Standard Bank gets serious about Bitcoin, Blockchain
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CAPE TOWN – Standard Bank said on Monday, that the financial institute would be launching a number of events to help explain the benefits and risks of emerging technology in the financial services sector.
Naomi Snyman, Blockchain Lead at Standard Bank, said that not a day goes by without talk about how Blockchain will change the financial services industry and the world as we know it.
Naomi Snyman. Supplied
"You could say that Blockchain, and its sibling Bitcoin have become the new “IT” words. Decentralisation is an opportunity and a threat, so it’s no surprise that we feel a mixture of anxiety and curiosity about the new technology", Snyman said.
Snyman heads up internal think tanks, wider collaboration, and use-case studies for business applications for the technology.
She has been in the position for the past three months but has been with the bank since 2008.
Below Snyman answers some of the major topics within the sector.
What does the title Blockchain Lead mean?
“I lead Blockchain use cases and thought leadership from a facilitation and co-ordination point of view for Standard Bank Group. I am also a member of the South African Financial Blockchain Consortium, which includes Standard Bank along with other local financial institutions, our Regulator and broader industry players. I also represent Standard Bank on the international R3 Consortium, which creates and drives Blockchain projects across members banks around the world."
“Though structurally I fall into the Emerging Payments space, the work we do on Blockchain stretches further than just looking at Payments but also Trade Finance, Digital Identity and Global Markets. A lot of our use cases are in Corporate and Investment Banking, and probably our biggest and most significant Blockchain opportunities are with ICBC, expected to be finalised at the end of 2017, where Blockchain will provide Standard Bank the opportunity to revolutionise data and asset transfers between China and Africa."
Naomi compares Blockchain to the Internet.
She said: “If we think about how the Internet started; we didn’t understand why we needed it or how it even works. But it has completely revolutionised our lives. The same counts for Blockchain.”
Blockchain originated from the desire to make peer-to-peer payments without a bank. Hence, the cryptocurrency Bitcoin was one of the first Blockchain protocols.
Its intent was to completely disrupt, allowing peer to peer transactions to take place without the need of a third party. It is really important to make the distinction though between Cryptocurrencies such as Bitcoin and Blockchain.
The benefits that Blockchain provides are much wider and more appealing than just Cryptocurrencies.
“In this world, you have to make peace with the fact that you will be disintermediated, your way of making money now and operating will be disrupted, because we are in a space where everything is being decentralised. Blockchain basically is a piece of technology that allows users to interact directly with one another through nodes instead of through a central party. Creating new networks and platforms are definitely the biggest benefits of this technology. The spirit of Blockchain is collaboration,” Snyman said.
She explained that Blockchain uses the idea of trust.
“If you think back to when you were a child, the key rules your parents taught you about strangers was: never get in a stranger’s car or go into a stranger’s home,” she said.
“The great thing about technology is that it has led to an evolution of trust. Think about Air B&B or Uber, these businesses are based on getting into a stranger’s car and going into a stranger’s home."
“In the past, trust was largely localised. We trusted our community, tribe or village. In the industrial age, we trust institutions and intermediaries such as governments and central banks. Trust is now distributed. We can trust people we don’t know. That’s what Blockchain is. It allows you to trust, interact, and transact with people you don’t know because of its key features.”
Blockchain’s decentralised nature improved security because no single server can be hacked.
Everybody saves a copy of a specific file or transaction or asset onto the Blockchain (also called the Distributed Ledger) which needs to be verified by all the users that are part of that network, so you would need to hack everybody on that chain to corrupt a transaction. Blockchain uses the highest level of encryption called Cryptography.
"It is transparent and immutable, allowing us to track and trace transactions, asset movements, where customer data is stored, or how customer data is moved between parties. That’s because each transaction entry onto the distributed ledger has a digital signature and timestamp. Each transaction is then verified by all the network users across the chain and how transactions are verified or validated are based on the rules that the users in the network agreed upon."
Why it’s important to Standard Bank
The bank said that it helped them to collaborate across industries and geographies.
"The power of a Blockchain is its network."
Standard bank has been collaborating with banks across our two consortiums, the South African Financial Blockchain Consortium, and R3. Blockchain formed part of our broader digitisation strategy, and the bank hopes to find new business use cases for Blockchain.