A perspective on the Future of Fintech based on four technologies: - AI - Blockchain - Cryptoassets - 5G mobile

1. Christopher Bishop
Bryan Mattimore
September 2019
How Will Our Businesses Adapt to
& Use New Financial Technologies

2. Agenda
2
• Socio-historical perspective
• What Millennials think about banking
• Tools & processes
• Artificial intelligence
• Blockchain
• Cryptoassets
• 5G/Mobile
• Minds-on Workshop

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Historical context

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1918 Fedwire Funds Service connects all 12 Reserve Banks by
telegraph
1973 Society for Worldwide Interbank Financial
Telecommunications (Swift) for cross-border payments
1982 First online brokerage, E-Trade. First electronic trade by
individual investor
2009 Version 0.1 of the cryptocurrency Bitcoin released.
1867 First stock price ticker system NYC

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Augmented reality

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Virtual reality

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What do Millennials think?
• 71% prefer going to the dentist than listening to what banks say
• 33% believe they won’t need a bank at all
• 65% don’t use credit cards
• Four of world’s leading banks are listed in ten least popular brands
• 73% more excited about offerings from Google, Amazon, Apple,
PayPal, Square than from a nationwide bank
SOURCE: Millennial Disruption
Index Report (Jan 2019)

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New competitors

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• Augment your team’s human intelligence
• Service more customers and increase assets under
management (AUM)
• Increases your competitiveness
• Generate actionable insights from the sea of Big Data
• Mitigate risks and reduce downside
• Increase operational efficiency while keeping cost-to-
income ratio low
Fintech lets you…

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• Artificial intelligence
• Blockchain
• Cryptoassets
• 5G/Mobile

14. Artificial intelligence
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Using algorithms to do things faster and
better than humans – including
• identifying data sources
• rationalizing them in new and
unanticipated ways to deliver value
• Constellation of tools and processes – not
one thing – Alexa to Watson

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AI – what is it?
• Simulation of human intelligence processes by machines
and computer systems
• Applications include predictive analytics, speech
recognition and machine vision
• Constellation of tools: Google Home to Watson
• Needs large amounts of data

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• Customer Support (chatbots, virtual assistants)
• Secure authentication using biometrics
• Anti-fraud and risk management
• Complex legal and compliance workflows
• Analyzing data for trading, asset management
Leading use cases for AI in
financial services

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“I would go so far as to say that any asset manager
or bank that engages in strategic trading will be
seriously competitively compromised within the
next five years if they do not learn how to use this
technology.”
Aldous Birchall, Head of Financial Services AI at PwC
What do experts think?

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• AI-driven chatbot
• Predictive analytics, natural language
• Lets users:
• access balance information
• transfer money between accounts
• send money with Zelle
• schedule meetings at financial centers
• Over 7 million users

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• Price forecasting using
Bloomberg’s real-time market data
• Cutting-edge deep learning engine
analyzes data at speed and
volume better than human eye
• Recognizes patterns in waves of
price movements instantly, making
market predictions possible.

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• AI programming language
• Brazilian Market Risk Manager priced 2.4 million Fixed Income contracts
with 78M cashflows, 17GB worth raw CSV data
• Julia completed pricing for dataset in 3.5 minutes, a 10x performance
gain over conventional corporate systems
• www.julialang.org (open source)

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Resources
• Newsletter: The Algorithm - MIT Tech Review
• LinkedIn group Information Technology Professionals ▶️
Agile Lean Scrum AI Blockchain FinTech Microservices
DevOps https://www.linkedin.com/groups/3732032/
• Web site: The Fintech 50 -
https://thefintech50.com/fintech-thought-leaders

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ACTIVE LISTENING
10 minutes – group interaction
• How could you use AI in your business?
• What you are excited about?
• Any aspect you are worried about?

