#SIBOS Insights: The innovation stage in market infrastructure (from SWIFT to blockchain)

In a panel discussion around “When Regtech meets Fintech” Peter Randall, the CEO of SETL set the stage with a retrosperctive of innovation in the market infrastructure part of the business. He reminded us that:
o in the 70s, SWIFT was the innovation
o in the 80s, the dematerialization
o in the 90s, RTGS (real-time gross settlement) system
o in the beginning of the 21st century, we had Cobol, the ICE (Intercontinental Exchange), and who would have imagined that it would buy NYSE in 2012
o Recently we have BATs and Chi-X with better UX and lower cost

Now in the second decade of the 21st century, innovation will move to the back office;
And this is where blockchain technology can change the landscape, if it tackles simultaneously four areas:

  • Operate at real world speed – 10 thousands transactions per second = billions per day
  • KYC/AML is native; not as an add-on
  • Moves real world assets – like move Central Bank money
  • And is functional in a world with many chains exist that are interoperable (because Peter doesn’t believe in one huge chain)

Everybody talks about “Standards” (the “s” is the problem). Too many choices, result in frictions and non-interoperability.
At the same time, we don’t want to agree on a standard that is the lowest common denominator for the global financial community. So what is the solution? We need to agree on a functional standard that works. This shouldn’t be too difficult in a dematerialized world.