Posted on

‘You can’t solve the world’s biggest problems alone’: How MIT is influencing the future of the blockchain

MIT is trying to solve the world’s biggest problems. To do that, it can’t go it alone. In addition to inventing stuff, the university convenes key influencers together to collaborate on finding solutions. For example, MIT houses the W3C, the world wide web consortium, and Kerberos, a network authentication protocol. It’s now doing the same thing for fintech through the school’s Connection Science division.

This group, founded by faculty member and famous data scientist, Sandy Pentland, is working to build better societies by applying trusted data to change behavior at scale. One of the focuses of the group is fintech and more specifically, blockchain.

MIT's Dave Shrier
MIT’s Dave Shrier

David Shrier is a managing director of Connection Science. In addition to his work with the group, he is also the creator and lead instructor for Future Commerce, a for-credit on-campus class as well as an online certificate program in fintech. Tradestreaming caught up with Shrier to talk about bitcoin and blockchain technologies.

Why should financial professionals care about bitcoin if it’s still mainly the domain of hackers?

The killer app for blockchain is data, not currency. Blockchain can be used to secure data, making it easier to share for highly valuable things. Bitcoin, as a currency, has gotten a lot of press and has been great for raising awareness and competency around blockchain. But size wise, bitcoin is equivalent to a small country’s economy. It is blockchain and the potential to transform financial data management that will be worth hundreds of billions of dollars.

We and others expect disruption in the financial services space will drive significant job loss, as much as 30 to 90 percent of the conventional financial workforce due to the rise of new business models and automation. On the other hand, some of the new fintech, like blockchain, or what we call distributed ledger technology, will allow for a greater level of data sharing. This will enable a greater level of data sharing between financial service companies, giving a much clearer understanding of risk exposure in the industry without exposing confidential information.

We want to better understand the threats and opportunities behind the $20 billion that’s expected to be invested in fintech this year alone.

In an increasingly blockchained world, what’s banking’s role?

Futurist Benjamin Calmer said that he only went into a bank branch when he did something wrong or the band did. As customers, our relationships with banks is poor. We’re intrigued with the concept of invisible banking. Emerging players are working to make banking seamless, so that we don’t notice we’re banking. Dealing with money and payments will become just part of everyday life.

That is what we call invisible banking and it’s enabled by the Bank of Things. BoT is the idea of taking transactions and other aspects of banking and interlinking them behind the scenes, making them digitally connected, transparent and more easily accessible to customers.

Technology providers seem to be signaling that they intend to get more serious about providing financial services. Where should industry professionals look to see where future competition is coming from?

Competition is coming from data and communication companies that touch people’s lives. Especially in a zero to negative interest rate environment like we are in today, what’s left to compete over is payments, transaction services, and other kinds of analytic advice. Companies like AT&T, Telefonica, and IBM can service payments just as well as a bank can.

Just recently, the CEO of one of divisions of Barclays Africa left to a financial services platform run by a telecom. There’s no reason why you won’t see more of that happening in the U.S. Sure, regulation is an issue but honestly, federal regulators here are looking to improve the current state of affairs and are actively looking to promote financial innovation. They want to address the 27.7% Americans who are underbanked and unbanked. We hear all the time about the unbanked in emerging economies. The size of the unbanked population is also a problem in our own backyard.

Hear more from David Shrier at Tradestreaming Money 2016 in New York City this November.

Posted on

Join us this fall for the Tradestreaming Money Conference

Tradestreaming spent this summer chronicling how the financial services industry is finding its footing. Technology is helping to make that happen. No one seriously compares large financial institutions to fintech startups that “threaten” them. The real story is about how financial services companies can reignite growth by working with innovative fintech firms and by finding ways to innovate internally. It’s about and, not or.

To dig deeper into the growth game plan, Tradestreaming is hosting its first event, the Tradestreaming Money Conference, taking place on Monday, November 14 at the InterContinental New York Barclay Hotel.

Tradestreaming Money Conference will convene the leading marketing and digital executives to discuss a variety of topics in finance and technology, including user acquisition trends, recruiting and retaining top digital talent, digital transformation, and emerging financial technologies. Here’s a sampling of who will be joining us:

BBVA: Banks and fintech partners are working together to build entire ecosystems to service customers. BBVA’s Scarlett Sieber is the bank’s svp of new digital business. She will analyze how the bank of the future will erecting an ecosystem around itself that includes direct investment in technology firms, encouraging third parties to use the banks infrastructure via APIs, and by running accelerator formats.

Cornerstone Advisors: Ron Shevlin is a banking analyst’s analyst, covering banks and credit unions. At the conference, Ron will participate in a creative format, Pardon the Interruption. This fast-paced and overly candid session will explore various components of what the bank of the future will look like.

Credit Suisse: Cutting-edge financial institutions walk a tightrope between finding growth in transformative technologies and managing new forms of exposure. Anne Johnson is head of data, risk, finance IT in the bank’s wealth management division. She straddles the worlds of technology, strategy, and risk and will talk about how financial firms can plan and optimize for growth while hedging their downside risk.

Citi: Innovation underpins the financial technology stack but it’s also being used for new customer acquisition and branding. The most successful firms combine both digital and offline marketing. Citi’s svp of content and social, Julie Booth will join us to discuss how the bank’s credit card group nurtures its social footprint with compelling 360 activations by focusing on consumer incentives and the brand’s relevance and reliability.

Fidelity: Asset managers and brokerage firms are harnessing new technologies to streamline existing operations. Companies like Fidelity are using technology to open up new business lines and profit opportunities. Hank Erbe is the firm’s group head of equity origination and syndicate. He’ll discuss how technology is changing the world of capital formation and where it’s headed in the future.

QED Investors: Many of the most active early-stage investors in fintech are very specialized in their activities. QED Investors is one of those groups. Caribou Honig will speak about where the new competition is coming from. Sure, banks can and should be talking to some startups but incumbent tech firms like Google, Facebook, and Apple — they’re the ones worth keeping an eye on.

You can view the agenda here. Tickets are available for purchase here. For speaker inquiries, contact Monika Honig: [email protected]. For partnerships and sponsorships, contact Caroline Bottger: [email protected]. Receive updates about Money 2016 by subscribing here.