Future of Blockchain and DLT in Financial Services

Cliff Evans, Capemini
Rohit Sabikhi, Capgemini
London, November 23rd
#CWIN17
What is the future with
Blockchain and DLT

2© Capgemini 2017. All rights reserved |CWIN Blockchain Presentation
Agenda
 The opportunity and challenge from Blockchain and Distributed Ledger technology
 Where will success come from
 A horizontal value exchange example, leveraging the Open Banking opportunity
 A supply chain and finance example, leveraging the traceability opportunity
 Conclusion
Blockchain and DLT have showed the potential from both
new technology and new business models
where will this take Financial Services?

Intermediary : Trust, not truth DLT : Truth, not trust
Data types
• Transaction data
• Any type of data
DLT Core attributes
• Immutability
• Consensus
• Auditability
• Transparency
TODAY TOMORROW
Distributed Ledger Tech (DLT) – Core Concept

What Who How
Private Securities Capital Markets Firms Digital Asset ledger for issuing private securities to investors
Syndicated Loans Lenders and Borrowers Shared loan ledger allows lending syndicate to form and
arrange loan
Ripple Integration Banks and Payment
Service providers
Connector for lower cost ‘peer to peer’ Foreign Exchange
between banks
PSD2 Compliance Banks, Payment
Services, Customers
Authorizing access to customer bank accounts by payment
providers
Business Identity Small Businesses,
Institutions
Businesses control ‘self-sovereign’ business identity
information, verified and shared.
Fiat - Relay Users of ‘Dapps’ and
Banks
Distributed app users able to ‘Cash-out’ from cryptocurrency
more easily.
Loyalty Consumers, Retailers,
Card Providers
Digital loyalty point wallets and decentralized exchange. ‘Pop-
up’ coalition loyalty schemes.
Social Loyalty Communities, Charities Charitable / welfare donation and non-cash value earning and
redemption for the financially excluded to improve social
welfare
Examples of Early Successes on Blockchain

Business
Logic Layer
Smart
Contracts,
Encryption &
Consensus
Blockchain
Layer
Public or Private
Blockchains
Technology
Platform
Providers
Consortia Based
Platforms
Physical
Layer &
Cloud
Hosting
Cloud Services
Proof of
Work
(P)BFT
Proof of
Stake
IBM
BLUEMIX
CUSTOMOR OR OR
1
• Payments & Loyalty Programs
• Post Trade & Back Office Automation
• Trade & Supply Chain Finance
• Syndicated / Commercial Lending
• Asset Management & Servicing
• Structured Products & Bespoke Bilateral Trades
• Identity Management & Attestation participation
• Fraud Detection / Dispute & Arbitration Management
• Digital Records Management / Proof of Ownership
• KYC / AML as part of broader Client Onboarding
Value Exchange Information Exchange
The DLT ecosystem continues to rapidly evolve
Enterprise Ethereum

Emerging areas of investment
• Identity – Social Identity
• KYC
• Payments and horizontal value exchange, such as tokens
• Post trade settlements
• New forms of Finance and Trade Finance, linking to supply chain
• Insurance Smart Contracts and leveraging IOT

Horizontal Value
Exchange - Loyalty

New Business Models: Loyalty Intermediary with DLT
Bank X
Administered
Blockchain
Administrators Role:
 Centralized administration via
Blockchain
 Initiates points generation based on
Electronic Payments transactions
flowing through card system
 Creates trusted environment for multiple
merchants to participate
 Validates transactions (fraud prevention)
Merchant Role:
 Responsible for loyalty rules
 Links loyalty solution to its personal
rewards exchange solution
 Validates transactions (fraud prevention)

• Enhanced consumer
(mobile) experience
• Immediate access to Balance
Information
• New capability to Transfer
Points
• New capability to define
Market Prices
• Decentralized nature provides
better security against hacks
• A Cost-effective solution
for a Loyalty Solution
• Standardized tracking of
loyalty points across different
merchants
• Smart contract capabilities
• Templates and API’s for fast
deployment
• Provides option to “Buy Back”
or create other incentive
schemes for usages
• Applied innovation of
Digital Currency
• New business model –
add on service
• Growth in electronic
payment services
• New SAAS offering that
creates stickiness
• Transparent database,
auditable by many
New Business Models: Loyalty Intermediary with DLT

