer network public, a cryptography and consensus algorithms based on the game theory. In a peer to peer network, every participant appear is a server and the client both supplying and consuming the resources public. A cryptography is the method of very fine digital identity with a high degree of confidence enabled by the use of private and public keys. Cryptography enables the Individual Identification and Digital Assets Exchange and Monday users. Cryptography is used to ensure that copious, identical and no transaction is duplicated. Several consensus mechanisms that enabled to reach consensus between the participants are based on the algorithms from the game theory, consensus mechanism and sure agreement between the parties on the network validated that identity and through as double spending by ensuring chronological record of data. So let me give you never you off each technology and let's start with a peer to peer network. Our current data architectures are mostly client server based, which means that all data is centrally stored on one computer and retreat with the Internet by another one. To get the information, you have to connect to the main computer that cold server clients contact the server for data and displayed to the users. User input, like a Facebook post, is committed back to the server for the permanent storage. Que limitation of this model is that central server can be a single point of failure. On the other hand, peer to peer Network is a group off independent computers that cold notes, which are interconnected with each other without needs off central computer or server abuse . Equally privileged participants in the application and can share resources or data with each other. Dark cryptography is a set of techniques for secure communication between the parties based on complex mathematics, so the information can only be used by the attendant recipients and nobody else. Encryption is the medicine votes taken unencrypted data such a space of text and encrypting it using mathematical algorithms. This produces a cipher text piece of information that is completely useless and nonsensical until it is decrypted. This method off encryption is known as symmetric key cryptography hashing algorithm takes a certain input, which may be your account details or card information and converted by the means off mathematical operation during output. Hesh that is a court with a pre defined beat lath that doesn't share the original data. Block chains make use of hash function everywhere. Data on the block chains is hash it in H block. If the bloke has changed it, or somebody tried to change how many Cryptocurrency talk is the own, the hash value would be different, and everybody could detect that something had changed. The hash value off the prayers block is used to calculate the hash value off the current block, creating the link between the blocks. Digital signatures enable security and integrity off the data that its record it on a distributed ledger. Digital Signatures is produced by combining a user private key with the data that they wish to sign through much medico algorithm. Since the actual data itself is a part of digital signature, the network will it recognize it? A. Sevele it if any parts off temperate with editing, even a slightest aspect off the data reshapes the whole signature, making it fells an obsolete leveraging on these three K capabilities. Blockchain technology s capable to guarantee that any data been record it on. It is true, accurate and intemperate with there is no central authority in the Blockchain that work. So how do we all make sure that the way agree on what is the truth is consensus mechanism enables to keep all the notes on the network, synchronize it with each other? The consensus mechanism govern how the participants in the network interact with each other provided water the participants who are maintaining the Blockchain and incentivized to continue doing so. The very first implementation off a distributed and trust less consensus algorithm is a bit coins proof off work in the proof of fork, miners compete to add the next block within a set of transactions in the D chain by racing to solve an extremely difficult cryptographic puzzle. The first miner to solve the puzzle wins the lottery and received a number off minted coins as a small transaction fee. There a number off other consensus mechanisms that exist in the Cryptocurrency space and in the press applications such as proof of stake, delegated proof of stake, practical Byzantine fault tolerant zero knowledge proof. Now you have a basic understanding off the cake concepts and principles of distributed ledger and the Blockchain technology in the next chapters will explore its application for the financial services and several practical case studies. 