It is undeniable that the banking system, like almost any system, is open to abuse. The numerous cases that there are of money laundering, document, wire and accounting fraud and just downright theft continue to plague the banking system. These instances and circumstances are almost always due to the greed or incompetency of a few select individuals that can end up making the rest of a corporation or institution become severely unstable.
Among the stakeholders in a bank, the worst to be affected by the various financial crimes can end up being the common stock shareholders.
After allegations, trials, sentences and penalties are imposed, it is highly unlikely that the bank will be forced into liquidation. But what is dead certain after regulators catch a whiff of a cartel, crime or corruption is a decline of paper value. In this piece DisruptionBanking will not be naming and shaming, but rather exploring a method that banks can prevent losses of key markets, depositors and financial health. Not to mention reputation, a priceless commodity in trust of business, and critical settlements.
Trust between parties obviously does not just extend to banks, issues such as those mentioned are widespread across the public and private sector. Different people in every part of the economy have to consider a common problem almost daily, trust.
Enter Trudatum, a tech startup making significant in-roads into bringing trust into business and general operations of organizations, giving companies and individuals the opportunity not just to have a trust bond in a contract to bound the parties, but a contract that is bound by digital-trust. What is digital-trust? Blockchain. Trudatum’s unrelenting goal is to utilize blockchain to entrust and ensure contracts and documents are not tampered with.
They are part of the ‘new wave’ of blockchain companies, looking to utilize the technology to better build trust and record keeping in many various sectors such as politics, data recording and many others. In other words, branching out from purely the financial sector. But the Fintech sphere is a market that moves at a breath-taking pace and to keep up one needs to continually innovate or be at risk of falling behind. Technologies that are quietly around the corner one day, become raging bulls crushing competitors incessantly the next.
To gain a better in-depth analysis for this editorial, we spoke to Roman Pogorzelski of Trudatum, a financial service heavy-weight with 20 years in the sector. He acknowledges that the Fintech marketplace moves fast but has great faith in his product, saying that “Trudatum is about utility, to better the relationship of client and service provider. You cannot be more flexible than us”.
Indeed, for any business or operation, Trudatum ticks many key boxes; “better efficiency, cost, operations streamline and compliance issues. A shaped product and service to the nature of the specific business. Clients have problems that we may not even know about until we speak to a client, as Trudatum is looking to reach as many different sectors as possible, and thus when speaking to a client in the insurance or real estate sector and that client mentions an issue that they have, there is a new thing to explore for Trudatum. But due to the nature of the technology, we feel confident that it will be implemented into many parts of life and services. We don’t know where Trudatum will go…owing to the very fluid nature of the business”.
That should not be taken to mean that Trudatum has little direction, but should rather be looked from the perspective of the problem. That problem, trust, is so widespread that they simply don’t know how it will appear and how a client would like to tackle it in their unique sector. The global cost of fraud on an annual basis reached $3 trillion last year, an astoundingly large market for a solutions-provider such as Trudatum.
To exemplify this common problem, one could look at HSBC, which has clearly moved to build more trust into their systems as they used a private Blockchain and using DLT passed the $250 Billion mark in settlements. To also compare this to a retailer taking cheques, Trudatum would be able to have cheques with their own hashes, their own ‘identifier’. Because these pieces of paper are a major source of pain for fraud investigators and cost financial intuitions and businesses, building up trust in these more would be a good thing to do. With Trudatum’s technology, it is possible.
How does Trudatum make it possible?
They have created a service where different versions of the document can be amended and yet every party can retain and verify the original from any location. This means that there can be no question of the authenticity of the document that is at hand. The blockchain node network must prove the document has or has not been changed, and that the information cannot be removed.
Trudatum therefore sets up and monitors the exchange of info. Workflow tools immutability is a strong feature, meaning the tools can be strongly relied upon to execute tasks, thus leading to a durable medium. It is complicated technology made simple by them yet secure. But critically, it also means that with the advent of this innovation, the exchange of information worldwide, can be tracked.
