The blockchain, the future of banking? - Dennis de Vries, KPMG

The Blockchain, the future of Banking?

Dennis de Vries

8 April 2015

2© 2015 KPMG Accountants NV, registered with the trade register in the Netherlands under number 33263683, is a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved. Printed in the Netherlands. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks of KPMG International.

vs

Payment infrastructure comparison

traditional banks cryptocurrencies


Client Client Facing layer

Product System

Transaction Processing Clearing Transaction

ProcessingProduct System

Client Facing layer Merchant

Process flow domestic paymentThe fascinating journey through time of a single payment


Process flow international paymentNon-Euro cross border payments take at least 3 days to settle

Source: www.swift.com, http://www.10588.com/pub_web/swift/books/us2m/doc/aig.htm

http://www.swift.com/

http://www.10588.com/pub_web/swift/books/us2m/doc/aig.htm


The cost of paymentsGlobal Payment Revenues estimated at USD 1,000 billion

Source: https://www.bcgperspectives.com/content/articles/financial_institutions_pricing_global_payments_2014_capturing_next_level_value/

https://www.bcgperspectives.com/content/articles/financial_institutions_pricing_global_payments_2014_capturing_next_level_value/


The cost of paymentsAverage global remittance fee 7,5%

Source: http://remittanceprices.worldbank.org

http://remittanceprices.worldbank.org/en


vs

Payment infrastructure comparison

traditional banks cryptocurrencies


Client Client Facing layer Mining Client Facing

layer Merchant

Process flow cryptocurrencySimple IT infrastructure allows for real time processing of payments


Statement 1: Cryptocurrency parties are unreliable?The core transaction processing infrastructure seems to operate flawlessly

Bitcoin developers:Maintain the bitcoin

protocol forming the basis for the infrastructure

Miners: Validate transactions in

order to earn bitcoins and transaction fees

Payer

Bitcoin exchange: Facilitate transfer of

traditional currency into bitcoins and vice versa.

Bitcoin wallet companies: Simplify bitcoin activities

for participants

Recipient

Bitcoin core transaction processing

infrastructure

Bitcoin facilitators


Statement 2: Cryptocurrencies are too volatile?Service providers have already addressed the merchant side

Reduce Risk

With Bitpay you can eliminate the risk of Fraud, Chargebacks, and Identity Theft from internet payments.

Monetize New Markets

You can now accept a payment from any country on Earth, with no risk of fraud.

Reduce Hassle

You can eliminate the need for PCI Compliance and expensive security measures.

Bank Direct Deposits

You will receive a direct deposit into your bank account every business day.

Wi-Fi Mobile Payments

You can accept mobile payments over wi-fi and 3G/4G without the need for NFC terminals.

All-Inclusive Pricing

Clear, simple pricing, with zero transaction fees and zero hidden charges.

Source: https://bitpay.com/

https://bitpay.com/


Statement 3: Cryptocurrencies facilitate anonymous payments?Public character of the blockchain results in new tracing possibilities

Client identification Transaction screening


Statement 4: Regulators will ban cryptocurrencies?US and UK regulators increasingly focus on technology agnostic regulations

Source: www.coindesk.com

http://www.coindesk.com/


Summary analysisCryptocurrency technology provides interesting alternative to existing infrastructure

Banks Bitcoin

Open during weekdaysfrom 07:00 to 17:00 hours Availability 24/7/365

Batch processing Processing Real time

1 day settlement for Euro, 3 days settlement for non-Euro Settlement

Real time Transaction validation time protocol dependent (Bitcoin 10 minutes)

Transaction engines from 1970/80sBank specific, non standardized IT architecture Global uniform standard

Guarantee instead of true paymentNo immediate access to money

Merchantperspective Immediate payment

Up to 3%, paid by the merchant Cost of payments Minimal, close to free

Requires bank account Access Requires internet


About the presenter

Dennis de VriesSenior manager, Financial ServicesKPMG Accountants N.V. Tel +31 206567451Mobile +31 643817117Mail [email protected]

ResumeDennis de Vries started his career in 1996 as internal auditor at ING Bank, performing operational and compliance audits in the Dutch Retail Banking network. As from 1999 he specialised in financial audits, acting as internal group auditor for ING Bank and the international branch network and working in close cooperation with external auditor KPMG. In 2007 he was appointed as Head of Internal Audit ING Lease, holding responsibility of the internal audit of ING Lease’s 30 subsidiaries across Europe.

In 2010 he was appointed Business Manager ING Lease, providing direct support to the ING Lease CEO and the management team during the divestment of ING Car Lease and other strategic changes. In 2011 he was appointed Business Manager Transaction Services, the Commercial Banking division providing payments & cash management, trade finance and working capital solutions to business clients. As part of this role he researched cryptocurrencies on behalf of the Executive Board of ING Bank during 2014.

In 2015 he joined KPMG as a senior manager Financial Services, servicing large banks and leasing companies. He is a member of the KPMG Payment Group with a focus on cryptocurrencies. Dennis de Vries is a Dutch CPA (Register accountant).

https://www.linkedin.com/in/dennisdevries22

mailto:[email protected]

https://www.linkedin.com/in/dennisdevries22

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The blockchain, the future of banking? - Dennis de Vries, KPMG

Economy & Finance