“CHANGING INDUSTRIES COMPLETELY”
RADHIKA VENKATRAMAN on the revolutionary technology Blockchain.
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.
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.
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.