More than just a tech buzzword, blockchain is changing the way banks think – and how they operate. As the technology matures bank are learning off one another how to best apply a technology with a number of industry shaking applications.
The Australian Digital Commerce Association recently staged the APAC Blockchain conference, featuring delegates from the China Blockchain Development Forum and FEA Consulting Blockchain Study Tour of Australia.
"[Wechat] have developed a lot of their own technology… and rent that technology to other financial institutions on as a service basis.” - Dobson
On the sidelines on the conference, bluenotes sat down with Nicholas Giurietto, the CEO & Managing Director of ADCA and Nigel Dobson, Banking Services Domain Lead Digital Banking, ANZ, to chat about their impressions of the major themes from the conference. Below is an edited transcript of that discussion.
They started by sharing what they’d learned from the session.
ND: What I thought was really interesting was when Benjmin Li from Webank talked about the problems the company solved first with distributed ledger were actually the same problems we’d addressed first at ANZ.
We had tackled the problem of reconciliation. We used it for Nostro accounts through a piece of work with Wells Fargo. That was the first thing Webank had solved as well and I thought that was really interesting.
NG: It was interesting. That reconciliation problem is at the heart of any banking relationship.
I thought the other thing that was quite cool - and this is a scale thing Webank obviously has because they're attached to Wechat, which has ‘only’ a billion users or something like that - was it was able to scale its solution and then apply it on the back end.
They could then provide micro loans to all of their social media users which is a really interesting model.
ND: I thought that was really interesting too. If I heard Benjmin correctly, they've got 130 million banking customers through that digital platform which is remarkable.
The other thing I took away from that presentation was Webank are completely cloud based - so their core banking is hosted in the cloud.
They've also developed a lot of their own technology - particularly around distributed ledgers - and they rent that technology to other financial institutions on as a service basis.
NG: My understanding is that part of their business plan is that they actually want to become not only a bank but a banking technology provider.
That's a big play and it will be very interesting to see how that scales outside of China.
ND: What we also talked about today was the challenges of the trade finance supply chain. We'd really just like to solve this long and elongated problem we have between multiple counterparties in a supply chain. It's a very complex problem.
As we solve parts of that problem over time we understand the technology better, we get better skills and increase our collaboration, standards and understanding of that supply chain because there are so many actors.
NG: I thought there were two interesting things there. We heard from Wanxiang, which started out as an automobile manufacturer and clearly has a complex supply chain behind it.
Wanxiang was able to work with Webank in terms of supply chain finance for the automobile sector. And because it had a better understanding of that particular area Wanxiang was able to apply that and make progress rather than trying to solve a whole big problem all at once.
ND: That's a good point because what Wanxiang did show was that it stuck to the business it knew and stuck to the problems it understood. That was a really good lesson and that's what we've tried to do here at ANZ .
It's great to hear from Chinese companies and banks that they are thinking very similarly about some of these challenges as well.
NG: It's been great interchange and exchange. One of the things that we're really pleased about is being able to facilitate that communication. I think Australia has a really good opportunity as some of these ecosystems grow because obviously China is our biggest trading partner
Because of Australia’s role in the standards process China is quite interested in using the country as a test bed for some of these international collaborations so if Australia can make the most of that we have the potential to be to be among the early adopters of this emerging tech as it really goes forward.
ND: And solving real problems along our traditional supply chains.
NG: Right.
Shane White is senior production editor at ANZ
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
12 Jan 2018
26 Feb 2018