Steven Heilbron, Former CEO of Investec Bank UK talks COTI
A Q&A session with one of COTI’s advisors Steven Heilbron on why he believes that COTI will indeed become the Currency of the Internet
COTI recently had the opportunity to speak with Steven Heilbron, a member of COTI’s board of advisors and former CEO of Investec Bank in London. For a fine grain view into his early involvement in the project all the way through to his outlook on digital currencies and their traditional counterparts, read on.
1. Please give us a bit of a background about yourself..
I have been in the financial services industry for 25 years and previously served as the global head of private banking and Joint CEO of Investec Bank in London. Today, I am the Joint CEO of Cash Connect, an automated cash handling, payments and credit business which I acquired as part of a consortium in 2013.
2. When did you first become involved in the COTI project, and what drew you to it?
David Assaraf approached me last year with a vision for the new standard in digital currencies. I immediately subscribed to COTI’s mission of bringing the current standards of the financial services industry into the digital sphere. The majority of other digital currencies which I had come across failed to understand the importance of maintaining high regulatory standards.
I was drawn to the project for two things: COTI’s team of highly experienced financial services professionals who understand this nuance and the innovative technology which powers the Trustchain and COTI ecosystem. I believe that the first use case of COTI for digital payments shows immense potential, but other applications for the technology in the remittance and insurance industry are equally significant.
3. What do you see as disadvantages in today’s payment systems like Visa and Mastercard?
Worldwide authenticators like Visa and Mastercard have dominated the payments industry for several decades. Their primary value proposition of intermediating trust between consumers and merchants and issuing banks and acquiring banks has consolidated this position.
The blockchain — with its innate ability to decentralize trust to network participants through a consensus mechanism supported by a proof of work — challenges this status quo, making the payments space ripe for unprecedented disruption.
Existing hurdles including accessibility to consumers and merchants, high transaction costs, delayed settlement periods, low transaction approval rates, particularly in cross border exchanges, and cumbersome multi-currency support are all up for a challenge with these new technologies.
4. Why have traditional payment systems like Visa and Mastercard not yet been disrupted?
They offer merchants and consumers speed and consistency in processing transactions, while providing mechanisms to protect all parties from improper and fraudulent use.
A disruptive technology will need to produce an ecosystem that is compliant with regulation, highly scalable, trust-based and which includes buyer-seller protections.
In the past few years, much hype has surrounded cryptocurrencies, and while they obviously show extreme potential, existing cryptocurrencies fail to deliver on all of these elements needed to dislodge the traditional payment incumbents.
5. What gives COTI an edge over other digital payment networks?
✓ Simple, transparent, instant and scalable, while building in mechanisms to protect
both buyers and sellers.
✓ Real value added to both merchants and consumers
✓ Fully compliant and embracing of current financial regulations.
✓ Accessibly and ease of use for both consumers and merchants
6. In your view, what will need to occur for COTI to experience mass adoption and be accepted on a global scale?
✓ An emphasis on real value added to merchants and consumers
✓ Network effect achieved with broad merchant adoption
✓ COTI functionality online and offline
✓ Full regulatory compliance
7. What excites you about COTI’s long term vision?
COTI’s vision is to exchange value as easily and simply as the internet exchanges information. There are multiple use cases and industries which can be disrupted by a trust-based system. International remittances and insurance are ripe for change.
The same goes for the two billion people around the world who remain unbanked and excluded from the financial services industry. A lack of trust with these consumers remains the biggest barrier to entry. COTI’s Trustchain has the ability to transcend this problem and democratise financial services accessibility.
8. What do you think a tech company like COTI can offer to users in payments that they wouldn’t get from traditional payment services?
✓ Decentralized governance and assurance of no overreach of power
✓ Zero-to-low fees
✓ High cross-border reliability, irrespective of industry or jurisdiction
✓ Efficient and decentralized buyer-seller protections
✓ Short settlement periods, alleviating cash flow challenges
✓ More reliable transaction approval rates with a reduction of false positives
9. Does the DAG structure have advantages beyond improving payment systems? Is that part of COTI’s vision?
COTI is fit for many use cases beyond the payments industry. There are over 14 verticals that can benefit from COTI’s Trustchain protocol. International remittances, micropayments and nanopayments, insurance and even digital advertising are among additional industries identified for future applications.
10. What are your thoughts on the team behind COTI?
They are highly experienced and skilled across a range of sectors from banking and payments processing to blockchain, e-commerce, data science and AI. There are also a number of accomplished PhDs and industry veterans on the team, such as COTI’s CTO, Dr. Nir Haloani, who has authored over 13 patents to date.
11. How does COTI ensure a trusted ecosystem?
To provide a community-based decentralized payment system, it will be necessary to create trust among community members by incentivizing trustworthy ecosystem participants with lower fees and higher transaction confirmations.
COTI takes a novel approach to building trust between transacting parties through its Trust Score mechanism. The Trust Score servers analyze user data, user behavior, and network payment statistics to calculate a Trust Score for each COTI network participant. The Trust Score as a metric helps to rate participants according to their trustworthiness and contribution to the COTI network.
12. How much involvement does COTI have during transactions between users? How does COTI resolve disputes?
COTI is decentralized and thus has no direct involvement in each transaction. While the Trust Score adds a layer of trust to all COTI network transactions and imposes disincentives on behavior that is dishonest or unfair, the Mediation System provides an additional mechanism that facilitates dispute resolution in an effective and cost-efficient manner.
Mediators in the network work independently to validate information pertaining to transaction disputes and then cast votes on a mediated outcome. Mediators receive caseloads and cast their votes using a specialized mediator application. They are not able to communicate with one another and are unaware of how many other mediators are involved in resolving a dispute. After mediators’ votes have been cast, they are assessed using a voting matrix that determines consensus automatically. Once a mediated outcome has been arbitrated by a quorum of mediators, the system compensates the winning party and returns that party’s balance to its rightful state.