Euro Finance Tech Day 2021
Where Euro Finance drivers & guardians were taken on the fast lane, driven by Crypto Valley to meet the transformative tech, AKA blockchain.
The 24th Euro Finance Week was opened by the European Central Bank’s de Guindo, whose speech focused on the health of the euro area financial system. He called for Euro area banks to face the need to act on the increasing urgency to meet digital transformation needs.
In support of such a call for digital transformation, CV VC and other initiators from Crypto Valley, the world’s most prolific digitization hub, were honored to host an entire afternoon. Here, we shared our experience and initiatives of spearheading transformation in the new digital economy and the transformative capability of blockchain for all enterprises and markets.
Guardians and drivers of Europe’s Financial system who had gathered to discuss financial and economic developments in the euro area and beyond partook in Euro Finance Tech Day with vigor.
Kicking off the morning program
The day opened with a rallying keynote by Burkhard Balz, Board member of Deutsche Bundesbank, who stated, “We need a clear mission of how we wish to configure the digital age. Not only in Europe but the rest of the world”. He said of technology, “It will allow us to walk together, as a globe, holding hands” and continued,” If in the near future, we have a digital euro, we have to show that it is as trustworthy as the real Euro’. In closing, he posed a thought-provoking question, “in the future, why shouldn’t we send Digital Euros to our grandchildren?”
Marc Billeb of PwC Germany told us that “We are in technological evolution, and we can’t move forward unless we are using the cloud. While we cannot forget about risk and compliance and the regulatory landscape, we need to open the cloud to the finance world together with authorities”.
Panel discussion — the future of banks
During the morning’s proceedings, an insightful panel discussion examined the future of banks in the tight field of earnings pressure and consolidation: Customer centering, platforms, and sustainability.
Frank Birkner, CEO of Capgemini, spoke passionately about some driving factors, such as children being the next generation of customers and the quick evolution of the mobile office. He reminded us that we are already making digital payments through our watches and phones. Birkner posed the question — “how can I create new technology that will provide a better experience to my customers?”. On the issue of sustainability — he said that “this is the issue that will make banking take responsibility. If a bank does not operate sustainably, it will be difficult to get customer attention and trust. Banks need to offer sustainable support, and this is true for all future businesses.”
Tom Dapp of KfW’s ThinkTank explored the English word ‘Digitize’ — “the process of using systems to make the process digital.” He believes that the challenge is that people need to “see technology as a simple thing.” He challenged banks not to hide behind technology companies. He encouraged delegates to see that it would be critical to metric the impact created and move the focus away from monetary value.
The impact of sustainability was further addressed by Christiane Fritsch of ING Germany, who discussed how — “for every product we offer, we offer a green alternative.”
Jürgen Hendrik Kuhn, HSBC Deutschland, said that “IT specialists nowadays sit next to the banker because it adds extra value to the customer experience.” Franz Sebastian Welter, DZ BANK, said, “it is not IT but the customer who is the lead.”
Fireside chat — the data-driven bank
This brought us to the subsequent discussion, where speakers gave their inputs on the importance of collecting data to better understand customers. David W. Thöni, Corporate Value Associates, said that he feels that most banking has been digitized. Still, the challenge is that the internal complexity of banks has not yet been solved.
"The future customer experience should be designed to be disconnected from all the internal processing systems."
Panel discussion — the use of big data in anti-financial crime
Wolfgang Berner of HAWK:AI discussed how AI is fighting financial crime and suggested that “instead of sharing the data itself, we could share models.” He further proposed that “any kind of sharing is good, take for example the sharing of case information from multiple data pools. We could use this information to create crime pattern models and share the analytics with the rest of the network so that everyone can see the full picture. We need quick alignment.”
“We don't have a problem of understanding where we need to go. We just need to work together and get going."
Patrick Tomo Töniges, spotixx, painted a startling picture — “we catch less than 1% of money laundering. What we are currently doing is not working, and it’s not changing. Regulators are aware of it and are introducing regulations, but it still doesn’t change the effect. There are fundamental problems in the way we attack the problem. We use simple rules that, by definition, cannot find something complex. They can reverse-engineer the process, but it generates false positives, and we don’t catch the guys.”
