M A Y 1 8 TH, 2 0 1 8

SAI Annual Convention

Digital Finance- Blockchain beyond the hype
Describe blockchain….

2 | Copyright © 2017 Deloitte Development LLC. All rights reserved.

What is blockchain?
A decentralized, distributed ledger that provides a way for information to be recorded, shared and maintained by a community.
ABC

############# ###### ########

ABC ABC ###### #####
#

#############

ABC ABC

ABC

A network of computers, connected via Each block can contain transactions, data
the Internet, in which users at any one and a reference to the previous blockchain
computer can receive or send peer to (creating the chain)
peer:
Transactions recorded chronologically and
cannot be changed once added to the
Value Identity Data chain

For blocks to be added to the blockchain,

it must be achieved through Consensus

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How blockchain works.

Transaction Block Validate Hash Execution

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Blockchain characteristics.
Blockchain technology have particular characteristics that set it apart from other technologies.

Value Immutability & Smart

Transfer Audit Trail Contracts

Data Storage Disintermediation Decentralised

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 Blockchain Simple Example

The
The block is Those in the
James wants transaction The block The money
broadcast to network
to send is then can be moves from
every party approve the
money to represented added to James to
in the transaction
Tony online as a the chain Tony
network is valid
block

6 | Copyright © 2017 Deloitte Development LLC. All rights reserved.

What we do know is.
In its technology evolution, blockchain technology remains nascent and immature

MISCONCEPTIONS CHALLENGES

Enterprise grade technology Standards need to be formalised

Not just cryptocurrency Not all regulators are on board

Traditional technology is not redundant or obsolete Does it scale?

Public blockchains Collaboration is hard

It’s not real-time Talent shortage

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8 | Copyright © 2017 Deloitte Development LLC. All rights reserved.
9 | Copyright © 2017 Deloitte Development LLC. All rights reserved.
Blockchain
Trends.
Factors effecting blockchain adoption.
There are some factors which are accelerating blockchain growth rate, although inhibitors remain.

Accelerators
✓ Competitors looking to invest more heavily
✓ Other industries are adopting quicker which
increases overall activity
✓ Use cases are closer to production than
expected
✓ Investment scaling in blockchain from venture
firms & competitors
✓ Regulator involvement is not typical for a
nascent technology

Inhibitors
? Lack of standards
? Operational challenges
? Network effect requirements
? Industry wide buy in
? Security concerns
? Lack of awareness

2008 2015 2016 2017 2018 2019 BEYOND

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Blockchain growing faster than anticipated.
Many sceptics believe blockchain is far away but indications suggest the level of adoption is quickening.

Blockchain Adoption Growth Curve

STEP 3:
TODAY Decentralize Decentralised
Everything Internet

STEP 2:
Year of Autonomous
Increasing
Digital Entities
Adoption
Year of
Production
Year of the
Pilot
Year of the
Proof of STEP 1:
Year of the Concept Increasing
Invention Use Case market
of Bitcoin disruption

2008 2015 2016 2017 2018 2019 BEYOND

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Blockchain in
Asset
Management
 Asset management is in a period of change.
MACRO
TRENDS New Buyer Demands
Individuals rather than
Active to Passive Disruptive Tech
A number of disruptive techs
Fiduciary Based Regulation
Investor regulation being
During next 5 years, 43% of
institutions driving innovation net new assets will be including robo-advice for direct strengthened across the globe. MiFIDII
and growth. Organic growth passively managed. consumer engagement and & DOL are increasing the risk of
more likely with outsourcers & Remonetisation of active analytics / AI for more effective sanctions and new pricing schemes
cost conscious buyers management expected segmentation & prediction may emerge as a result

BOLD Optimise Build a unique

Digitise Differentiate Streamline
RESPONSES Resource
Distribution Investments Operations
customer
Allocation oriented brand

AM VALUE CHAIN
FUNCTIONS
Client Interaction Front Office Middle Office Back Office
Investment Objectives Information Gathering Trade Execution Objective Check, Rebalancing
Investment Advice / Proposition Asset Mix Evaluation Transfer of Ownership Investor Communication
ACTIVITIES
Onboarding * Investment Decision Trade Settlement MIS
Document Management Risk Management Asset Accounting Regulatory Reporting

