2nd Event „Blockchain – Applications in Financial Services“ sucessfully hosted on May 3rd in Munich
Following the first Blockchain event, hosted by our students in January, the second event took place on May 3rd. Location for the evening was the Fraunhofer headquarters in Munich. We welcomed roughly 200 students from different programs and experience levels regarding Blockchain. The speakers came from renowned corporates as well as start-ups.
After Prof. Dr. Buhl had welcomed the guests and introduced Fraunhofer as well as our Master’s program, Dr. Pohl (Deutsche Bank) took over and introduced potential business cases of Blockchain in the field of banking and highlighted the importance, the network, and the reputation of banks in the business world. Furthermore, he presented one variation of Blockchain, the so-called Tradechain. The idea of the Tradechain is to enable a secure interaction between businesses that do not know each other.
Dr. Diehl from the Federal Bank of Germany highlighted that payments processing per se is not costly but the security mechanisms behind it are. To maintain public security and prevent e. g. money laundering, authorization functionalities are crucial and cannot be implemented in the “classic” (public) Blockchain. He also explained the economic meaning of money, and how important it is that central institutions are in control of the amount of money in the market. Regarding this, he mentioned that e. g. the market capitalization of Bitcoin is by far not sufficient to play any role regarding federal money flows.
Similar to the previous speakers, Mr. Zhang (Allianz) supported a private variation of the Blockchain as a strategic instrument to bring together several private institutions and exchange data. Generally, this approach is comparable to a regular database but there is no need to define data ownership or a handling of trust issues, which facilitates governance.
The last speaker of the evening was Dr. Karpischek, founder of Etherisc, who elaborated on misaligned incentives of insurance companies, which try to avoid payments instead of covering risk. He presented one product of Etherisc, which offers smart contracts for flight delays. Etherisc is developing its products Open Source and on a public Blockchain. The goal is to revolutionize the business of insurance. The idea is that insurance premiums are paid according to objective criteria and to establish a market for different risk models. Finally, he demanded that the government takes the chance to legislate ex-ante instead of ex-post to shape the future of the Blockchain instead of slowing it down since the legal situation is not defined, yet.
The ensuing panel discussion, presented by Prof. Dr. Urbach, focused once again on the differences between public and private Blockchains. Key takeaways were that we are not living in a perfect world, and therefore security mechanisms remain to be important. As of today, a public Blockchain does not meet these requirements. A private Blockchain is different from a public one in the way that instead of substituting intermediaries, data ownership does not need to be defined and collaboration between corporates is enhanced. In addition, the necessity of a transition phase until a private/public Blockchain technology is established, became clear.
The all-around successful event ended with a buffet and a get-together to exchange thoughts and further discuss the interesting topic of Blockchain and its implications.