WEF - The future of financial infrastructure

1 The future of financial infrastructureAn ambitious look at how blockchain can reshape financial servicesAn Industry Project of the financial Services Community | Prepared in collaboration with DeloittePart of the future of financial Services Series August 2016 ForewordConsistent with the World Economic Forum s mission of applying a multistakeholder approach to address issues of global impact, creating this report involved extensive outreach and dialogue with the financial Services Community, Innovation Community, Technology Community, academia and the public sector. The dialogue included numerous interviews and interactive sessions to discuss the insights and opportunities for collaborative thanks to the industry and subject matter experts who contributed unique insights to this report. In particular, the members of this financial Services Community project s Steering Committee and Working Group, who are introduced in the Acknowledgements section, played an invaluable role as experts and patient are also very grateful to Deloitte Consulting LLP in the US, an entity within the Deloitte1network, for its generous commitment and support in its capacity as the official professional services adviser to the World Economic Forum for this ECONOMIC FORUM | 20161 Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities.

2 DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see a more detailed description of DTTL and its member firms. Please see a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial , investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

3 Deloitte shall not be responsible for any loss sustained by any person who relies on this feedback or questions:R. Jesse McWaters, Lead (212) 703 6633 The Distributed Ledger Technology project is the most recent phase of the Forum s ongoing Disruptive Innovation in financial Services work3 WORLD ECONOMIC FORUM | 2016 THE future OF financial SERVICESThe future of financial Services project explored the landscape of disruptive innovations in financial services, provided the first consolidated taxonomy for these disruptions, and explored their potential impacts on the structure of the industryBEYOND THE future OF financial SERVICESThis phase of the disruptive innovation work explores two topics with key potential as foundational enablers of future disruption20152016 This project explores the potential for distributed ledger technology to transform the infrastructure of the financial services industryThe future of financial infrastructure .

4 An ambitious look at how blockchain can reshape financial servicesA Blueprint for Digital Identity: The Role of financial Institutions in building Digital IdentityThis project explores the potential for digital identity in financial services and beyond and lays out a blueprint for the implementation of effective digital identity systemsContents4 WORLD ECONOMIC FORUM | SummaryContext and Case Deep : Global : P&C Claims and Lending: Syndicated and Lending: Trade Raising: Contingent Convertible ( CoCo ) Management: Automated Management: Proxy Provisioning: Asset Provisioning: Equity Post 1 AcknowledgementsWORLD ECONOMIC FORUM | 20165 Anju PatwardhanVenture Partner, CreditEaseDavid PuthChief Executive Officer,CLS Bank InternationalWilliam SheedyGlobal Executive, Corporate Strategy, M&A, Government Relations, VisaDieter WemmerChief financial Officer, AllianzAcknowledgementsMembers of the Steering Committee6 WORLD ECONOMIC FORUM | 2016 The following senior leaders from global FIs provided guidance, oversight and thought leadership to the future of financial Services series as its Steering Committee.

5 Kim Hammonds Global Chief Operating Officer and Chief Information Officer, Deutsche BankJason HarrisChief Executive Officer, International Property and Casualty, XL GroupMichael HarteChief Operations and Technology Officer, BarclaysAxel LehmannGroup Chief Operating Officer and Member of the Group Executive Board, UBSR obert ContriVice Chairman, Deloitte & Touche LLPAnn CairnsPresident, International Markets,MasterCardDavid Craig President, financial and Risk,Thomson ReutersJohn Flint Chief Executive Officer, Retail Banking and Wealth Management, HSBCA cknowledgementsMembers of the Working Group7 WORLD ECONOMIC FORUM | 2016 The project team would also like to acknowledge the following executives of global FIs who helped define the project framework and shape strategic analyses as its Working Group:Victor MatarranzSenior Executive Vice President, Strategy, and Executive Chairman s Office, SantanderNeil MummVice President, Corporate Strategy, VisaMax NeukirchenManaging Director and Head, Strategy, JP Morgan ChaseChristine O ConnellGlobal Head of Strategy, Risk, Thomson ReutersRobert PalatnickManaging Director and Chief Technology Architect, DTCCK osta PericDeputy Director, financial Services for the Poor, Bill & Melinda Gates FoundationJustin PinkhamSenior Business Leader, Strategic Initiatives, MasterCardBob ReanySenior Vice President and Group Head, Identity Solutions, MasterCardPeter RutlandPartner, Global Co Head of financial Services, CVC Capital PartnersNicolas de SkowronskiChief of Staff,Bank Julius BaerHuw Van SteenisManaging Director and Head, financial Services Research.