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• Artificial intelligence
• Blockchain
• Cryptoassets
• 5G/Mobile

25. Blockchain
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What is a blockchain?
• Distributed, decentralized, transparent, immutable consensus ledger
• Created in 2008 to keep track of bitcoin – digital data can be copied
• Each peer holds a copy of the complete ledger
• Digital information can be recorded and distributed but not edited
• Can be public, permissioned, private
• Also called Distributed Ledger Technology (DLT)

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Blockchain value prop
• Faster: Removes long, expensive money transfer processes with
several intermediaries, multi-layer systems
• Safer: info spread across a network; hacker would have to track
down all instances
• More secure: “add-only” function - very difficult to edit, impossible
to delete transactions
• Cheaper: Capgemini estimates savings of up to $16 billion in
banking fees for consumers each year

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“Even though they are still
uncertain of the impact
blockchain will have on their
businesses, 60% of CIOs in the
Gartner 2019 CIO Agenda
Survey said they expected
some level of adoption of
blockchain technologies in the
next three years.”
David Furlonger
Gartner, Distinguished
Research Vice President
What do experts think?

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• new division “Quorum”
• specifically for research and
implementation of Blockchain

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• Dedicated blockchain specialists
across core lines of business
• Tax, Audit, Advisory, and Industries
• In 30 countries across the world.

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Vendors/partners
• Enterprise-grade permissioned distributed ledger
for developing solutions and applications
• Modular and versatile design satisfies a broad
range of industry use cases
• Offers a unique approach to consensus that
enables performance at scale while preserving
privacy

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Vendors/partners

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Vendors/partners
• SIMBA Chain makes it easy to build and deploy
blockchain systems across multiple blockchains
and data stores
• Tailored for users, developers, government, and
enterprises to quickly deploy blockchain
distributed apps (dapps) for the enterprise

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Criteria to consider
1.Are multiple parties involved in your transactions?
2.Is it critical to have a tamper-proof record of transactions?
3.Does your ecosystem benefit from increased
transparency?

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Resources
• Newsletter: Chain Letter – MIT Tech Review
• LinkedIn group: Information Technology, FinTech,
Blockchain and Bitcoin Innovation -
https://www.linkedin.com/groups/2154029/
• Web site: Coindesk https://www.coindesk.com/

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ACTIVE LISTENING
10 minutes – group interaction
• How could you use blockchain in your business?
• What you are excited about?
• Any aspect you are worried about?

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• Artificial intelligence
• Blockchain
• Cryptoassets
• 5G/Mobile

38. Cryptoassets
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What are cryptoassets?
• As of May 2019 – 2,000+ in 4 categories
• Use cryptography, public ledger, no middleman
• Four categories: Cryptocurrencies, Platform Tokens,
Transactional Tokens, Utility Tokens

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2. Platform
• Platform for other projects
• Adds “smart contracts” – must be fulfilled
to complete transaction
3. Transactional
• Enables fast cross border payments
• Visibility throughout entire process
4. Utility
• ICOs: issued to fund development
• Later used to purchase goods/services
offered by the issuer
• Spent in a certain blockchain
Cryptoasset categories

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1. Cryptocurrencies
• First cryptocurrency was Bitcoin (BTC)
• Launched 2009 by individual/group known as Satoshi Nakamoto
• Created by solving complex problems (energy-intensive “mining”)
• Designed to be immune to government manipulation
• Sept 2019: 17.89M bitcoin in circulation-total market value ~$63 billion
• Thousands of alternate cryptocurrencies (“altcoins”)
• Market value of over $120 billion

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“The dollar’s influence on global financial
conditions could similarly decline if a
financial architecture developed around
the new [digital currency] and it
displaced the dollar’s dominance in credit
markets. By reducing the influence of the
US on the global financial cycle, this
would help reduce the volatility of capital
flows to emerging market economies.”
Mark Carney, Governor, Bank of England
What do experts think?
"It is pretty much the highest-risk, highest-return
investment that you can possibly make.”
Barry Silbert, CEO, Digital Currency Group,

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Stablecoins
• Fiat currencies like US dollar, other cryptocurrencies, precious
metals or a combination of the three
• Designed to tackle inherent volatility in cryptocurrency prices
• Captures benefits of a trusted stable coin while simultaneously
offering reduced-friction international trade and stable currency
Cryptocurrencies with value pegged to another asset

