governance – FinTech and Blockchain Law Watch

Rometty Touts Transparent Governance for Blockchain

Nov 08 2016

Ginni Rometty, CEO of IBM, calls for a system of transparent governance for blockchain in a recent Wall Street Journal Commentary. Rometty predicts that blockchain, once widely adopted, will transform the world. She notes what readers of this blog already know, that financial institutions have become the early adopters of distributed ledger technologies. However, blockchain’s potential is much, much greater than in fintech alone. For example, IBM has estimated that applying blockchain to global supply chains could result in more than $100 billion in annual efficiencies. She describes projects in which blockchain is used in car leasing and ride-sharing in order to speed up the transactions and cut out newly-redundant intermediaries like Uber and Lyft.

In order for us to achieve all of the vast potential of blockchain, Rometty argues that the new technology needs a system of transparent governance developed by not-for-profit groups similar to the way the internet was developed in the 1990s. She notes that IBM and more than 600 firms have joined or applied to join the Linux Foundation’s Hyperledger, an open source collaborative effort created to advance cross-industry blockchain technologies. Hyperledger is attempting to create communities of software developers building blockchain frameworks and platforms to ensure the transparency, longevity, interoperability and support needed to bring blockchain into mainstream commercial adoption. Rometty believes this effort will give businesses the confidence to widely adopt blockchain.

Rometty’s final challenge to readers is to ask themselves, are they going to be the disrupter or the disrupted when it comes to blockchain.

Regtech Earns a Name

Sep 12 2016

By Susan Altman

Technology solutions for bank regulatory requirements have been around for decades, but their soaring popularity has led to them earning their own nickname within the fintech world: they’re now “regtech” solutions, according to a new report issued by Bain & Co. in the American Banker. Regtech products are designed to benefit banks’ efforts to comply with growing regulatory burdens and improve internal governance controls. Bain estimates that governance, risk and compliance costs account for 15% to 20% of the total “run the bank” cost base of most major banks. It’s no small wonder that banks are struggling to devise a robust and efficient approach to compliance and are outsourcing the implementation and hosting of advanced compliance tools with nimble regtech-focused outside vendors. Bain has identified more than 80 emerging regtechs that extract and structure data, integrate data from banks’ proprietary systems, third-party data providers and public sources, and crunch the data in automated, scalable ways. Artificial intelligence, or machine learning, continuously improves the quality, precision and reliability of the insights that emerge.

Bain predicts that banks’ relationships with regtechs will be significantly shaped by regulators, in the form of governance, risk and compliance standards and approval of proposed solutions. As new requirements go into effect, banks will need to continuously assess the level of functionality, complexity and efficiency of current technology, systems and data. And did we mention, this all has to be done in a very secure environment?

Tag:governance