Friday, December 18, 2015

Financial companies working meticulously on new technology: Revolution of monetary transactions – N24

UBS, Credit Suisse and the German stock market experiment with the block chain technology. 2025 could be the Money Transfer process be omnipresent and speed up transactions.

The latest Hollywood movie can be downloaded in a few minutes. A money transfer from the US to Europe, however, will take some more days. Therefore major banks, exchange operators and dozens of startups fiddle to a new encryption technology that could revolutionize the decades-old process behind remittances and exchange transactions. The block chain makes the settlement of transactions not only faster, financial corporations could save with it billions. “The block chain will be omnipresent in ten years,” says German Bank Manager Rhomaios Ram. Already in the coming one to two years, the first company would go with offerings to the market

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The demand, the global to improve financial market infrastructure, is great as the Zurich Financial entrepreneur Richard Olsen emphasized. “This is like a circulatory system, which is clogged.” Although transactions are handled electronically for some time, but they often go through more processing steps of the old paper and post-age. Many jobs are even bundled in the day and then sent on a journey through five to ten different stations

Here promises the new technology. Remedy: Switch over the block Chain money or securities directly from one account to another, without going banks and other middlemen. Instead of days the whole thing lasts only minutes. The block chain is a kind of digital bank statement for transactions between computers. Since the data are stored on a network of different computers, they can hardly be manipulated. This technology is based also the cyber currency Bitcoin. But while Bitcoin has ensured with fraud for headlines and is viewed critically by many banks, there is at the technology behind them with great interest.

The Institute hope to whittle their huge processing apparatus using the block chain. The consultant at Oliver Wyman expect that banks can save on 2022 annual infrastructure cost 15-20 billion dollars. 30 institutions, including Commerzbank, German Bank, Credit Suisse and UBS, have joined forces in a consortium to develop the technology for the financial industry.

“With block chain efficiency could massively improved and the risks are reduced” says computer science UBS CEO Oliver Bussmann. The Swiss banking giant wool with other institutions to develop a market standard and lead talks with regulators. German rival Bank has internally played with the art placement of corporate bonds and draws a positive conclusion: “Technically it works, but some regulatory and legal issues are still open,” says Ram. This included the question of who is responsible if something goes wrong course. “The computer?” Asks Ram.

At Deutsche Bank is so far only to internal tests of a launch, the institute is still far away. Company founder Olsen, which builds a global securities trading platform with his young company Lykke is already progressed. “We want to get started in the second quarter 2016, a forex trading platform, and then gradually expand into the money market and in stocks,” he announces. Olsen has built up at the exchange broker Oanda already a successful financial company. “We also have contacts with banks,” he says. “Some are very interested to get involved.”

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Trading places like the Swiss SIX or the German stock exchange plumb the potential of the block chain from also. In particular, the settlement of commercial transactions, the so-called clearing, let accelerate characterized says Ashwin Kumar, the chief product developer of the German Stock Exchange, in the Reuters interview. “The block chain technology will not make market infrastructure provider but obsolete.” For the foreseeable future the block chain can only be used in segments where the volume low and the speed is secondary, says Kumar. For large equity and derivatives platforms, the technology was not mature enough.

“I’m assuming that less efficient areas of the financial markets as the commodity trading make the move first and offer the proof that this really works “says Oliver Wyman expert Stefan Jaecklin. Later would follow the bond and currency trading. Until the big breakthrough of the technology it will still take. “You always overestimate what will happen in the next three to five years,” says the consultant. “But you underestimate what can happen in the next ten years.”


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