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• June 2019 - backed by deposits from central banks
• Global currency for developing countries (unbanked)
• Governed by Libra Association, Swiss group - 28 members
• Calibra, Uber, PayPal, Mastercard, Visa, Spotify
• JPM Coin - February 2019
• First U.S. bank to test digital coin tied to a fiat currency
• Designed for inter-firm remittances, to settle bonds and
commodities transactions
• Always has a value equivalent to one U.S. dollar

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• One of the world’s first blockchain games – runs on Ethereum
• Each CryptoKitty is one-of-a-kind, cannot be replicated, taken away, or
destroyed
• Cryptokitties took off during the ICO craze of 2017
• Most expensive Cryptokitty sold at auction for $170,000 in September
2018 (600 ETH)

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How to get started
1. Join a cryptocurrency exchange: Coinbase provides access to Bitcoin,
Ripple (XRP), Ethereum (ETH)
2. Download a wallet:
• Blockchain.com for Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH)
and Stellar Lumens (XLM)
• MyEtherWallet for Ethereum and ERC-20 Tokens
• Rippex for XRP/Ripple
3. Buy some cryptocurrency!
4. Research new cryptocurrencies, Bitcointalk.org is a good start
5. Hold your investment or dollar cost average on a weekly/monthly basis

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RESOURCES
Book: Cryptoassets: The Innovative Investor's Guide to Bitcoin and
Beyond - Jack Tator and Chris Burniske
LinkedIn: Cryptocurrency Investing Network
https://www.linkedin.com/groups/2144608/
Web site: Forex Ratings: http://www.forex-ratings.com

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ACTIVE LISTENING
10 minutes – group interaction
• How could you use cryptoassets in your business?
• What you are excited about?
• Any aspect you are worried about?

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• Artificial intelligence
• Blockchain
• Cryptoassets
• 5G/Mobile

51. 5G/broadband mobile
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The future of financial services is mobile

52. What is 5G?
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• Fifth generation cellular network technology
• Delivers unprecedented speed, low latency
• Can manage huge numbers of connections simultaneously
• Download speeds of 4.5-10.0 Gbps - 20 times faster than 4G
• AT&T, Verizon, Sprint, T Mobile all bringing 5G online
• Moves compute load to the cloud

53. Use cases for 5G
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• Deliver innovative mobile services
• Real-time video consultations – both virtual and human
• Faster processing: applications, credit checks, approvals,
funds transfer
• Enhanced, proactive fraud prevention using biometrics
• Real-time information gathering/delivery allows new artificial
intelligence-based, AR/VR personal banking services

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“The benefits of 5G networks offer next-
generation mobile internet connectivity, faster
speeds and more reliable connections on
smartphones and other devices, which we
believe will benefit all consumers.”
Jeremy K. Balkin, Head of Innovation, retail
banking and wealth management at HSBC USA
“5G will begin to unlock some interesting
things that we’ve dreamt about or imagined
for some time. It’s low latency and high
bandwidth will support a lot of applications.”
Dominc Venturo, EVP and Chief Innovation
Officer at U.S. Bank
What do experts think?

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RESOURCES
Newsletter: 5G Communications News
https://www.globalspec.com/newsletter/pub/161/5g-
communications
LinkedIn group: 5G Series
https://www.linkedin.com/groups/1146097/
Web site: Light Reading 5G
https://www.lightreading.com/5g.asp

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ACTIVE LISTENING
10 minutes – group interaction
• How could you use 5G in your business?
• What you are excited about?
• Any aspect you are worried about?

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• AI
• Blockchain
• Cryptoassets
• 5G/mobile
Brain walk
• Generate several ideas at your Ideation Station with your teammates
• Go to the next station
• Add your comments or feedback
• Circle an idea and describe what you liked about it
How might you actually use one of these fintech
solutions in your organization?

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Getting started with fintech
• Always prioritize value you are trying to deliver for clients
• Fintech plan should lay a foundation for long-term strategy
• Consider all business functions
• Start small: get an early win where you have data and buy-in
• Build vs buy – always be willing to investigate partners

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Thanks!
Christopher Bishop
chris@improvisingcareers.com
Bryan Mattimore
bmattimore@growth-engine.com