5. Why it matters for Financial Services: welcome back to the Blockchain in financial services. Off the 1st 3 chapters, you become more familiar with distributed ledger technology and the Blockchain principles. Now it's time to move from the general concept to its specific complications in the financial services. In this chapter, you will learn more about potential value that distributes Ledger and the Blockchain could bring for the financial services in this to use cases and information about the K players off the ecosystem. Blockchain. Does it really matter for the industry? Or just another buzzwords? Another. To answer this question, let's take a close look on the current state of the financial services. So first of all, it's constantly changing to meet new customer needs, becoming more digital and comply with the regulator landscape. At the same time, many areas of the industry are facing significant inefficiencies. Such a limited transparency between participants slow and inefficient back office functions , especially in the reconcilation and exception handling huge business support cost. For example, according to the latest through search, current 80 and the parish in expenditures in the capital markets is close to 100 $250 billion per year. Among the banks complex regulatory environment and huge compliance fines. For example, a fest companies paid several $1,000,000,000 in the regulatory fines just for I AML breaches. Slow service is another problem off the industry. Settlement of the payments can easily take two or more business days, especially for the cross border transactions. Distributed. Ledger and the Blockchain technology could provide a lot of benefits change in the way how financial services industry is functioning. We could have greater efficiency and operations, making payments, sending messages and obtaining records on the specific conditions. Everything will be automated, duplicated transactions done, become written in the data set and carry out automatically. It was at another level of transparency to the dealings and enable selectively disclose information on Lee with drug. Later. In the multiparty environment, errors are reduced with a Blockchain because authorizations are visible no just to transaction parties. But to any related parties, such a slow ER's controllers and accountants. A study by Accenture shown that investment banks can reduce their compliance cost between 30 and 50% by 2025 by using distributed ledger technology. Technology couldn't prove speed and traceability of the business processes. Assets can be transferred across the globe to any personal machine in seconds or minutes. Smart contracts could enhance trust and interoperability documents related to the particular deal. I encrypted on a shared ledger, and all parties can have access to them. But from promoting efficiency and changing some of the existing operations, emergent technologists like a Blockchain could also bring entirely new business model and the revenue streams. Yes, you see, technology is going to have a huge impact on financial services. Streamlining back office processes, making business transaction faster, more efficient, safer and less costly. Stability Ledger technology is now engaged in the minds and the budgets off almost all influential players in the financial sector. Companies around the globe are setting up innovation lops partnering with a startups to experiment with the Blockchain and Cryptocurrency for various use cases. They're actively exploring various use cases to determine how they can use technology to achieve course benefits and drive new revenue. They also trying to prioritize use cases to target their time and money to get the best return on investment, You may say a non exhaustive list of distributed ledger use cases that core almost all products and business processes in the financial services. Let's have a look on the several examples from insurance business where Fred Load claims slow manual process is fragmented, that the sources and the legacy and the rights and models are the biggest challenges at the moment. Using Blockchain on, the writers can source the data from external sources. The automate some aspects off underwriting process. Since the data on a distributed ledger is trustable and very fight or another use case with a smart contracts, implementation could automate claims processing, enabling complete control, transparency and traceability for exclaim. It could take inputs from a variety of different sources without tempering any information . For example, data from weather stations could be used to determined claims amount based on the actual weather readings that will eventually let the automatic playoffs with no delay. Waters protests in the retail banking is far from simple. The terms of the mortgage agreement are based on assessment off the mortar gee income outgoings credit score and that the circumstances the need to carry out this checks often through third parties can make the process Lampley and complicate it. So the block chain could cut the middle man so the parties could deal directly with each other and faster. We have a number off very promising use Cases in the trade finance industry with the existing business processes are complex, slow and involved many parties across the world. This part is usually don't trust each other. Has they need the trusted third parties, such as banks and clearinghouses, to mediate. Therefore, executing smart contracts on a distributed ledger to transfer titles to goods and money could significantly automate the protests and reduce the cost by cutting out the middleman and their face. SAM use cases could be applicable across several business areas, for example, as a stick in ization that removes the frictions. Foreign assets to be freely traded on a global market lows Investors To diversify the investment across the larger opportunity set, startups across the globe are developing and rolling out wide reach off applications and solutions that done to focus on specific points in the industry. Companies like Supple Ripple, stellar or a Clise Digital assets holding are focusing on leverage and distributed ledger technology in the way that makes them potential candidates for disrupting established in business models. Various groups of players are actively exploring technologist potential