Supply chain and
Trade Finance

Blockchain for Supply chain: Better traceability and
transparency, ultimately allowing for lower costs
Manufacturer
Insurer
Govt Agencies
Logistics
Warehouse
Retailer
Ports
Customs
Consortium
administered
blockchain
Reduce or eliminate fraud by maintaining cross-party visibility
across the ledger. If one element is tampered with, everybody
can see.
Improve inventory management by keeping traceable
and clear records of each transaction, receipt and
Reduced delays from paperwork. Everything is
automated, be that in the form of smart contracts or
other records attributed to the product.
Identify issues faster. If there are problems with the
delivery and distribution of products within the supply
chain, these can be flagged immediately and supply
issues can be resolved more quickly.
Increase cross-party trust. As there is true visibility for all
parties throughout the supply chain, and issues can be flagged
immediately, more trust can be created between parties enabling
them to further business opportunities.

Blockchain for inter-company accounting allows faster
and more efficient reconciliation of group accounts
Inter-company accounting is how two branches of the same company come together to bring the balance of the overall general ledger to zero. It is traditionally highly complex and
is therefore operationally expensive, open to discrepancies and errors and time-consuming.
Blockchain solutions can improve company accounting by applying a distributed ledger that is immediately traceable across businesses:
Real-time settlement of inter-
company accounts
Because accounts are recorded
on a distributed ledger,
settlement can be made
instantaneously rather than over
the course of days or weeks with
a general centralised ledger.
Reduction or elimination of manual
reconciliation
Reconciliation on the Blockchain is fully
automated. It is estimated that banks
lose 50 – 100 days a month on
reconciling differences (EY, 2017). With a
shared ledger, transactions can be
identified at source so time is not lost
finding when and where these occurred.
Inter-company transparency
Because the ledger is visible to all, all
companies have to be transparent with
each other. In addition to added trust
between different branches of the
same company, this will prevent
financial trickery that has had negative
consequences for businesses in the
past.
Manual processes
Invoicing, manual calculation of value
of goods and other processes extend
the length of time spent in inter-
company accounting further, costing
businesses more money.

Inter-company accounting Example: How does it work?
Company A
Company B
Company A places
order with
company B
1 receives order
and notify
company A of
delivery dispatch
2
Intracompany Blockchain
Using coded smart contract,
terms of transactions are defined
ERP and accounting
systems/ledgers
systems in both
companies Updated,
using info in shared
ledger
5
Transactions along with relevant
Documentations recorded
in distributed ledger
Using smart
contract, value of
trade is
determined and
invoice issued
3
Internal ERP
and Ledger
Using smart
contract, Transaction
is reviewed and
payments settled
4
Internal ERP
and Ledger
Taxmen's,
Auditors

Conclusion

The 5 Pillars of DLT Innovation
DLT Research
and Thought
Leadership
POV Design &
Development
Partner
with leading
DLT
Start-ups
Participate
in leading
Open Source
initiatives
Capgemini released
“Evaluation
Framework” (2015)
and a Viewpoint on
“Smart Contracts”
(2016)
Capgemini’s
network of Applied
Innovation
Exchanges (AIE)
offers a unique
setting for POV
elaboration
Capgemini
collaborates with
leading DLT start-ups
(e.g., Symbiont,
BigChainDB)
Capgemini
continues to
expand its team of
DLT experts
Capgemini participates
in leading open source
distributed ledger
projects (Hyperledger,
R3)
Build a team
of DLT
Experts

Conclusion
Bitcoin and Blockchain showed the potential from both
new technology and new business models
where will this take Financial Services
Blockchain and DLT models are moving into specialist production, when it
becomes a volume consumer application then we move to a step change

A global leader in consulting, technology services and digital transformation,
Capgemini is at the forefront of innovation to address the entire breadth of clients’
opportunities in the evolving world of cloud, digital and platforms. Building on its
strong 50-year heritage and deep industry-specific expertise, Capgemini enables
organizations to realize their business ambitions through an array of services from
strategy to operations. Capgemini is driven by the conviction that the business
value of technology comes from and through people. It is a multicultural company
of 200,000 team members in over 40 countries. The Group reported 2016 global
revenues of EUR 12.5 billion.
About Capgemini
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Copyright © 2017 Capgemini. All rights reserved.
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Future of Blockchain and DLT in Financial Services

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