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Finance

MULTI-CLOUD BONDS FINANCIAL SERVICES AND FINTECH INDUSTRIES

By DAVID BLESOVSKY, Chief Executive Officer at Cloudhelix

 

In the past, the financial services sector has held the reputation of being behind the curve when it comes to technology and digital transformation, but that is changing. Earlier this year, a report showed that 60% of financial services businesses will use multi-cloud to architect their IT environments within the next two years. Alongside this stat, agility tops the list of cloud adoption drivers (47%, compared to 32% of businesses overall). Being able to innovate quickly to capture new market opportunities and emerging technologies, such as AI and blockchain, shows how the bond between the two financial sectors is growing. Adaptation is at the heart of these partnerships, led by the need to gain ready-made customers, motivate growth with innovation, and avoid being left behind by the competition.

The traditional three pillars for IT in financial businesses are security, compliance and flexibility – reviewing these can help to understand where multi-cloud will come into its own:

 

Multi-cloud – an introduction

Multi-cloud has become a buzzword and it’s easy to lose track of the true meaning. Unlike a hybrid cloud, where you can use different platforms (such as public and private clouds) but with the same provider, multi-cloud allows you to use multiple platforms with multiple providers for separate workloads. Multi-cloud is broader than hybrid – you could have a hybrid cloud within a multi-cloud but not vice versa.

There are several reasons why you want to host workloads on entirely different cloud platforms or with different providers:

  • DAVID BLESOVSKY

    compliance for security and data protection policies

  • better data control
  • to avoid vendor lock-in
  • cost and performance optimisation
  • opportunity to develop new tools and services, such as AI and blockchain
  • flexibility to use the best environment for each workload

 

More security for your firm

Keeping all your business-critical systems with just one service provider is a bit of a gamble. There are multiple threats to the reliability of technology – cyber-attack, natural disasters, nuclear war!

A multi-cloud strategy increases resilience, it’s a solution that can be consistently deployed in the same manner, regardless of location. It improves cost efficiency as well as allowing you to leverage different services, ensuring each of your department’s critical functions are served and secure.

Public cloud can be used for big workloads with low compliance needs, whilst private cloud could be more compliant and efficient for data with security policies attached, and another set-up could be provided for dev testing and building etc.

There is a solution for firms that need to keep an on-premise product; the converged cloud stack brings the benefits of the cloud on-prem. While on-premise data centres perhaps aren’t the best way of working, there’s been a recent acceptance in the industry in the role of on-prem.

This is shown in products like AWS Outposts, which is Amazon’s version of the CCS. Historically, AWS have said ‘you can run anything on AWS, public cloud will be the way everything works eventually.’ However, AWS building an on-prem solution shows that on-prem is still important. We’ve seen how it can be used within the financial sector. When used in the right way, on-premise has a role, and is likely here to stay.

 

Compliance, no matter what

Compliance is a close second to security; financial data has always come with compliance policies, even more so now with recent changes in how data is stored and reported on.

43% of the financial industry sees multi-cloud architecture as a way to meet regulatory needs, and this can be met by working with providers who understand your compliance needs.

Part of compliance is documenting and proving an effective Disaster Recovery strategy. If your service is hosted on a single cloud provider’s infrastructure, a natural follow-up question from an auditor will be “What is your plan for when that cloud provider experiences an outage?” Having your solution spread across multiple cloud providers in an active-active configuration facilitates a satisfactory answer.

By introducing a multi-cloud strategy to your firm, you can make the most of the strongest services offered by each individual provider to ensure your business can handle almost any situation. Mission critical data can be held on the most suitable platform whilst other elements of your infrastructure can be run on another to ensure security and cost efficiency.

 

Flexibility, on your terms

Vendor lock in can occur easily when you use a single cloud service that restrains you from easily being able to transfer to another service.

This can happen because of introductory offers that have constraints in the fine print, not having a cloud strategy that allows for unexpected usage, using technologies or services that are incompatible with the common standard, or even long-term reliance on a provider, skill sets, or older systems and processes.

A multi-cloud deployment will mean that the cloud vendor’s native services cannot be used – instead, independent services are required. As an example, let’s imagine that your application requires a real-time data/event ingestion service. These services are natively available on public cloud, e.g. Amazon Kinesis, Microsoft Event Hubs and Google Pub/Sub. While you could write your application in three different ways to account for all three of these options, you might prefer to deploy your own equivalent solution using Apache Kafka. This would avoid being locked into the vendor-specific services and add flexibility to your deployment strategy – the software could even be deployed in the same way on private cloud infrastructure. The trade-off is that as you do not have a managed service from the cloud provider, you have an additional administrative overhead.