to enhance efficiency, trust and transparency technology and service providers like IBM, Microsoft and Amazon consulting companies like Extension Deloitte, a developing enterprise. Solutions and services regulators and government authorities are working on illegal aspect off Cryptocurrency and Blockchain technology adoption. From the legal perspective, universities contribute to the ecosystem with researchers and academic studies, as well as by providing tech and business education courses, largest financial institutions and attack providers. A developing collaborative projects by grouping into consortiums like Our Tree Hyper Ledger and the Theory Um, Enterprise Events Consort is institution trying to build regulate and then the great distributed ledger services into the real economy. Industry oriented consortia advocate instability, alleged technology in their industry and define in the norms technology oriented consortium . Focus it on the building. Technical solutions and the platforms, for example, or three consortium have created an open source. Distributed ledger platform. Call it Korda. Design it, especially for the financial world, handles complex financial transactions and provide advances. Privacy settings. Two. Transaction data. Hyper Ledger is another collaborative started in December 2015 by the Lennox Foundation. Focus it on the ledgers design to support global business transactions, including major technology, financial and supply chain companies. We also observe that the landscape is constantly growing new start ups and in conventional greens, ations are starting to work on the solutions to address specific use cases or creating tools and the software for the cross industry implications. And this is so for this chapter in the next chapter will explore how four financial services organisations have studied distributed ledger technology in the several practical use cases. Thank you for watching and States Unit. 6. Case studies: Welcome back in this chapter, I will give you a brief overview off. Four case studies were distributed. Ledger technology has been applied to address existing inefficiencies in the financial services industry. Let's start with the cross border money transfers, existing process in Wolfman Orm or intermediaries or correspondent banks that take days to settle. And settlement delays can happen for a number of reasons, including countries inability to handle rail, damn settlement or more come burst own regulatory compliance. And the change, unfortunately, will not come easily to International correspondent banking. The current market structure is incumbent companies, a powerful incentive to preserve the status quo or, at the same time, distributed Ledger technology could exponentially transform and speed up the payments process by eliminating number of middle men and enable Derek transactions between the counterparts something there is one of the first banks offering Deal T based foreign exchange payments for its customers. After two years of development and internal testing, Bank introduce it. It's payment up in 2018 to enable customers to make cross border real time payments. It's built on a distributed ledger technology provided by San Francisco based Blockchain Startup Ripple Service, known as something there. One pay fix. Make possible for customers to complete international transfers in the rial time or by the next day. It also helps bank too many mice, operational costs, human that are and minimize the fraud. Bank executives see tremendous opportunities to improve the services that they offer to customers, and the launch of cross border payments up is only the first off many potential applications. Blockchain implementation brings huge transformative opportunities to the insurance industry. Insurance GNT American International Group, AIG E and UK Global Bank Standard Chartered. It have completed Blockchain pilot designer to simplify some off the industry. Most complicated insurance policies. Violet solution built by IBM using open source hype alleged fabric protocol. That's that the commercial insurance of mustard policy written out off London and apply to local policies in the U. S, Kenya and Singapore. A muster policy is typically issued in the country where the company is headquartered, while the athletes often need coverage in other countries that impose Varian Rules, documentation and Payment terms, the real time system A Lowe's Cos. The units and the insurance, among others to simultaneously share all data and documents about the policies. Complex book off. His processes were automated and simplified by moving policy from the traditional systems where each country party would hold its own records to self executing Smart contract regional hype, alleged fabric blood firm. From the customer service perspective, the pilot project reportedly showed how real time visibility to the insurance coverage could the low recipients to be automatically identified following on insurable event. A G is not the only insurer experimenting with a distributed ledger technology in the Blockchain betrayed by Industry consortium involving some off the industry. Top names, including Munich Re, Swiss Rare Zurich generally and aliens was set up to explore technology potential for the insurance industry. My neck changes, also quite active in experimenting, was distributed. Ledger Technology Australian Stock Exchange, or I six, is one of the leading financial market exchanges providing services. Such a sleaze stings trading, clearing and settlement. I six has a computer system to perform