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Potential impact of blockchain None Low Medium High
 Asset management is in a period of change.
MACRO
TRENDS New Buyer Demands
Individuals rather than
Active to Passive Disruptive Tech
A number of disruptive techs
Fiduciary Based Regulation
Investor regulation being
During next 5 years, 43% of
institutions driving innovation net new assets will be including robo-advice for direct strengthened across the globe. MiFIDII
and growth. Organic growth passively managed. consumer engagement and & DOL are increasing the risk of
more likely with outsourcers & Remonetisation of active analytics / AI for more effective sanctions and new pricing schemes
cost conscious buyers management expected segmentation & prediction may emerge as a result

BOLD Optimise Build a unique

Digitise Differentiate Streamline
RESPONSES Resource
Distribution Investments Operations
customer
Allocation oriented brand

AM VALUE CHAIN
FUNCTIONS
Client Interaction Front Office Middle Office Back Office
Investment Objectives Information Gathering Trade Execution Objective Check, Rebalancing
Investment Advice / Proposition Asset Mix Evaluation Transfer of Ownership Investor Communication
ACTIVITIES
Onboarding * Investment Decision Trade Settlement MIS
Document Management Risk Management Asset Accounting Regulatory Reporting

15 | Copyright © 2017 Deloitte Development LLC. All rights reserved.

Potential impact of blockchain None Low Medium High
 Asset management is in a period of change.
We see some megatrends powering the IM revolution.

NEW GENERATION OF COMPLEX AND EVOLVING

FUND
INVESTORS REGULATORY LANDSCAPE
❖ Stay in control (do it yourself) DISTRIBUTION
❖ Tailored & multi channel advice Now Tomorrow
❖ Peers and social networks VALUE CHAIN ❖ AIFM, UCITS V, ❖ Shared ledger

❖ Digital front-end PRIIPS, MiFID, ❖ Smart contracts

❖ Downside protection and hedging AMLD IV, CRD, ❖ Online payment

❖ Yield and service of WM clients EMIR ❖ Data

❖ Social responsible investments confidentiality

Product Trade order Post trade ❖ Cybersecurity
management & processing servicing
marketing
TECHNOLOGICAL DATA SURGE
INNOVATIONS Regulation and Cybersecurity
❖ Growing quantity of sources and data
❖ Blockchain
❖ Need for powerful data processing
❖ Digital payments
❖ Allow for real-time information
❖ Machine learning
❖ Shifting mix of required analytical
❖ Digital investment platforms
capabilities
❖ P2P lending
❖ Algorithmic
❖ Robo-advisor
❖ Predictive
❖ Robotic process automation

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Blockchain initiatives in banking are widespread
Many banks have been working on blockchain initiatives over the past 18-24 months

A new integrated
A syndicated loan payment solution that
market – in which enables straight
multiple lenders pool through payment
their capital for processing and
individual borrowers automates Intesa has tested a
– built on blockchain. Working on the reconciliation by using bitcoin blockchain-
“utility settlement a distributed ledger. based tool as part of a
coin” (USC), which is bid to validate trading
dealing with inter- data. The bank, along
bank settlements. with Deloitte tested
the timestamping PoC

Working with Ripple Deutsche Bank has

& American Express partnered with IBM
for cross-border on a blockchain based
payments via KYC Utility Launched the first
Most investment in
blockchain. engagement commercial
blockchain technology
deployment of
along with investment
blockchain technology
in Digital Asset
for the private equity
Holdings.
market.

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Blockchain in the
Insurance
Industry
Blockchain & Insurance – the use cases
There are some key uses cases in the Insurance sector which are good blockchain use cases currently being explored

1 2 3 4 5

Client On- Identity History of Client

Fraud Prevention Claims Processing
boarding Management Events

6 7 8 9 10

Loyalty
P2P Insurance Usage Based Reinsurance Micro-insurance Programme
Insurance

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 Blockchain & the Insurance Value Chain
Blockchain-driven interventions could potentially transform the whole insurance industry

Potential benefits
Pre-Sale Distribution Underwriting Administration Claims

▪ Frictionless evaluation of claims

▪ Transparent calculation of premiums
Insurance P&C Sales Risk Premiums Processing
functions ▪ Automatic receipt of claims and pay outs

Better Experience
Life On-boarding Quote Compliance Payments

▪ Less resources and lower personnel cost

▪ Faster quoting-binding and settlement of
Product development Communication Background check Payment notification Identity verification claims processes
▪ Savings in terms of underwriting leakages
Reduced cost and
Document Calculation/ time
Leads management Identity Creation Quote generation
management Adjustment
Insurance
activities
▪ Digital and innovative vocation of new
Offer solutions
Planning Risk calculation Premium collection Claim evaluation
definition
▪ Capitalization of cryptocurrency security
▪ Enhanced on-boarding and verification of
Needs assessment Application Binding Regulatory reporting Disbursement Further risk
Edge

Potential impact from

None Low Medium High
blockchain
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 Internal investment
Start-up financing/
collaboration
Consortia participation

Interest of EU Insurance Company Proof of concept

Live Solution

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 Blockchain Investments in the Insurance Industry
Venture capital investments are dominated by banking institutions but insurance actors are starting to invest..