We know the pain of being trapped by a provider and it’s something a business shouldn’t have to deal with. Working with a provider who only has an allegiance to you, will allow you to utilise multiple services across different platforms whilst ensuring your flexibility comes with the peace of mind of dealing with a single company. This also provides you with more freedom when it comes to acquiring new fintech solutions as you adapt and grow.

 

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Finance

WILL BLOCKCHAIN REVOLUTIONIZE FINANCE?

By Ken Timsit, ConsenSys

 

Over the last 10 years, researchers, software developers, start-ups, and large companies have been conducting experiments aimed at determining whether networks based on blockchain technology can ultimately – in whole or in part – replace the infrastructure on which financial institutions and capital markets are built.

 

In today’s electronic databases, any information can theoretically be replicated at will. This is why most governments allow only regulated actors to keep records of digitized assets (banks, depositories), to avoid pitfalls such as the execution of misleading transactions or the creation of artificial assets. With blockchain, these pitfalls can be avoided at the source code of the technology, which is available to all members of the network. The creation of Ethereum enabled a more robust blockchain network capable of “smart contracts”, which once programmed, can run automatically without the results being modified or manipulated.

 

Contrary to what some critics argue, the potential of the blockchain is not the creation of a free and unregulated space in which everyone can invent new financial instruments. Rather, the potential lies in creating a much more efficient and globalized commercial and financial infrastructure, in which many layers of control and intermediation are no longer needed as they are replaced by transparent and immutable IT rules that ensure the same risk management functions.

 

For example, bonds are essential financial instruments on which a large part of our economy and savings are based. The issue and exchange of a bond requires the intervention of several dozen financial institutions (issuers, intermediaries and investors). Some regulated players in this intermediary chain exist mainly to ensure that it is possible to know, at any time, who holds each bond, in order to guarantee their rights to its bearers.

 

It is theoretically possible to simplify these stacks of operators by linking them to a global blockchain network, open to all stakeholders in the industry. The blockchain network can thus ensure at any time that the number of outstanding bonds corresponds exactly to the number of bonds issued, and that each exchange transaction is carried out without the risk of default.

 

The blockchain revolution is first and foremost the reduction of costs and delays caused by the current financial infrastructure. The blockchain revolution also creates innovation opportunities for consumers, savers, and investors.

 

 

The Web3 revolution, often used to refer to the blockchain revolution, will be driven by the reduction in transaction costs, allowing the emergence of new peer-to-peer business models that we are not yet able to accurately predict, but which will probably participate in a rebalancing of the relationships between financial institutions and their clients. Some international peer-to-peer payment and loan-to-peer savings investment models are already attracting increasing interest from the most sophisticated consumers.

 

Where are we in 2020?

Today, the blockchain revolution is still in its infancy. Transaction volumes through blockchain networks, public and private, are low compared to those of existing systems. The fixed costs of the technology are still relatively high, and the user experience leaves something to be desired.

 

However, innovations abound. It is already possible for me, from my smartphone, to buy digital assets whose value is equal to about one US dollar, and to lend them in three clicks to other users who will pay me between 1% and 10% per year for this service, depending on the type of platform.

 

The number of large operational business projects is still small, but very promising. Numerous international commodity trading players have joined forces to create Vakt and komgo, two platforms that contribute to a significant simplification of trade and oil financing. Similar and competing projects, Voltron and Marco Polo, are being launched. On the corporate side, the Capbridge 1x platform (Singapore) already allows shares to be traded on an Ethereum blockchain network. Other important projects such as LiquidShare (France), SIX Digital Exchange (Switzerland), Daura (with Deutsche Borse and Swisscom in Switzerland), Synapse (Hong Kong Stock Exchange) are in preparation. The World Bank, Société Générale and Santander have issued bonds on an Ethereum blockchain network. These initiatives are still experimental but have attracted significant interest from financial institutions around the world.

 

And of course, many projects aim to revolutionize global payments by creating digital assets on blockchain networks that are fixed in Euros, U.S. Dollars or other currencies, such as those of the Monetary Authority of Singapore, the South African Reserve Bank, and Union Bank of the Philippines. Since the announcement of the Facebook-initiated Libra project, many governments have expressed concern about the possibility of private companies controlling global payment flows, and have asked their domestic financial institutions to redouble their efforts to explore competing initiatives.

