September 15th, 2017

BUSINESS DISRUPTION

WITH BLOCKCHAIN

1. My own experience

2. Will Blockchain change the world?

3. Why explotion still missing

4. Two Constrains

5. Is the gigantic wave arriving sooner than

expected?

6. Final Remarks

Agenda

Started in May 2015 with decision of experimenting on Ripple.

Pilot of cross-currency payments in production (fully integrated with legacy systems) with real money (with RBC) based on

Ripple technology. (September 2016)

POC on Supply Chain Finance with Skuchain and with R3

Forex trades confirmation matching directly in the blockchain network removing the need for SWIFT & paper

confirmations for internal trades. Internal pilot running

R3: active participation in their Labs and different projects; i.e. Project Argent, eLoc and Digital Trade, Moore, Vega Stingray,

Trade finance

KBC: consortium of European Banks

Discussion with MAS for projects in APAC

Pilots/Evaluation with different platforms: i.e Ripple, Corda, Skuchain, Ethereum, Hyperledger, ecc.

My Unicredit Experience

Everis Blockchian Offering

Everis implements the Ripple Solution

to enable banks to conduct real-time and bilateral settlement of funds. With Ripple banks can access the Ripple Consensus Ledger, a blockchain that functions as a global cross-currency RTGS system and

liquidity marketplace. Ripple’s technology is the most advanced settlement system in the industry.

Corda and Hyperledger Fabric have been engineered to enable shared

and authoritative systems of record for financial agreements. They are the most advanced platforms for recording, storing and maintaining financial industry level smart contracts to represent and reconcile

financial contracts between parties. everis aims to become the best Corda and Hyperledger Fabric System Integrator for banks.

The Interledger Protocol (ILP) is the

open Internet standard for connecting ledgers. It is a neutral and open protocol stack for bridging banks, blockchains, digital wallets and other types of ledgers. Everis, Ripple and NTT DATA are

collaboratively working on the Java implementation of the Interledger Protocol.

Solution FABRIC

1988 forecasting 2018 Nov. 2015

2. WILL BLOCKCHAIN CHANGE THE WORLD?

It will change our life … more than Internet

FROM “BLOCKCHAIN REVOLUTION” by DON TAPSCOTT

“He (Satoshi Nakamot) solved all the problems. Whoever he is should get the Nobel Prize-he’s a genius. This is the thing! This is the

distributed trust network that the Internet always needed and never had” Marc Andreessen (co-creator of Netscape)

“Ensure the integrity of the data … without going through a trusted third party”. It will allow us to re-posses our

own data.

“Distributed trust will profoundly affect people in all walks of life”

“It is also a platform for everyone to know what is true – at least with regard to structured recorded information”

To The Economist blockchain technology is “the great chain of being sure about things”

It solves security (not only for the encryption algorithm) as well as privacy issues. There are no more intermediaries

It changes how to prove my ownership it will disrupt also the new disruptive model

Blockchain Is Not Only Cryptocurrency

SO MANY DISCUSSIONS, USE CASES, PILOTS, POCS,

A LOT OF INTEREST,

HUNDREDS OF ANNOUNCEMENTS, BUT …

WHY THERE WAS NOT A REAL EXPLOSION YET?

3. WHY EXPLOTION IS STILL MISSING?

Gartner Hype Cycle

A foundational, not a disruptive technology (*)

The impact will be enourmous

Blockchain will create a foundational for our economic and social system

Process of adoption will be gradual and steady, not sudden

It will require more time than initially expected

Internet took 30 years to have real disruptive business models. Today, half of the companies with higher value have Internet

driven platform-based business models

Physical scale and unique IP no longer confer unbeatable advantages: economic leaders are enterprises that act as “keystones”

proactevely organising, influencing and coordinating widespread networs of community users and organizations

(*) “The truth about Blockchain” article on Harvard Business Review, Jan-Feb 2017

“THE TRUTH ABOUT BLOCKCHAIN” (*)

From a digital currency to a platform for digital transformation

Blockchain technologies offer a radical departure from the current transaction and recordkeeping mechanisms and can serve as a

foundation of disruptive digital businesses, for both established enterprises and startups.

Blockchain technology has operated outside traditional legal, accounting and institutional governance frameworks, threatening

long-standing working practices.

Gartner Too

BUT

Many blockchain technology and foundational concepts are immature, poorly understood and unproven in mission-critical, scaled business operations.

Many blockchain technologies are not fully developed, are untested, and will require early adopters to accept significantly increased levels of operational risk over the next five to seven years.

The vendor ecosystem is neither cohesive, nor fully formed

Regardless of vendor claims, Gartner anticipates that, through 2018, 85% of projects with "blockchain" in their titles will deliver

business value without actually using a blockchain

No enterprise has yet been able to take a POC to scale. This is partly a technology issue, but inhibitors also include multiple business challenges (including legal, risk, accounting, culture and strategy).

