By Mariana Gómez de la Villa, Head of Wholesale Banking Blockchain, ING.
Mariana, can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?
I’m the global head of ING’s Blockchain program, with overall responsibility for driving research and development of Distributed Ledger Technology as well as capitalizing on its potential in order to unlock mass-scale value. Under my leadership, the Blockchain program has delivered over 40 proofs of concepts and projects in collaboration with the following business areas: payments, trade finance and working capital solutions, financial markets, post-trade, bank treasury, lending, compliance and identity.
I’m also responsible for setting up long-term purpose and vision, including the governance of the program within the organization. I’m an active leader in global consortia, outlining the Distributed Ledger Technology strategy and envisioning market landscapes. Part of my accountabilities include the definition of products, services and business models, as well as foresight to business, technology, leadership communities and international stakeholders, including regulators.
At Risk EMEA 2018, you will be speaking on your insight regarding ‘Understanding uses and leveraging the opportunities available with Blockchain technology across risk management practices’. Why is this a key concern right now? And what are the essential things to remember?
Risk is an inherent consequence of information asymmetry. While we as a society have developed tools and processes to monetize information asymmetry, another consequence is that this in-transparency can also be very dangerous. As the 2008 global financial crisis has shown us too well. As it stands, having in-transparent / opaque systems is no longer a luxury we have as financial institutions. Blockchain’s core promise is to provide that much needed transparency mainly by reducing complexity. In essence, if you are able to use a single source of truth across a wide variety of entities, clear provenance and full audit trail goes a long way towards reducing risk. Risk management practices will need to adapt to this new way of creating and managing information, in a broader more transparent global ecosystem.
Can you briefly explain the importance of incorporating blockchain technologies into day to day activities across the enterprise?
In the case of ING as with any other multinational company, with operations in tens of countries and millions of customers, internal (as well as external) processes suffer from multi layers of checks and reconciliation. This is also a consequence of structures that tend to be siloed and isolated. Re-iterating on the above, being able to rely on a single source of truth between entities (be them internal or external) provides immediate and tangible benefits, in the form of lowering cost and inefficiency. It also serves as a visible implementation of new way of interacting/ doing business: that of decentralized business models. By adopting these types of processes internally, the organization will be better able to reinvent themselves and be prepared for a decentralized future.
In your opinion, what is one of the main disruptions to mainstream transactions?
In the area of payments for example, correspondent banking is still the dominant model. While tried and tested, it is not without its drawbacks. End to end visibility and transparency is difficult to achieve and increases the strain on our organizations to best deliver fast and cheap international payments towards out clients. It’s not too far to imagine a world where established players like ourselves would need to change the way we offer our services and conduct business. Another example could be how letters of credit may be obsolete as Delivery vs Payments models are integrated directly at the foundational, ledger level.
Without giving too much away, could you please give an insight in to the leveraging opportunities available with Blockchain technology.
By carefully distinguishing between blockchains and distributed ledgers, the latter being the main area of interest for ING, we are now seeing very large potential many of our core areas of activity: Transactional services, financial markets, lending services etc. One of our most well-known efforts is Easy Trading Connect: in this offering, we are aiming to disrupt traditional Energy commodity finance by providing a single platform where buyers, sellers, shipping companies and other relevant stakeholders to interact in an almost frictionless decentralized environment.
How do you see the Risk landscape evolving over the next 6-12 months?
It is of course difficult to anticipate the impact on such a short timeframe but the first effect I would consider is having to redesign risk frameworks and models to incorporate the subtleties of decentralized platforms. This is no easy task as this is for all intents and purposes, uncharted territory. Strong alignment between business and risk, together will all the other support functions is needed to begin the process of innovating our risk practices.
Mariana will also be speaking at the 7th Annual Risk EMEA Summit. Will you be joining us?…