 

All of this is to say that adoption is happening, albeit gradually. The middlemen and intermediaries of the financial world will not be replaced overnight. Moreover, the exact formation or architecture of the new financial system is impossible to predict with accuracy. However, it’s safe to say that blockchain will enable a financial system that is more efficient and yields more value-add to consumers, users, and investors.

 

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Finance

RECOLLECTING 2019 CRYPTOCURRENCY TRENDS & LOOKING FORWARD TO 2020

Marie Tatibouet is the CMO at Gate.io

 

It has been a bold and progressive year for the digital asset market with exciting announcements flowing in from technology behemoths and government bodies around the world. However, Facebook’s launch announcement of Libra (though they are now facing regulatory issues) and China’s new cryptocurrency law caught all the attention, affecting the Bitcoin price, and the overall market sentiment.

In 2019, the global market saw several catalysts emerging for mainstream adoption despite increased scrutiny around several burning issues such as wash trading and security breaches. For over 400 cryptocurrency exchanges in the world, being able to constantly improve on aspects around user experience and fund security is the only way to be sustainable. However, only a handful have real trading volume and technical expertise to build strong trust in the community. For instance, global wash trading has been the hottest topic of discussion in 2019 but new rankings on CoinMarketCap clearly indicate that the industry is working towards eliminating market manipulation.

 

Looking back at 2019

In 2019, digital asset organisations have constantly innovated to attract users but at the same time, the trading process has become increasingly fragmented, spiking the time gap between new users becoming long-term users.

 

Marie Tatibouet

Holding & Lending Funds

Since 2014, the Bitcoin margin trading market has expanded from $10 million to $100 billion. Margin trading has been a great use case in the cryptocurrency space. Many exchanges launched the feature to provide diversity to the trading experience and attracting a huge amount of users to the platforms. It allows traders to multiply their profits on successful trades, providing a range of possibilities for both profits and losses.

Staking is a process where users can buy digital assets and earn interest by keeping (holding) them in a cryptocurrency wallet for a particular period of time. It has proved to be a strong use case for digital asset companies as it encourages user participation. In 2019, staking programs brought stable earnings for cryptocurrency investments made by the users. For instance, HODL & Earn launched by Gate.io in August 2019 has been bringing stable earnings for cryptocurrency investments made by its users. The competitive advantage for HODL & Earn is its annual interest rate, which is as high as 32%.

 

IEO

Crowdfunding as an approach to build and grow products has seen a lot of traction over the last decade or so. One of the highlights this year was the emergence of “Initial Exchanges Offerings”, more commonly termed as IEOs, an alternative to traditional IPOs where companies can raise funds by selling a quantity of digital assets to investors, supervised by cryptocurrency exchanges. With over 1.5 Billion funds raised, IEOs shook the entire cryptocurrency space in 2019.

Owing to the richness and variability that we have seen so far, there has been no one clear winner to pick, but there’s also no ignoring the leaders; Gate.io has the second best average IEO returns, raising over 80 million dollars in its first 5 projects and has similar offerings panned out for 2020.

 

Source: https://medium.com/@neironix.io/top-8-largest-ieo-whats-happening-to-them-now-f7e60a638dda

 

Deals and Discounts 

Discount deals are being increasingly leveraged by digital asset companies, encouraging users to maximize their capital. Holiday seasons such as Black Friday are packed with jaw-dropping discounts. However, as an industry, we should aim to integrate discounts in digital currencies into the mainstream world, which would bring price stability.

 

Dynamic User Relationship

Cryptocurrencies are being taken seriously and companies are designing consumer-specific strategies. It is a great indication of the fact that more and more people are interested in trading digital assets. However, we have a long way to go when it comes to tackling the industry challenges and unlocking value for the entire ecosystem.

 

Regulation, Security, and Mass Adoption 

Central banks of the US, Europe, China, and Ghana are looking at creating their own central bank digital currencies, putting a structure to the adoption of the blockchain technology across finance and other industry verticals. Japan’s recent regulation amendments, China’s new crypto law have laid the right frameworks for mainstream crypto adoption.

While we have major countries pushing for the mainstream adoption, security remains a major concern. Cryptocurrency thefts and frauds in Q3, 2019 annual stand at USD 4.4 billion and this will only increase if fund safety mechanisms aren’t strengthened. Therefore, the strongest will survive as far as digital asset security is concerned.

Nonetheless, blockchain technology is helping to create an innovative and accessible financial system around the world and its mainstream adoption is closer than we can fathom.

 

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