Wall Street on Blockchain: Is a Revolution coming?
Recently a team of veterans from Wall Street and Silicon Valley is testing a new type of investment banking community using blockchain technology, facilitated by big data and artificial intelligence (AI), to rebuild the traditional investment banking system. The project is named ‘Banca’, a decentralized investment banking community running on blockchain. The team is based in Shanghai and Silicon Valley, a joint effort between high-tech and high finance, to create a “Wall Street on Blockchain”.
The Background of Banca
Investment banking services nowadays have reached the top of the financial industry food chain after over a hundred years of development on Wall Street. Names like Goldman Sachs, Morgan Stanley and Merrill Lynch are synonyms for world financial elites. However the bankruptcy of Lehman Brothers, a well known investment bank on the street at that time, has pushed the 2008 financial crisis into an abyss. The hidden fact behind this was how hard those ‘too big to fail banks’ had pushed world financial resources into assets relating to the housing bubble, totally out of their own interests. Their greed cost trillions of dollars of taxpayers’ and investors’ money. Wall Street, at the center of the financial world, faced the most challenging situation in its history as this American financial dream model shattered. It’s hard to say that this marks the end of the American dream to maintain its power, but this certainly sounds the alarm for the American financial system which is in desperate need for change. In this context, Banca introduces the idea of an ‘investment banking community’, aiming to solve the internal dilemma of traditional investment banks and to become the trail blazer of a future investment banking service model.
Banca is a decentralized, intelligent investment banking community
In order to prevent the moral hazards existing in the centralized management of traditional investment banks, the Banca team has set up the business protocol, trust mechanism and reward system based on QTUM blockchain technology. In the last few years, blockchain technology has improved with the growth of cryptocurrencies and, now with a more mature underlying architecture setup, is being applied to more industries outside the cryptocurrency world. The team believes it will also bring opportunity for the investment banking industry.
Banca community will utilize AI and smart contracts to achieve automatic management. As blockchain technology ensures incorruptibility of data and smart contracts provides automation of transactions, the system can be considered highly credible while execution cost and compliance cost are greatly reduced.
The Banca team has accumulated more than ten years of experience in big data analysis and intelligent robo-advising, which will become an important building block of Banca community service. With those technologies, the community will be more accurate in recommending relevant service providers for clients, provide more useful data and information for a specific client and connect fund raising projects with potential investors more efficiently. If the team can further improve Banca’s functions and keep the community services abreast with the most updated technologies in AI, the aforementioned procedures will continually evolve. Banca shall run as an eco-system by itself.
The Structure of the Banca Community
Banca, the decentralized investment banking community, is made up of four departments:
(1) Primary market services that facilitate ICOs, bond offerings and securitization of crypto assets;
(2) Secondary market services that include investment research on digital assets, rating service and digital asset management;
(3) OTC digital financial services that include digital financial derivatives, liquidity management, portfolio risk management and digital asset custodian;
(4) Foundation services that include legal services, accounting, auditing, etc.
Banca tracks the performance of all primary market and secondary market projects running on its platform, maintains the data on blockchain and generates automatic reports, which are incorruptible. This performance evaluation process is smart and dynamic. Its result will decide the community’s rating on service providers and the bonus level each service provider can be rewarded.
The Banca team firmly believes the financial industry is the core area to be revolutionized by blockchain technology, and traditional investment banking won’t be left out in this trend.
Will this truly revolutionize the investment banking industry? Only time will tell!