Loraine Lawson
Good day, I’m Loraine Lawson, deputy editor of Bank Automation News. Welcome to this episode of the Weekly Wrap from Bank Automation News’ podcast, the Buzz. We’re pivoting this month to highlight some of the conversations featured during our Bank Automation Summit, held March 1-2 in Charlotte, North Carolina. This episode features a discussion from our panel on Leveraging Smart Contracts and Blockchain for Smarter Banking. In it, you’ll hear from Russell Schwartz, Senior Director of Payments Product Management at TIAA and Ananth Subramanya, Senior Vice President of Digital Business with HCL Technologies, as they share their experiences with blockchain and automation.So maybe Russell, you could start us off today, by talking about your journey with blockchains and smart contracts, what role Have you played in the journey? And how have you used them to automate?

Russell Schwartz
So kind of my background, the blockchain was actually attending conferences and had some guest speakers Don Tapscott, specifically, talking about his book Blockchain Revolution, was probably about five years ago or so and read through it and found it to be really kind of fascinating. And I looked at it from the optics of what I do, which is payments, moving money from point A to point B. And when I started thinking about it said, Hey, maybe there’s some great applications we could use for what our team it to enterprise payments does, and basically move money in and out of the organization and within the organization. My first thought was a good blockchain be used for an infrastructure basis for moving money within the company. And our company is structured with retirement Ira bank brokerage and the only one separate platforms. And so the thought it was blockchain could could bridge that gap for us. Work through a little bit more, we found not necessarily using our whole infrastructure with a very specific use case of cross platform money movement. And so it was between us and a third party that provides our brokerage services. And so we move cash back and forth today, through a batch file process, and the thought was, Blockchain is a way for us to improve that process. We were looking at it from the point of view, can we reduce the number of failed transactions? Can we increase processing time and improve customer experience? And ultimately, that’s that’s the route we end up choosing with the blockchain.

Loraine Lawson
Thank you. And can you talk a little bit about your role with blockchain and what your company does with that?

Ananth Subramanya
Absolutely. Like Russell was speaking, HCl is actually a service provider to banks. So in our role, our goal is to make sure that we can make the technology accessible and easy to consume for banks. And in that sense, we develop, you know, both solutions on blockchain and developer productivity solutions. As an example, everybody knows IBM has invested in hyper ledger. But leveraging hyper ledger within a bank requires the bank to learn so much more about the blockchain technology, they may not have the expertise to do. So we build, you know, local platforms on top of hyper ledger, Aetherium, etc. So that consumers of the technology can make it make make it significantly easier for banks to consume it, and therefore build applications on top of it. And eventually, somebody has to manage all of this infrastructure. And that’s another role we play in helping the ecosystem, the infrastructure.

Loraine Lawson
See, I’m still learning about this, too. This is a I mean, I guess lots of us, alright. But I didn’t even realize there were different, I guess, platforms that you can build on. So that’s been fascinating to learn. Is it hard to deploy to use? What have you what was your experience Russell?

Russell Schwartz
So being a large financial services company, we kind of look to some of our existing business relationships. So we had relationships with IBM and Oracle. And our first POC platforms that we built, were in hyper ledger fabric, working with Oracle, who was our first iteration. I was blessed with a great IT team that was able to work with them, learn the platform, build out what we need to get built, they provided us support as well. That was iteration one, iteration two. We did with IBM, we had that same sort of support in working with it. So we had some in house talent, people volunteered to learn the new coding language. For them. It was kind of like an opportunity to expand their knowledge base and get involved in something new and cutting edge. And that’s essentially how we went out and built everything for our first few iterations of working with Blockchain.

Ananth Subramanya
And then So to what Russell said, the excitement exists. So if you’re going within a bank and say, Hey, who wants to work on it, I’m sure like 100 hands will go up and they want to work on it. I think what customers like Russell have done is create a structure in which you can then encourage talent to work on it. And learning it is fairly simple. I think the concepts are easy learning coding language is easy. But today, like I said, there are developer productivity platforms, both the platform providers themselves build like IBM, and some, like service providers like us build that makes the learning curve significantly, you know, it’s not as steep. So which means anybody wanting to explore this technology can do it much faster. The excitement exists, I think it’s about just creating enough room, within the banks for people to explore the technology and make good sense and use of it. Because initially, it will be a lot of POCs. When we explore what will work, how will it work, and then who should be responsible for it. I think having the patience through the journey, and certainly make it worthwhile.

Loraine Lawson
I think, you know, most of us are, of course, familiar with crypto and how it works with the blockchain. But there are use cases beyond that. And one of those of course is is the way it automates so wrestle, you said that a smart contract is but basically the business rules around an automation or a program that runs on the blockchain. Can you explain just both of you a little bit more about how it automates

Russell Schwartz
Sure, so, um, from from how we built our platforms. And again, it’s, it’s still in kind of a test in experimental load for us. But basically, we take a transaction request from a customer. And we validated against what would ultimately be the rules that our partner platform would ask. And we ask those questions in real time. So when we migrated from a batch file process to what we’re what we’re building out in blockchain, rather than the request coming in at 12, noon, and we process that request in an overnight batch file, we interrogate that request in real time. And so we’re being able to do things like are there sufficient balances? Is the account open? Are there any restrictions on the transaction and things like that? Those are all conditions that you can validate in real time through a smart contract? I call them, you know, business rules. And then we immediately know what’s the status of that transaction. The difference is it because we work in a batch mode, we’re not able to do that in real time, when you’re passing a file overnight to separate party. But by using Blockchain and a shared ledger of common data that we can validate against, we can do those validations in real time.

Ananth Subramanya
Interesting. I mean, we’ve seen use cases. I think the other popular thing outside crypto is NF T’s. I think anybody who’s on Twitter sees all these monkeys being sold for 300k. So tokenization is another very important aspect the blockchain can be used for and we’re seeing a lot more experiments in the European region, where people are sending selling tokens effectively, you know, you take something that exists in the real world, break it into chunks, and each person can own a chunk, they’re doing it with real estate, like we used to have timeshares can you know, own a piece of real estate that are just tokens. And then I own, perhaps like 1/50, of a Manhattan studio and you own the other 150 of the Manhattan studio, and then I can sell it to anybody that I want to sell it to. And that thing, that entire process is being experimented a lot in Europe, we’re also seeing art, which is extremely important, primarily, because if you’re buying anything for like, say $20 million, you don’t know the lineage of the art, who owned it. Is it really real? Did somebody do the valuation of the art was the valuation accurate. And that’s a brilliant use case for blockchain, especially as we get into wealth management, and you diversify. So making sure that you’re diversifying in the right places, and therefore they are getting into art. And then can we create the provenance on AR is another very important use case you’re seeing? So I think it’s expanding. But it really comes down to you know, who’s taking those bold steps to put these capabilities together. And that’s what we’re seeing.

Russell Schwartz
And what I found with a tokenisation, because that’s some use cases that we’re looking at on our asset management side is it it’s an opportunity to create liquidity for transfers of ownership. So where you may need to go through a lot of paperwork and a manual process or a manual review, simply by saying, I’m selling my share, which is represented by a token for me to you, we can do that transaction instantaneously and not have to go through the physical process of executing a transaction.

Loraine Lawson
Thank you for tuning in to this episode of our podcast Buzz, the Weekly Wrap edition. Tune in next Friday to hear more from our Bank Automation Summit.

Thank you for your time, and be sure to visit us at Bank automation news.com for more automation news. You can also follow us on Twitter and LinkedIn. Please don’t hesitate to rate this podcast on your podcast platform of choice.