This past week the Depository Trust and Clearing Corporation (DTCC) hosted their sold out Fintech symposium. If you’re in capital markets and technology, this is a great event. The DTCC team does a fantastic job keeping the agenda focused and brings in top notch thought leaders.
This event started a few years ago as a “Blockchain” event. The world was just learning about Bitcoin, distributed ledger technology (DLT), and how Blockchain was going to revolutionize the infrastructure that makes today’s markets function. Now in 2019 we’re still seeing the early part of the technology curve – many experiments, evolving technology, and various use cases that may…or may not…deliver value. Here are two big ideas that I think are important for us to learn.
First, is a quote from Tim Lind of DTCC. “You know why legacy systems are legacy, right? Because they work.” This simple truth is spot on. New technology is great and in the right hands with the right use case, new technology absolutely delivers value. However, one of the challenges with replacing legacy systems with new technology – be it DLT or something else – is the connectivity and network around it. The upstream and downstream systems. The external clients. The operational processes, though sometimes challenging, are at least managed fairly consistently in a legacy environment. Everything hits end of life and there are significant advantages to today’s modular, cloud-based, AI-powered platforms, but we should really look at these legacy-system ecosystems and learn from them.
Bitcoin is the second big idea for me. Admittedly, Bitcoin is not something we spend a lot of time thinking about nor working on at Kingland. However, keynote speaker Neha Narula of MIT opened all of our eyes to an important concept. From about 1974 to 1995, technology advanced through open protocols to facilitate the creation and adoption of the internet. What is the internet really? A capability of sharing “information” with anyone and anything around the world. What Narula suggests is Bitcoin is really no different.
We’re a few years in on a next wave of technology innovation that will allow billions of people around the world to exchange “value” with anyone and anything. What is money? It’s an accepted system for collecting and exchanging value. Will Bitcoin be the means to do this? It’s hard to tell, but it is extremely likely that innovation over the next 5 to 10 years will fundamentally change the way value is managed, exchanged, and shared throughout the world. And the world will fundamentally change for the 1.7 billion people that have no access to digital financial services (e.g. online banking, bill pay, investing).
These are the insights we think about. They don’t end up in our Platform tomorrow, but they do keep us focused on the future and working to dream up new ways to deliver progress for our large enterprise clients.
This article first appeared on Kingland’s blog on May 1, 2019.