The previous edition of FINNOSUMMIT took place in Bogotá on February 16th, and we were joined by distinguished Fintech experts from Europe, US and across Latin America to discuss topics that are disrupting the financial services industry. One of the most important topics when talking about the future of financial services is blockchain technology, hence it was obligatory to cover this subject in the events’ agenda. The panel, curated and moderated by Arie Levy Cohen Managing Director of Tocqueville Bullion Reserve, W3C i-Expert, and Blockchain & FinTech Advisor, was designed to talk about blockchain and the innovation that it brings to the future of financial services. Jalak Jobanputra from Future Perfect Ventures, Juan Llanos, an experienced Fintech Compliance Executive and Advisor to many bitcoin startups and Daniel Vogel from Bitso were the Fintech experts who gave us an idea of what this technology can deliver.
Blockchain is an emerging technology that promises to revolutionize the world of banking as we know it. Arie Levy Cohen introduced the discussion affirming that “Blockchain technology has the capacity to transform the way in which many things in banking are done.” Nevertheless, this platform cannot work by itself, it is an essential part of a whole Fintech system that has arrived to the financial industry to stay. All these new technologies will complement themselves creating innovative tools that will change not only the way institutions and users interact, but also the banking system as a whole. Arie explained that “the mutualization, immutability and synchronization of the information” are the three most promising qualities that this developing technology offers, and could have the potential of changing the way information is gathered and databases are created. This way, this technology can be used to create and innovate financial products that otherwise would have never existed. This panel explored the importance and opportunity of blockchain in Latin America and its significant role in driving financial inclusion to the region.
Latin America has traditionally fallen behind when innovating and developing financial technologies, including blockchain. But that doesn’t mean that this is a negative situation, because in emerging economies there is a huge opportunity for innovation, creativity flowing due to the lack of services and the amount of problems to be solved. Quoting Jalak Jobanputra, “looking outside the developed market is actually a good thing”, because a lot of the innovation is coming from underdeveloped economies and there are a lot of promising projects in this regions. Banking innovation is needed in such areas for solving problems that do not exist in other more developed regions, problems such as financial exclusion.
As Llanos explained, the innovation that blockchain brings to the table solves a transparency issue by making a digital asset uncopyable. “It has the ability to create a digital asset that travels on the network, but can not be copied. So the registry of this asset is unique, public and cannot be replicated.” This is one of the features that makes it so revolutionary. Right now all the management of money is private and controlled by banks, people trust these institutions to keep their values safe. But blockchain makes the ledger public and by doing so, it becomes fully transparent. The possibilities with this technology are infinite and are promising to disrupt the banking system.
Blockchain is really broad, and many of its’ uses can be applied more accurately in one country than other. That’s why many startups are creating solutions using different blockchain applications for solving different problems, and adapting the technology to the idea. One of the areas where is being applied is in the solving of the identity problem. Identity, as Juan Llanos explains is important for banks and governments because of two main reasons: taxation and law enforcement. There are millions of people around the world who are being excluded from enjoying the privilege of financial services because they lack banking information, and in consequence, they lack identity. This is known as financial exclusion, and is a very common problem in underdeveloped economies like Latin America, where for example, many people don’t have the records to back up their trustworthiness so they are not given loans by banks. Blockchain technology can be used to create databases that allows banks to have information about these unbanked people, and in consequence they could get access to a broader offerings of financial services, just as the rest of us.
This way, Blockchain could become a global identity platform for those who lack banking history, and this is just one of its benefits. Blockchain is the ledger that promises to change the future of decentralized conglomerates. It is a very complex technology that is flexible enough to expand into the solution of a million problems, playing an important role in underdeveloped economies where problems with financial services are more complicated and underdeveloped that in larger economies. Arie Levy-Cohen affirmed that banks want this, regulators want this and even the government wants this, but this change has to occur progressively and show the users that this technology will really benefit their lives, as Jalak Jobanputra mentioned. This is the area where the developers of blockchain have failed by not communicating its true benefits. So now it is time for Fintech startups to gain consumers’ trust and show them the true value behind the technology.