6 Morgan StanleyColin TeichholtzPartner and Portfolio Manager, Pine River Capital ManagementFabien VandenreydtGlobal Head, Securities Markets, Innotribe &the SWIFT Institute, SWIFTTom BrownPartner, Paul HastingsChristof EdelGlobal Head, Strategy and Business Development, financial , Thomson ReutersRob Galaski (Project Advisor)Head of financial Services,Deloitte CanadaDorothy HilleniusDirector, Corporate Strategy, INGMarc Lien Director, Innovation and Digital Development,Lloyds Banking GroupMatthew LevinExecutive Vice President and Head, Global Strategy, Aon CorporationLena Mass Cresnik, PhDHead, Innovation, Strategic Product Management, BlackRockAcknowledgementsList of subject matter experts8 WORLD ECONOMIC FORUM | 2016In addition, the project team expresses its gratitude to the following subject matter experts who contributed their valuable perspectives through interviews and workshops (in alphabetical order).

7 Meyer AaronBank of CanadaMark AdamsAustralian Securities and Investments CommissionMark AdamsNational Australia BankKeith AjmaniTD Bank GroupAndrew AlexandratosAustralian Prudential Regulation AuthorityRobleh AliBank of EnglandJeremy AllaireCircleSarah AndrewsThomson ReutersAngus ArmourBusiness Council of AustraliaAkhtar BadshahCatalytic Innovators GroupMurad BaigDeloitte LLPS teven BardyAustralian Securities and Investments CommissionNick BeecroftLloyd's of LondonAdi Ben AriApplied BlockchainPeter BergVisaMichael BodsonDepository trust & clearing CorporationSven BossuSWIFTA ndre BoysenSecureKey TechnologiesCarolyn BurkeRBCRoss BurnettMacquarie GroupOliver BussmanUBSC laire CalmejaneLloyds Banking GroupNick CaplanFaster PaymentsAlicia CarmonaIdentity2020 Michael CaseyMIT Media LabStephen CatchpoleMacquarie GroupJavier CelayaBanco Santander ChanDepository trust & clearing CorporationChristophe ChazotHSBC Bank PlcIlsa ChristAustralian Transaction Reports and Analysis CentreLynne CockerellReserve Bank of AustraliaJames ColacoDeloitte CanadaRobert CranmerDeloitte CanadaNeil CrossDBS BankStephen CrossAonDame DamevskiinpayAndrew DavisStone & ChalkShellie DavisCommonwealth TreasuryAvery DellheimCircleThomas DeLucaAMP Credit TechnologiesNigel DobsonANZK irsten DunlopSuncorp GroupJohn EdgeIdentity2020 Anna EwingNasdaqScott FarrellKing & Wood MallesonsUsama FayyadBarclaysDaniel FeichtingerDigital Asset HoldingsKarin FlinspachStandard CharteredBrian FordeMIT Media LabMary Ann FrancisWiproConan FrenchInstitute of International FinanceSteve GallagherAustralian Prudential Regulation AuthorityEmilio Garcia de la SierraSantander InnoVenturesNicholas

