“CHANG­ING IN­DUS­TRIES COM­PLETELY”

RADHIKA VENKATRAMAN on the rev­o­lu­tion­ary tech­nol­ogy Blockchain.

Bulletin - - Contents - By Si­mon Brun­ner (text) and Doug Chayka (il­lus­tra­tion)

Radhika Venkatraman, is Blockchain* an in­ven­tion that will change the world like the wheel or the print­ing press?

I'm un­sure whether Blockchain Tech­nol­ogy will change the world, but it cer­tainly has the po­ten­tial to dis­rupt var­i­ous in­dus­tries, in­clud­ing tra­di­tional fi­nan­cial ser­vices.

How so?

At its core, Blockchain Tech­nol­ogy is a data­base tech­nol­ogy founded on a com­mon net­work con­cept which uses cryp­tog­ra­phy to con­tin­u­ously guar­an­tee part­ner syn­chro­niza­tion. It al­lows for peer-to-peer trans­fer of value with­out the need for a third-party in­ter­me­di­ary. In fi­nan­cial ser­vices, an ex­am­ple of such a third-party which could be dis­in­ter­me­di­ated via Blockchain Tech­nol­ogy would be a cen­tral au­thor­ity.

How ex­actly would this work?

Blockchain Tech­nol­ogy would en­able the trans­fer of own­er­ship of an as­set while both guar­an­tee­ing that the sender was, in fact, the owner of what has been ex­changed as well as re­leas­ing own­er­ship of the as­set once the trans­fer had been made, all with­out the need for an in­ter­me­di­ary to do any­thing. This dis­in­ter­me­di­a­tion is trans­for­ma­tive in the con­text of the dig­i­tal age where mak­ing a per­fect dig­i­tal replica has be­come triv­ial.

Will tra­di­tional fi­nan­cial in­sti­tu­tions ben­e­fit from this de­vel­op­ment?

Blockchain Tech­nol­ogy can change the way in which we think about do­ing busi­ness across the fi­nan­cial ser­vices value chain. How­ever, by the same to­ken, it will only lift off if all par­ties can see an in­cen­tive in com­ing to­gether. If one fi­nan­cial in­sti­tu­tion does not par­tic­i­pate, it will fail.

Who will be among the win­ners and who will be among the losers?

Blockchain Tech­nol­ogy in con­cept brings a se­ries of ben­e­fits for fi­nan­cial ser­vices clients. Not only would they en­joy lower costs for re­mit­tance ser­vices, they would also ben­e­fit from speed­ier trans­ac­tion times com­pared to to­day – par­tic­u­larly for over­seas pay­ments. Cus­to­di­ans and other clear­ing houses, on the other hand, could po­ten­tially be chal­lenged if dis­trib­uted ledger tech­nolo­gies* and smart con­tracts* be­come ubiq­ui­tous. Ref­er­ence data ag­gre­ga­tors also stand to lose out as banks be­gin ex­plor­ing the dis­trib­uted ledgers* fur­ther.

What re­search is Credit Suisse it­self do­ing?

We are work­ing on var­i­ous top­ics, such as ap­pli­ca­tions which re­duce time taken to trans­fer cash be­tween en­ti­ties. Ul­ti­mately, trans­fers could po­ten­tially oc­cur in real-time and for free, sim­i­lar to how emails work to­day. We also have proofs of con­cepts un­der­way within our Global Mar­kets divi­sion where the prom­ise of Blockchain Tech­nol­ogy could sig­nif­i­cantly help us im­prove ef­fi­ciency and op­ti­mize costs. Also of note is a project within our syn­di­cated cor­po­rate loans* area uti­liz­ing smart con­tracts to au­to­mate the loan ser­vic­ing func­tions, as well as cre­ate a new, cost-ef­fi­cient col­lat­eral trans­fer mar­ket.

There has been lit­tle le­gal reg­u­la­tion of the field to date. What im­pact will the in­evitable reg­u­la­tions have?

It is im­por­tant to dis­tin­guish be­tween the broader field of Blockchain Tech­nol­ogy and cryp­tocur­rency* specif­i­cally. Reg­u­la­tors have a gen­er­ally fa­vor­able ap­proach to pri­vate or per­mis­sioned* ledgers specif­i­cally de­signed for fi­nan­cial ser­vices. If they are de­signed with reg­u­la­tory com­pli­ance in mind, they can pro­vide in­creased trans­parency into the mar­kets, and are ar­guably an im­proved tool to man­age sys­temic risk. In­for­ma­tion on these mar­kets can be viewed by reg­u­la­tors in near-real time, in­creas­ing the amount of in­for­ma­tion they can con­sume to en­able bet­ter de­ci­sion mak­ing.

And cryp­tocur­ren­cies?

These are con­sid­ered much more cau­tiously. The reg­u­la­tory land­scape con­tin­ues to evolve, and se­cu­rity sur­round­ing this tech­nol­ogy is be­ing as­sessed and scru­ti­nized. At this point in time, Credit Suisse is not ac­tively en­gaged in the pub­lic crypto-space, how­ever, we con­tinue to mon­i­tor de­vel­op­ments in the mar­ket closely.

How will new tech­nolo­gies change the fi­nan­cial in­dus­try over the next sev­eral years?

Thirty years ago we could not have pre­dicted some of the world's largest ex­changes such as NAS­DAQ, NYSE or Deutsche Börse be­com­ing pure elec­tronic mar­ket­places. I fore­see a con­tin­u­a­tion in these trends where tech­nol­ogy is an en­abler of greater ef­fi­ciency and sim­pli­fi­ca­tion.

Many coun­tries, in­clud­ing Switzer­land, are find­ing it hard to get large num­bers of girls and young women in­ter­ested in pro­gram­ming and tech­ni­cal ca­reers. You were a pioneer in this area – how did you get started in the male-dom­i­nated tech world?

Be­ing par­tic­u­larly strong at math­e­mat­ics and science, I chose to pur­sue my ar­eas of pas­sion. I very much be­lieve that parents, teach­ers and any­one in a po­si­tion to in­flu­ence and en­cour­age young women's in­ter­ests should make a con­certed ef­fort to do so. The me­dia tends to project neg­a­tive stereo­typ­i­cal roles for this field; no girl wants to be a part of a geek cul­ture. We need to break this habit and pro­vide a pos­i­tive im­age of ca­reers in tech­nol­ogy to at­tract more young women.

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