& Others

Blockchain momentum Smart Angels

(VC Investments, cum., 2013-16)

$1,293m
$947m & Others

$457m
$95m

2013 2014 2015 2016 & Others

& Others

Mitsui Sumitomo Insurance

& Others 42 banks1
& Others & Others

& Others
& Others

Key
& Others

21 Inc. Venture Capital Investment

& Others

& Others & Others & Others

Internal Investment

Partnerships

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2015 2016 2017
Blockchain
Active in the
Insurance
Industry
How to Engage
• Successfully implemented Fizzy
is a blockchain-based product
with Blockchain?
that pays out compensation for
flights delayed beyond two
hours. It's already live - you can
buy a policy right now if you
have a valid ticket on a CDG-USA
sector
23 | Copyright © 2017 Deloitte Development LLC. All rights reserved.
• Successfully trialled blockchain
technology for a global ‘captive’
insurance program including
cash transfer between countries.
(Self Insurance product)
• Functionalities include:
-cash payments
-real time access of tracked
information
• Launched a Technical Accounting
Blockchain Proof of Concept (PoC) to
assess the feasibility of using
Blockchain technology to enhance
the Ruschlikon1 initiative
• Member of B3i
• Conducting internal research
• Collaborating with start-up
ChainThat around blockchains use in
reinsurance market processes.
• Member of B3i insurance
initiative
• Partnered with Singapore telco
StarHub to launch a blockchain-
• Developing business models
around blockchain and other
technology
based digital trade platform for
small and medium-sized
enterprises (SMEs).
•
•
Increasing digital talent pool
Looking to invest in emerging
• Platform can be used for making
payments, tracking goods and
buying insurance
technology
• Member of B3i • Supporting startups in the
blockchain, A1 and VR space
• Entered into a long-term strategic
partnership with a blockchain
based home insurer Buzzvault
 Our blockchain team
Focuses on

A new technology, Disruptive Technology

Blockchain Strategy
for a new age. Use Case Development

THE EMEA BLOCKCHAIN LAB Proof-of-concepts

By packaging the power of Deloitte, we’re Pilots

transforming the blockchain space in ways
are competitors don’t. Live Productions

Leaders across our client

organizations can come to
our Lab to have their
blockchain ambitions
brought to life.
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 Phases

Prototype Build.
Discovery Design Build Review
Discover & Vision Design Build
Scope Requirements Use Case Identification Server Infrastructure
• Scoping workshop • Specific use cases identified and Back-end Development
• Document ideal end-state documented • Smart contracts developed Deployment /
• Agreed statement of work • Wireframes designed
ACTIVITIES

Data Gathering • Design dummy data

• API / high level testing
• Data interaction / loading Integration
• SME interview Technical Architecture Front-end Development Test / Stage Deployments
• Data Gathering
• Process Mapping
• High Level Data Architecture
defined
• UI screens and log-ins Enhance Build • Integration testing
• Develop basic functionality Enhance build based on • Issue resolution
• Time in Motion Study • High Level POC Technical Business Case Development • Feature implementation
Architecture defined feedback
• Update UI screens /
log-ins
• Update smart contracts
where necessary
Production
Review
Workshop UI/UX Review
Internal Team Workshop
Architect
Business Team

Week 1 - 3 Week 3 - 5 Week 5 Week 6-9 Week 10 Week 11-12 Week 13-14 Week 15
CTO
Backend /
Blockchain

• Integration testing
& resolution
OUTCOMES

• Senior Stakeholder • Blockchain

• Project Time-plan and Project Session implementation
Charter • Final user stories • Feedback / input complete
• Technical Design Document documented on final deliverable • Dashboard website
• Detailed documentation of • Wireframes shared
current process • Stakeholder engagement
• Updated process flows • Blockchain based software solution
plan produced
• Functioning interface
25 | Copyright © 2017 Deloitte Development LLC. All rights reserved. • Business case – quantitative and
qualitative analysis
Thank you.
Paula Butler
Manager, EMEA Blockchain Lab
Contact: pabutler@deloitte.ie

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