clearing settlement and other prostrate services for the Australian equity market. They want to replace it by a distributed ledger based platform to become the first major stock exchange in the world to my great one of the score services to the deal, T based System Exchange made this decision after two years of building proof of concept, working with potential users and testing the implementation new system based on permission . A distributed ledger will provide users with more efficient clearing settlement and other prostrate services through in Pruitt recordkeeping reduced to consolation and more timely transactions and better quality. Today, distributed ledger platform for the exchange will be developed by Digital Asset Company and I six is targeting rural date to the beginning off 2021. So not too long to wait have another interesting story from regulator. The Monitor Authority of Singapore is attentional Bank of Singapore and financial regulated authority. Its mission is to administer the various loss, pretending the money banking, insurance, securities and the financial sector In General. Project Toobin was a collaborative initiative with the main industry players to explore the use of distributed ledger technology for clearing and settlement off payments and securities for the first face must partner. It was artery and consortium off local banks to conduct proof of concept for the interbank payments. Using Blockchain technology projects, a sexually achieve the objective of producing digital representation off the Singapore dollar for the interbank settlement and tested the methods of connecting core bank system to the deal. T This functionality loves banks to swab digital currencies or cryptocurrencies for cash. What central bank aims to do in the future during the second face must develop three prototypes by three work streams on three different Blockchain platforms. Korda Hype, Alleged Fabric and Quarrel. The prototype successfully demonstrated that the real time gross settlement functions such as fund transfer, curing mechanisms and Greg Look resolution can be achieved through the variety of techniques and solution design report with the project. Outcomes indicates that Blockchain based RTGs system would reduce the cost and resources off day to day operations and eliminate the risk off Central bank. Becoming a single point of failure in the systematic disturbance technology could significantly improve the kinds of payment systems that currently enable banks around the world to transfer trillions of dollars per day to each other and help them to manage their financial liquidity. There are many other success stories off a proof of concept and even pilot projects using distributed ledger technology and the block chain in the financial services. However, despite their potential, many of this projects aren't yet ready for the prime time due to a number of limitations in the next chapter will take a close look on this limitations. And I will share my vision on the for the technology adoption. Thank you. And stay tuned. 7. Future Outlook: welcome back and thank you for which, in this course, in the final chapter, you will learn about new business opportunities. The technology could bring to the industry challenges for the Massif adoption and that will also share my vision on the further perspectives of distributed ledger technology, evolution in the financial services to achieve great efficiency, Internet enabled business to move back office processes and customer interactions online distributed ledger technology and the Blockchain could be the catalyst for the next evolution in many industries, including financial services. By optimizing existing business processes and enabling new business models and services, technology could introduce new waves off financing businesses, start ups and simplified crowd sourcing as an alternative to traditional equity shares. New businesses could create an issue, the currency or tokens to fund their projects. Distributed Ledger and the Blockchain could enable the beginning off a new era off globalization as moment off capitals, assets and people becomes faster and cheaper. Another example is the Blockchain based Fingerprint Identification Service that will simplify customer out certification and electronics documents. Verification technology could provide a digital single source off i d. A lowing for the same list. Exchange of documents between the banks and external agencies that would likely result in automated account opening, reduce it cost and the resources central banks will be able to issue Cryptocurrency and control its supply. Central bank bacon Cryptocurrency can be distributed to customers like a business or individual without need of any middle man. Cryptocurrency can be also launched by a single commercial bank or a number of banks who come together to facilitate payments or clearing and settlement between each other. Internet of things is another big thing. By 2020 there will be more than 50 billion connected devices in use around the world. Distributed ledger technology could enable i o T devices to become independent agents that autonomously conduct right of transactions. Imagine event in machine that can not only monitor and report its own stock, but also solicit bids from the distributor's and pay for a delivery off the new items automatically. Oh, vico, that can diagnose schedule and pay for its own maintenance or simply printer. The divides in country. She feel cost into micro payments that a transaction for each bring job completely new and