DrumG Immutable Reflections — #2
“In this business, by the time you realize you’re in trouble it’s too late to save yourself. Unless you’re running scared all the time, you’re gone.”
“Technology is nothing. What’s important is that you have a faith in people, that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.”
I write from somewhere across the Pacific Ocean as I fly back from Sydney, Australia where, along with Chief Architect, Marc Sparrow, and Head of APAC, Alistair Duff, I was proud to represent DrumG on one of the biggest stages in our industry. It also happened to be my first time at the annual traveling circus that is Sibos.
To be honest, I wasn’t quite sure what to expect. I’ve participated in my fair share of conferences over the years and have often found them to be challenging experiences. Solid networking opportunities with some new insights to take home at best. A waste of time and energy at worst. Perhaps it’s because DrumG Technologies is going through a period of incredible growth at the moment and we’re riding high on some meaningful momentum with our network founders. Or perhaps it’s because enterprise blockchain in financial services feels like it has just moved into a new gear. But Sibos 2018 in Sydney was really very impactful on a number of levels. Here’s an attempt to distill the experience into three specific observations.
1 — Blockchain in Financial Services is Real
It’s been a while. Blockchain was invented 10 years ago by Satoshi Nakamoto (whoever he, she or they are). So where are the results? In reality, specifically in regulated financial services, blockchain and crypto assets only came into the initial collective consciousness of a few progressive global financial institutions around 2014. 2015 saw ConsenSys and R3 come into existence and IBM upped the ante with their work on Openledger, the precursor to Hyperledger Fabric. Also, Blythe Masters joined Digital Asset Holdings, one of the early innovators in the space, and added fuel to the rapidly burgeoning hype cycle fire became apparent towards the end of the that year.
Everyone has a blockchain origin story. Mine was visiting Coinbase and Ripple in March 2015 with a group of UBS executives. Like many of us who got in relatively early in financial services, I saw incredible promise of the use of blockchain and digital assets for mutualized infrastructure and as a solution for collective action problems in global financial services. But I had no idea quite how it would pan out nor over what timeframe. I joined R3 as CEO of the Lab and Research Center in the latter part of 2015 and we started to pull together over 200 banks, insurance companies, asset managers, regulators, central banks and technology companies into a consortium where we ran over 70 Proof-of-Concepts across all of the blockchain platforms that were around at the time. You name the use case, we probably ran a PoC on it. And so, 2016 became the year of the ubiquitous PoC. I remember calling for the death of the PoC in September 2016 at one of our first member conferences.
In 2017 the pressure began to pile on as the CxOs of financial services were demanding results. Some genuine pilots were instantiated which allowed us to move to the next stage of development. DrumG Technologies, along with our “ledger appropriate” stance, was born in 2017 in the knowledge that we were on the cusp of a crucial stage in the journey. All of the major DLT platforms continued their hard work and maturation as we were heading into 2018 where we would finally see some real production instances bringing real business value into financial services. The holy grail…
So here we are near the end of 2018 — and the proceedings at Sibos send a message to the assembled masses that blockchain has arrived. The Discover Zone on the 4th floor at the ICC in Sydney included a who’s who of blockchain players including ConsenSys, R3, Digital Asset, Hyperledger, Microsoft, Adhara, Trustology, IBM and Blockapps among others. More importantly, the number of traditional financial services players who were openly discussing the importance of blockchain in financial services was staggering. The number of important blockchain announcements was significant. The extent of scheduled programming related to blockchain was telling. Make no mistake: deals were getting done, money was being invested, bold statements were being made, results were being demonstrated and alliances continued to be formed. Unvarnished optimism was taken over by gritty realism and commercial pragmatism. This is what we have been waiting for.
From a DrumG perspective we were excited to demonstrate our first Proof-of-
Business-value (the PoC is long dead, at least from our perspective). A fully live and operational end-to-end workflow and deployment demo of our Titanium Network built on Enterprise Ethereum and operating on Microsoft Azure with our anchor partner, Credit Suisse. Very real indeed.
Back in my R3 days I came up with a “DLT calendar” that was inspired by the Chinese calendar. It was a bold but imperfect attempt to demonstrate how we were progressing and were likely to progress towards a blockchain reality in financial services. If you saw me speak at one of the big conferences in 2016 and 2017 then you likely saw this slide:
I’m sure many will quibble with the definitions and the exact timing, but I would suggest that we are broadly on track. To quote my favorite musician, “some day we’ll look back at this and it will all seem funny.” * We’ll also look back at this and marvel at the speed with which we made progress. Deploying enterprise software at scale into highly regulated global financial services is very hard. We’ve only really been doing this in earnest for 3 years. I’d say the blockchain industry is in rude health.