Anjishnu Bandyopadhyay, Elucidate, highlighted that the KYC and admin process is still manual. Banks cannot track crime in real-time. We can use big data, data sharing, AI, and any modern tech to make sure that we can catch criminals immediately and not ten years down the line. The goal would be to share knowledge for other banks to be on the same level. He encouraged that the focus should be on sharing knowledge rather than sharing data and analytics.
Fittingly the morning ended with a discussion about the issue of data-driven strategies to enable a better future.
CV VCs afternoon program — blockchain, tokenization & digital transformation
The afternoon commenced with CV VC taking the stage to demonstrate the transformations that are already in place in the digital economy. Tracy Trachsler, co-head of CV Labs, introduced CV VC as one of the founding fathers of Switzerland’s “Crypto Valley” and its ecosystem company CV Labs as the heartbeat of Crypto Valley.
Tracy told delegates that not only is the sun shining for Crypto Valleys 960 plus blockchain companies and 12 Unicorns, but that the presence of blockchain founders here today was a testament to the function of this Megatech in financial systems.
Keynote — blockchain use cases and investment solutions
Olaf Hannemann, co-founder and CIO of CV VC, spoke with acumen about blockchain and its USD3.1 trillion opportunity. He explored the tech shift change which this and other game-changing tech is bringing to all industries. Olaf presented some proof facts, such as 80 of the 100 largest companies in the world are working on blockchain projects.
Blockchain is a new asset class, not just because BTC and ETH are in the top 20 global assets by market cap, but because the future of money is digital. He advised making no mistake that the digital asset class is here to stay. Olaf reminded the audience of a recent record broken by a digital asset — the first US-listed Bitcoin-linked ETF is now the most successful launch in exchange-traded fund history. This ETF gained over USD1 billion of assets in just two days, beating the largest Gold ETF’s 18-year-old record. He invited delegates to consider actioning a strategic focus on this technology as a growth opportunity.
Further, Olaf invited investors to look into the emerging new asset class as both a portfolio balancing and a yield generating option. He said that “Blockchain is not only the largest tech trend in global finance but also a transformative technology for other industries. This is what underpins CV VC’s interest in investing in blockchain technology.”
“It’s more than just a technology. It is a catalyst that is driving the way the world will interact and transact.”
On that note, he introduced some blockchain use cases from pioneers in the industry, Asvin, Proof Of Impact, and Pravica.
Blockchain — use cases from different industries
First up, we had Sven Rahlfs, COO of Asvin, who explained how Asvin uses blockchain to secure and update IoT devices during the lifecycle. In a world where 80% of malware attacks are distributed by devices, he demonstrated that now is the time to act. A single attack can cost USD1b. Attacks are up 650%. By 2030, there will be 125nb devices. Asvin will secure and embed IoT devices on the blockchain.
Mohamed Abdou of Pravica explained how they are building a secure communications system based on blockchain technology. Pravica will ensure privacy and security while preventing data breaches and security attacks. In a world where a single attack can cost $4m, Pravica solves the need to secure communications privacy for enterprises.
“Pravica can protect what you value most!”
Carlos Albrecht from Proof of Impact introduced us to the reality that impact investing will reach $750bn by the year’s close. The Proof of Impact solution creates operational data to show investors what managers are doing with their money. Proof of Impact processes and validates data, and it is the leading ESG & Impact Insights Platform.
The role of innovation as a competitive factor for Europe
Philipp Rösler, Former Minister for Economics, Germany, and President of CV VC Advisory Board, enjoyed a chat with CV Labs’ Tracy Trachsler and discussed the role of innovation to ensure European competitiveness. Rösler explained why life after politics has been so enjoyable — “one can get a better feeling for your impact! In business, you can make a decision and see the impact, whereas one has to wait longer for that in politics.”
“Zug is the capital of the world… when it comes to Blockchain at least”
He expressed his geo view that Europe doesn’t stack up too badly against other regions regarding tech but admitted he feels that the US is doing a better job than Europe. He believes that the strength of the euro lies in its ability to connect tech to industry because of its strong industrial base. To further focus on the topic of industry application outside of cryptocurrencies, he added that “Europe needs regulation for fair competition.”