Normally a regulator or guardian is acting as a trusted third-party medium but in the case of Trudatum they are actually more of a ‘portal’ that uses democratic consensus of authenticity to keep integrity between the relevant parties in the agreement(s). Because anyone can see the blockchain hash as it is open source, it is a significantly more transparent and immediate solution, should the client make it so to varying degrees. Law firms should now take notice as it could eliminate notaries.
Trudatum is able to utilize most blockchains to achieve their aims but the cryptocurrency Dash is their go-to for cost and speed of the network. Another element that is that the “density of nodes in the Dash system worldwide would prevent a 51% attack”, as could potentially be done in China on the Bitcoin network. But setting up a locally controlled blockchain system for a client could be of more benefit to the communities that use them, rather than trusting the wider market forces. This is because the owners of the private network can maintain a steady hand in the supply of the chosen unit of exchange. Using alternative blockchains if one would need to switch between systems are also possible and would just require the user to input the hash.
In its essence, the Trudatum solution is simplifying KYC (Know Your Customer). The danger when approaching institutions is that the technology needs to be implemented seamlessly or the point is lost. To for instance, register the document. Then incorporate it into current processes, easily and simplistically. The cost is made cheaper by putting some processes online, clearly cutting time and resources costs. And some serious players are taking notice of these benefits of Blockchain seriously.
Shifting Market Sentiment
Trudatum has partnered with Dell and Microsoft, which shows the sort of giants that are looking to utilize blockchain. At the moment they appear to be observing the market, perhaps seeing the best use cases, the government regulation in the market and the most competitive players. Insurance companies are doing follow ups with Trudatum, talks with two central banks are also on-going, demonstrating to just what extent blockchain will come to alter the global financial system.
Roman Pogorzelski says that “I can confirm that the Trudatum platform is being used for exchange of private documents between one of the largest financial institutions in CEE, and over 5 million of its retail and corporate clients”. PKO Bank Polski is certainly not small fry, being the biggest bank in Poland, but it is also certainly not the only major bank or institution alongside previously mentioned HSBC to use blockchain, but a trend is clearly being created.
The Australian government is for instance putting all citizen documents on the blockchain so that documents are not changed, so they are not lost and that they can be viewed by the relevant parties. Australians will be able to easily access their documents. Because the tech can be used for things like tax declarations easily, governments are more keen. This is following along with the now almost atypical response of governments to utilize the technology, for the Japanese and Chinese banks this materializes in using the technology in inter-bank trade.
And if the system is shared by other parties then the cost of implementation of the technology is significantly lowered. Phone companies for example can utilize their major client base. Which is why Dell and Microsoft are in a partnership with Trudatum, their vast databases could always do with cost-cutting. Governments can incorporate every citizen to a distributed ledger that works for the betterment of society at large.
Trudatum need to be selective and look for the largest clients first before moving into the retail sector. Their strategy is to go after the big fish to be able to first interact with the retail clients there through the client’s base and operations and then perhaps to be able to tailor build systems that are unique to Trudatum and its solutions. By Trudatum entering into the retail market, it will place them into contact with a much wider audience and also be able to gain traction and awareness of the technology. To have the ability to screen your client with KYC with your mobile phone and thus make decisions based on that screening. This is an element of trust that blockchain truly looks to build upon.
Roman Pogorzelski claims that “Two years ago, if you asked a person in banking what they thought about Bitcoin they would say that it was for money laundering and terrorism. That CEO’s attitude has changed – now it is seen as an innovation, that the blockchain is looked at as a good thing that can be incorporated”. The quiet technology behind the corner, is roaring.
Roman Pogorzelski is an international sales and business development leader with over 20 years proven track record of successful project implementations within financial services markets. Roman started his career working for several years for American Express TRS Co, followed by managerial roles in leading consulting and payment processing companies (both Polish and international). At Coinfirm Roman is leading the implementation of blockchain-based Trudatum platform for Polish and international financial institutions. A Graduate of University of Warsaw, he holds an Executive MBA Diploma from University of Illinois at Urbana Champaign in the US and University of Warsaw.
Trudatum is a product by Coinfirm, a leading RegTech company worldwide.