disruptive payment models is coming to the market corners. Today, it's more connected and more digital than it has ever been. And guilty technology could enable adoption off a new, faster, more relevant and easy methods off the payment tied to a new commercial models. Smart contracts have a great potential not only to automate complex back office processes but also to improve customer experience. For example, if insurance policy will be, store it as a smart contract on a distributed ledger than the payout can be automatically triggered her customer. If light a cruise has been, cancel it or dilate French insurance. GM AXA has launched a new flight delay insurance product called Busy that stores and protest payouts via smart contracts. It's very simple. If your flight is more than two hours late and your airline details are loaded into the up , you will get automatically identified with the compensation options. Once you make a compensation choice, the money will be sent directly to your cart or account. I don't have a full picture off all distinctive opportunities for the distributed ledger technology and the Blockchain because this is inevitably unpredictable for the innovation. With the new technology, the question is still being explored globally by the government's enterprises and the startup ecosystem. Number of challenges needs to be address it to make technology must adoption possible. We have a number off environmental constraints and limitations related to technology in maturity for some use cases. One of the challenges is to find solution that can handle required volume and speed of transactions limited rate at which transactions can be performance. It reduces delays in other off minutes before transaction become fully finalized. New consensus mechanisms could solve this limitation from a capital cost perspective. Frankly, if value for the new system will or wait, the sunk investment off existence, solutions, regulatory and legal hartals could be the K challenge as the regulator Landscape dance to assume centralized, trusted actors. Security and privacy is another big challenge. Implementing solutions. Companies have to balance confidentiality and traceability off activities depending on the use case. Compliance with the European General Data Protection Regulation and other data privacy regulations. One. Being easy as well. Ongoing maintenance require scale technical skills and establishes standard tools and infrastructure. Implemented Solutions should also prove their long term viability for the technology for the particular use cases in the financial industry. Adoption is the last but not the least risk that I want to race. Firstly, we shouldn't think let the financial institutions are overwhelm it with the legacy systems . Processes and relationship make innovation extremely differ. Secondly, a number off use cases will require multiple stakeholders to agree on a change, something that might be too challenging politically. In some instances, wrapping up this course, I would like to emphasize that this is a big myth that distributed ledger technology and the Blockchain could solve every problem in the industry or why their economy every emergent technology has its advantages and disadvantages comparing to conversion ones. But there is no doubt the distributed ledger and the Blockchain technology present many opportunities that transformed financial services and has potential to drastically alter the way we do business and interact. A recent report by International Data Corporation estimates that more than $9 billion per year will be invested into distributed ledger solutions by 2021. Budgets are growing and more companies akin to invest into the emergent technology. Ultimately, the winner will be the customers who will benefit from the greater efficiency, greater security and greater transparency off the new generation, financial services and products. We're definitely moving to environment were old centralized solutions, I gradually being replaced by decentralized and distributed solutions. The block chain and DLT will transform the way how we exchange value and whom we trust intermediaries. Such a slow er's and accountants needs to be prepared to change their business models to maximize the potential off the block chain and deal T from technology. Point of few. Most likely that within five years, DLT and Blockchain will be one of the standard technologists available, and most applications will be built with some elements off the block chain included new business and business models expected to rise, making some existing business models obsolete. These changes create a great potential for the fin tex and the startups to enter the market by leverage and emergent technology. The job of governance and financial organizations is to ensure that the damage to workers in the industry is mitigated to the greatest possible extent. Technology and the landscape. I woolen quickly, and the learning Corfe is significant. You're currently working in the financial services industry, planning toe work or run the business in this area. I would encourage you to explore more information about DLT and its implications for the business area you're working on. Thank you so much for watching discourse and help that it was interesting and insightful. This show your feedback in the review. If you're interested in the most specific courses on how technology could change payments, investment banking or any other business area in the financial services, please indicated in the year review. Thank you one more time and goodbye.