He referred to Switzerland’s DLT (Distributed Ledger Technology) Act as a good example. He mentioned that one of the reasons for establishing his new company Consessor in Switzerland is the regulatory frameworks already in place and the positive political framework supporting new industries.
Rösler continued to say that “cooperation is needed to push forward. To drive innovation — we need to explain opportunities. Regulation cannot be too strict, as without creativity, we have no innovation. Blockchain needs the right balance between stable regulation and sufficient freedom to develop new ideas.”
When speaking of the creativity of blockchain, he believes that NFTs are, in particular, the best example of the democratization potential of blockchain.
“While most cannot buy a Picasso, they can own a part thereof. Governments must spur innovation, and steer away from being as strict as Asia/China and must make an effort to keep up in terms of regulating a framework.”
Concluding, Rösler encouraged us all to see that blockchain technology is way more than its application in fintech.
Panel discussion — tokenization & digital assets
Daniel Rutishauser, CEO of Tokengate, discussed the topic of tokenization, a rapidly expanding digital asset class created by blockchain. As one of the longest established tokenization experts focusing on banking grade and complex tokenizations across jurisdictions, Daniel spoke of the token economy.
He noted that, in recent years, he has been hearing from banks embarking on this journey. Investors are no longer just letting money sit in deposits but rather looking for new investments. For many, the allure of the token economy is that it brings liquidity through fractionalization. The clarity in regulation helps to issue and share tokens. He foresees a great need for banking services in this economy, such as professional custodial services. Corporates are rapidly advancing to the space, and this too will allow banks to take the journey with their corporate clients.
“Change entire value chains, enable new business models, and participate!”
As a near veteran of the space, Daniel advised that getting into the token economy can take up to a year, so all should grab the chance and act now. He also reminded delegates to keep an eye on the incredible nascent DeFi space, which already has 100b$ TVL — look into it!
Panel Discussion — tokenization & digital assets
Next Up, Chris Sinkey of Bittrex Global spoke about the mass number of retail traders currently active in the space. He brought up the fact that institutional traders are now coming in and providing a solid foundation of buoyancy. He felt the most significant change in mindset is the fact that users are now seeing blockchain and crypto use cases outside of the digital metaverse.
Evgeny Matershev of iVE.ONE commented on the big shift from the distrust of the digital realm into the more positive outlook that is a future force and that it’s great to see banks eager to start on new projects.
Panelists hotly debated the challenge of mass adoption, and a consensus was reached that the following barriers need fixing: the complexity of user experience, the fear of losing assets, and the fear of making mistakes. At this point, the utility issue is still a challenge outside of crypto itself. It became very evident in discussion that as both the physical and digital worlds merge in the metaverse, as is currently happening in gaming, then adoption will soar.
Regulation of digital assets was deemed a constant challenge — governance is required to decide: who owns it? Is it a security token or a currency? Regulators will need to get in line, and infrastructure is needed to make regulation a more straightforward process. The facts are that the understanding is low, legacy systems are there, and financial players are trying to determine if digital adoption is worth it for them.
While some are moving forward and many are screaming for it — such as wealth managers, we all need to remember that it took 200 years to build our present financial system, and here we are ten years in, so a great deal has already been accomplished!
Incentive-based educational resources are needed to support the industry through learning. There is a constant supply of tokens (assets) wanting to go digital but what is lacking is a level playing field across jurisdictions for their issuance and for the secondary markets’ ability to partake.
The panel agreed that when banks jump into this space and begin to issue digital tokens, there will always be a role for fiat, too, such as paying dividends. It was noted that Swiss banks have done it, and delegates were encouraged to engage with these Swiss banks.
“A great way for traditional banks to learn might be to bring crypto and blockchain businesses in as customers and learn from the experience!”
SUPER ALERTING — kids nowadays are using apps like Revolut, which has an inbuilt trading facility — this generation won’t come back to traditional banks!
Corporates are now looking toward the digital world to tokenize assets not only to create liquidity but also to engage and reward consumers. “It is time to go digital!”