Gartner Too

WHICH ARE THE OBSTACLES THAT ARE SLOWING DOWN THE

ADOPTION AND POSTPONING THE EXPLOTION?

4. TWO CONSTRAINS

Who Will Win Among Competing Platforms?

Someone say: “The one not yet in the market”

Of the approximately 75 blockchain platform providers, not all will survive. The vast majority are startups

Gartner predicts that, by 2025, five blockchain/distributed ledger platforms will be "mainstream” commerce

platform enablers.

Look at Internet history:

Internet search engines in 1995: Altavista, Lycos, Terra, Excite, Yahoo, Magellan were well-estabilished players Google

came later and won

Social Networks in 2003: Friendster, Bebo, High5, Orket, MySpace Facebook came later and won

Mobile OS in 2007: Blackberry, Nokia, Win Mobile, ecc. IIOS and Android came later and won

Platform Issue

Much of the discussion about blockchain focuses on the technology itself, and diverts attention away from the radical

societal and business shifts it could enable

The ability of blockchain to provide information transparency and immutability, the potential for smart contracts,

and the opportunity to create new business models should force CIOs and business leaders to review the

fundamental aspects of their value chains, and urgently conduct scenario planning and/or implication theory analysis.

Cultural / Strategic Approach

BLOCKCHAIN DISRUPTION POTENTIAL IS MORE THAN WHAT IMMEDIATELY WE PERCEIVE

IT IS TRUE IF WE THINK NOT ONLY TO FINANCIAL TRANSACTIONS

“Blockchain has the potential to become the system of records for all the transactions” HBR

5. IS THE GIGANTIC WAS ARRIVING SOONER THAN EXPECTED?

GARTNER Predicts

By 2022, at least one innovative business built on blockchain technology will be worth $10billion.

By 2030, 30% of the global customer base will be made up of things, and those things will use blockchain as a

foundational technology with which to conduct commercial activity.

By 2025, the business value added by blockchain will grow to slightly over $176 billion, then surge to exceed $3.1

trillion by 2030.

Having a grasp on the economic potential for blockchain is essential to better analyze investment spend and prioritization, by

industry and geography. As with many prior emerging technology enabled changes, the "s curve" of growth is quite pronounced

Is The Gigantic Wave Arriving Soon?

These opportunities paint a landscape of future economic development and potential growth

BUT, FOR THE MOMENT:

Most of the projects are replacing existing supply chain components

There is not yet the transformational disruptive vision to remove centralist supply chain intermediaries. It needs also:

Continuous regulatory rethink (already evident)

Additional technology upgrades: (it needs time)

To unlock the control over infrastructure by powerful centralist in favor of transaction flows among financial institution themselves:

the centralists need a push by those in whose name they serve (mainly the largest 100 FI)

Is The Gigantic Wave Arriving Soon?

Recent survey: 1520 execs from 578 Financial Services firms (*)

80% private blockchain will gain greater prominence over the next 5 years

86% public blockchain will gain greate prominence over the next 5 years

Concerns: 69%

Privacy and scalability

Significant cultural shift

Major part of them still in POC stage

(*) Reported by American Bank

Something Is Really Changing

1. My own experience

2. Will Blockchain change the world?

3. Why explotion still missing

4. Two Constrains

5. Is the gigantic wave arriving sooner than

expected?

6. Final Remarks

Agenda

IS THE FINAL WAVE ARRIVING IN THE NEAR FUTURE (NEXT 2-4 YEARS)

OR IT WILL TAKE 20 YEARS?

I DON’T KNOW.

WILL IT ARRIVE?

I AM SURE OF IT. PROBABLY FASTER THAN EXPECTED.

IT WILL CHANGE COMPLETELY THE FINANCIAL SERVICES WORLD

Closing Remarks

Soon or later there will be a disruption in the financial services

Banks will have to reinvent themselves

Will current account, payments, deposits be supplied and managed by banks in the future?

Banks has to design and transform their business value, that means their role and services

“Distributed ledger technology can liberate many financial services from the confines of old institutions, fostering competition and

innovation”(*)

“Similarly incumbent institution can transform themselves around blockchain technology, if they can find the leadership to

do it.” (*)

MORE IMPORTANT

They have to think and to design …. how to be the one that disrupt its own business

(*) Blockchain Revolution by Don Tapscott

Closing Remarks

Be part of the experimentation

Assume whatever blockchain technology you choose will be obsolete in 18 to 24 months. Nevertheless is important to understand

the technology and opportunities that technology is opening

Undertake proofs-of-concept to learn about the major platforms

Select limited narrow-scope use case for real deployment on a chosen platform. Prepare to migrate off that platform in

24 monts

Involve all the roles (business, technology, security, compliance, legal, risk, ect.) in a proactive and positive way: you need new

attitudes more than new competencies

Closing Remarks

Much more important

Think how Blockchain can improve your business

Use learnings to reimagine business processes, business models, markets, products

Think which value you can bring in the new world age

Think how your business can be distrupt in this new age

and ….

be the one that disrupt your business

Closing Remarks