8 GiuriettoAustralian Digital Currency & Commerce AssociationJulian GormanGSMAU dayan GoyalAnthemis Group SAMichael GronagerChainalysisJoe GuastellaDeloitte Consulting LLPAran HamiltonVantageAldila HanantoTelstraAnna HarperSocietyOneAdrienne HarrisCouncil of Economic Advisers AcknowledgementsList of subject matter experts (cont.)9 WORLD ECONOMIC FORUM | 2016In addition, the project team expresses its gratitude to the following subject matter experts who contributed their valuable perspectives through interviews and workshops (in alphabetical order):Oliver HarveyAustralian Securities and Investments CommissionAndrew HauserBank of EnglandIan HillWestpac GroupSteven HolzerCitiMatt HooperBarclaysChuck HounsellTD Bank GroupGys HymanDeloitte Consulting LLPRaj IyerBloomberg LPChetan JainInspira EnterpriseKevin JohnsonSWIFTA shton JonesMacquarie GroupEiichi KashiwagiBank of Tokyo Mitsubishi UFJS teffen KernEuropean Securities and Markets AuthorityAndrew KeysConsensysDan KimerlingSilicon Valley BankPhilipp KroemerCommerzbank AGMatthias KronerFidor Bank AGAshwin KumarDeutsche BoerseJo LambertPaypalJo LangR3 CEVC hris LarsenRippleMikkel LarsonDBS BankMatthew LeavenworthBank of AmericaIan LeeCiti VenturesLeo LipisLipis AdvisorsJoel LipmanDeloitte AustraliaJames LloydEYSharon LuTyro FinTechHubJoseph LubinConsensysAdam LudwinChainChristian LundkvistConsensysJoanna

9 MarathakisDeloitte Transactions & Business Analytics LLPB lythe MastersDigital Asset HoldingsLukas MayTransferwiseRichard McCarthyPerpetual LimitedMark McDonaldQICTodd McDonaldR3 CEVC laire McFarlandCommonwealth Department of Industry, Innovation and ScienceRichard MillerDeloitte AustraliaJohn MossUBSE ddie NiestatNovantasHanna NilssonAllianzKevin NixonDeloitte AustraliaMadan OberoiINTERPOLDan O'PreyDigital Asset HoldingsCheryl Parker RoseConsumer financial Protection Bureau Bharat PatelAustralian Securities and Investments CommissionJon PerkinsonDeloitte AustraliaGuy PiconeSuncorp GroupEric PisciniDeloitte Consulting LLPRick PorterDeloitte & Touche LLPDan QuanConsumer financial Protection Bureau Dilan RajasinghamCommonwealth BankRhomaios RamDeutsche BankSuresh RamamurthiCBW BankDilip RaoRippleTara RichardsNational Australia BankAlex RinaldiDeloitte CanadaAlex RozmanDeloitte & Touche LLPW iebe RuttenbergEuropean Central BankJoel SacmarDaonJoy SavageDeloitte CanadaAcknowledgementsList of subject matter experts (cont.)

10 10 WORLD ECONOMIC FORUM | 2016In addition, the project team expresses its gratitude to the following subject matter experts who contributed their valuable perspectives through interviews and workshops (in alphabetical order):Rocky ScopellitiTelstraAngus ScottEuroclearSabrina SdaoDeloitte CanadaAnton SemenovCommerzbank AGBeth ShahDigital Asset HoldingsRajesh ShenoyCitiMakoto ShibataBank of Tokyo Mitsubishi UFJM atthew SpokenucoElizabeth StarkLightning NetworkMaxwell SuttonReserve Bank of AustraliaPaul SzurekBlockchainMichael TangDeloitte CanadaDon TapscottThe Tapscott GroupAlison TarditiCommonwealth Superannuation CorporationSimon Taylor11:FSAdizah TejaniLevel39 Craig TillotsonFaster PaymentsKeith TippellSWIFTM arcus TreacherRippleAlan TseCommonwealth TreasuryHedi UustaluNasdaqPeter Vander AuweraSWIFTW ayne VaughnTierionChris WasdenUniverity of UtahCasey WilcoxParetixShane WilliamsUBSGreg WilliamsonJPMorgan Chase & WilsonBarclaysLawrence WintermeyerInnovate FinanceJerry YohananovSocietyOneTom ZschachCLS BankAcknowledgementsProject team and core teamProject TeamThe The future of financial infrastructure : An ambitious look at how blockchain can reshape financial services project team includes the following individuals:World Economic Forum Project TeamJesse McWaters, Project Lead, Disruptive Innovation in financial ServicesGiancarlo Bruno, Senior Director, Head of financial Services IndustriesMichael Drexler, Senior Director, Head of I