Daniel Rutishauser encouraged delegates to start today with a small gesture — “if you haven’t already, install your first wallet on your phone today!”
Why Institutions Need To Get Serious About Cryptocurrencies
Chris Sinkey, Chief Business Officer at Bittrex Global, took the audience through his captivating journey from traditional businesses, such as Accenture and DocuSign, where he discovered the wonders of the smart contract. He works with one of the globe’s longest-established exchanges, Bittrex, which was founded in 2014, and continues to advance and drive positive change.
Bittrex has custody of $5–10bn in customer funds, and they are fully regulated and compliant as an institutional-grade platform. He sees blockchain as a transformative technology that is already causing disruption, such as lowering costs for remittances. He worries that only 20% of banks are really looking at implementing blockchain technology and feels that convergence is still only in mind. He challenged banks to get involved today and warned that if they do not, they will be left in the dust.
New Ways to Invest and Banking 4.0
An insightful and very determined panel discussion, here are some key takeaways:
Education, both bankers and investors need to self educate to understand the potential of blockchain as an enabler of greater efficiencies and profits. Stefan Kern of BitKern Group told delegates that “CV VC is a place where you can get this knowledge.” Olaf Hannemann added that he believes the onus is equally on the blockchain world to show and lead the way forward. Olaf reinforced the fact that blockchain is a catalyst technology that is enabling a variety of megatrends, such as AI, which together are driving the fourth industrial revolution. Michael Mildenberger added that events such as today are needed so that industries can begin to get to know each other and build a foundation to establish collaboration.
Mainstream, blockchain and the assets it creates are becoming mainstream. Investors are curious, and global media giants are covering the various asset classes. Michael Mildenberger of Yieldster said, “I am excited about blockchain technology being used in banking. We can now do things a lot more efficiently, which leads to better profits”. Dimitrij Gede of Iconic Holding added,
“Europe has to change or otherwise we are the slow car and we will be overtaken by Tesla.”
This was a reference to the fact that many American banks are already integrating blockchain as the catalyst technology driving the future.
Banks and investors cannot compete against the progress that blockchain is bringing. Engagement with the technology will be a matter of survival as we move generationally forward.
Olaf Hannemann explained that he is seeing an increase in inbound dialogue between financial market players, supported by curiosity, the high value of bitcoin, and a more positive tone from global media coverage.
Dmitrij Gede added that the contradictions, such as ‘dirty’ money, are shifting as people realize that blockchain has an application outside of cryptocurrency and is a game-changer that is fast-forwarding transparency & efficiency globally. It was agreed that there is an onus on Europe to quicken the pace and further illustrate how the technology is more than just cryptocurrencies.
How to get in? Investors need to feel comfortable, which is supported by good education. Panelists invited the audience to think of the early days of the internet, diversify your assets in terms of exposure, and work out long-term strategies and momentum-driven approaches.
Why invest in blockchain now? Blockchain is the basis of future digitization. Just as in the early days of the internet, it is time to get in now and shape the future. Olaf Hannemann reiterated that blockchain is a catalyst technology that enables many other megatrends, such as AI, machine learning, etc. All of which can only work properly through blockchain tech.
Regarding blockchains’ oldest asset class, cryptocurrency, the point was made that if you are a long-term investor and a smart trader — you ought to benefit because where there is volatility, there are trading benefits.
Dimitrij Gede spoke of the tax benefits, as blockchain can automate this process and generate a great deal of value for society. Olaf Hannemann added a fun fact — “you can pay your taxes in BTC in Zug and when this occurred, it sent a message to the world that we are open for business.” Michael Mildenberger expressed that everyone is chasing yield, and because we can do things more efficiently with blockchain, we will have a better outcome.
CV VC came to Euro Finance Week with an open mind and a welcoming heart. We were happy that we shared our mission — to demonstrate to guardians of the traditional finance world that the yield factor from blockchain is this: it is a catalyst technology enabling the convergence of all other technologies driving the Fourth Industrial Revolution. We are delighted that there will be evolving cooperation and sharing of learnings between the traditional and digital finance worlds.
Photo credit: dfv Euro Finance Group / Jose Poblete