Blockchain in financial services is real. The train has left the station…
2 — Ownership of Data as an Asset
We’ve always known deep down that there had to be some sort of trade-off if we had Google and Facebook for free. And in 2018 we finally took action and put Mark Zuckerburg in front of lawmakers in the US and Europe. We kick ourselves now, of course. We should have seen this coming — but too late. So we need a new paradigm. One where we own our own data and choose where it goes and permission and audit who has access to it. One where we get paid for the use of our own data.
This is not only true for individuals but also true for corporations and governments. This represents a profound generational shift and needs a technology capability to facilitate the outcome. Enter blockchain.
From our vantage point we’ve seen a palpable shift in collective consciousness of this topic over the last year and, in no small part, we have the Facebook scandal to thank. Along with the new reality of identity theft in our daily lives. It’s now clear to us as individuals what it means to have sovereignty over our identity and control over our data. Because these are accessible and tractable concepts with real-world reference points, we are seeing this translated into our professional lives. When viewed through this lens we can start to see a whole host of new solutions that generate business value and a BETTER WAY OF DOING BUSINESS on the horizon, powered by blockchain technology
(and combined with other recent and emerging tech like cloud, machine learning, Internet of Things and artificial intelligence).
We saw this become a more pronounced theme at Sibos this year. We heard a number of the most significant banks and financial market infrastructure companies discuss this explicitly and publicly. Facilitating the ownership and privacy of data when data is considered a valuable asset in its own right is a core blockchain competency. It’s exciting to see the prevailing view of what blockchain can do evolve from “let’s put bonds on the blockchain” to “let’s use this technology to evolve our business models.”
From a DrumG perspective, our two primary products, Titanium and Finsbury, are definitively designed to address this and to facilitate a meaningful step into this materially better paradigm.
3 — Convergence is Happening and the Mindset is Changing
Convergence is in equal measure a complex concept and relatively straightforward. We believe in convergence at DrumG and are convinced that this is a key driver of strategic change in complex dynamic financial markets. We will, in fact, be producing a thought development piece on the topic of convergence in the coming weeks.
For now, let’s focus on the easy part. Convergence between business and technology. Convergence between hitherto siloed business models and business processes. Convergence between existing and blockchain financial market infrastructure. Convergence between open permissionless networks and private permissioned networks. Convergence between blockchain and digital assets (possibly an odd statement given that they were born as one — but you have to respect the journey highly regulated financial services is taking on that one). And, with a very Sibos twist, convergence between the emerging FinTech companies on the Discover Zone floor and the incumbent financial services giants represented on the main exhibition hall. This latter form of convergence can also simply be called collaboration.
As important as convergence is breaking with dominant logic. Breaking with the defensive posture that has understandably been the primary positioning of the incumbents. That’s ok, it’s called dominant logic for good reason. But now we’re genuinely starting to see that dominant logic change — and with it comes a generational shift in mindset that is a necessary condition for so called “innovation” to come out of the theatre and into commercial reality.
As I said, this was my first Sibos, but by all accounts, there was a marked change in tone from previous years. The “D” word — disruption — is starting to feel more like a way of life and a strategic imperative than a threat. There is acceptance that financial services and financial technology may very well be one and the same. The Discover Zone sessions on quantum computing, artificial intelligence and machine learning and blockchain (including the final keynote session with member of DrumG Board of Directors, Joe Lubin) were so well attended (often standing room only) that these emerging technologies can no longer be considered backwaters. They are coming into the mainstream. But don’t take just my word for it:
In many respects the embodiment of this shift in sentiment was most clear to me on the panel I was invited to participate in by Dr Peter Golder, CEO of Euroclear Information Services entitled “Post-trade is the new Pre-Trade”. Sound dry? It wasn’t. Along with Tim Lind who looks after the data services business at hugely important financial marmet intermediary DTCC, and John van Verre who is Global Head of Custody and Treasury Services at global banking giant HSBC, we hit many of the topics I have described in a refreshingly open and constructive manner. We had some of the most important financial institutions in the world engaging with a blockchain startup in a dialogue around what it means to rethink how we work together to create a better future for all.
For the brave, here’s a video of the whole thing — and summarising it all, the recorded intro as part of the rather spectacular AV intro, “Sibos: Enabling the Digital Economy.”
Something tells me that 2019 is going to get very interesting indeed…
Wishing harmony for all.
*Bonus points for anyone who gets the reference