Blockchain technology has been a transformational technology in the world of finance, and financial institutions have been investing and experimenting heavily. Learn what has been effective, how to move from a technology-first approach to focusing on business solutions and what future products the technology enables that will change the shape of finance.

1. EY Global
Blockchain Summit
San Francisco, CA
April 26, 2017

2. Page 1 EY Global Blockchain Summit
Financial services
Exchanges, settlements, payments and embedded finance

3. Page 2 EY Global Blockchain Summit
Unique
identification
Each participant in the
network is assigned a
public-facing address
(like email) unique to
the participant.
Data reconciliation
Because parties to a
transaction share an entry
on the blockchain,
transaction records are
automatically reconciled
up front.
Asset creation and
transfer
1Assets can be created
or represented on a
blockchain, and
securely transferred
between parties.
Cryptocurrency
Securities
Commodities
Property
Interbank ledgers
Post-trade netting
Peer-to-peer payments
Product chain of custody
Customers
Merchants
Entities and counterparties
Regulators
In financial services, blockchains are used for
2 3

4. Page 3 EY Global Blockchain Summit
► Clearinghouse completed first leg of post-trade trial focusing on
netting process for government treasuries and agency
reposession agreement transactions
► Major global stock exchange revamping its shareholder registry
with distributed ledger technology
► Major financial institution uses blockchain technology to
manage financial transaction reference data
► 15 banks worldwide completed trade finance trial focusing on
accounts receivables invoicing and letter-of-credit transactions
► Major European banks plan launch of new network for tracking
open account international trade, involving products shipped
before actual payment is due
► 47 banks complete pilot of Ripple Connect payment platform
and expected to be in production at select banks by end of
2017
► Major credit card company scheduled to launch business-to-
business payment network supported by blockchain by end of
2017
► Singapore-based bank uses blockchain technology for
interbank payments
► EY piloted customer onboarding tool in Australia and beginning
tests in US
► Major global stock exchange group of domestic banks recently
collaborated on know-your-customer data trial involving
blockchain
► 10 global banks tested distributed-ledger-based know-your-
customer registry through R3 blockchain consortium
Asset creation and transfer
Asset creation and transfer
Data reconciliation Data reconciliation
Asset creation and transfer
Unique identification
Data reconciliation
Data reconciliation
Experimentation has been focused in four key areas.
Securities and
commodities transfers
Supply chain and
trade finance
Know your customer and
customer onboarding
Payments

5. Page 4 EY Global Blockchain Summit
To move to production, you need to build value-driven
applications, not just technology.
By themselves, blockchains are not solutions. Tools are needed to bridge the gap between the technology and the
business applications.
It is the process enabled by the technology that will drive value.
Business processes
Applications
Gap
Infrastructure (data)
Database layer in which information is stored because another type of
database, blockchain, lives in this layer
End-user programs that rely on database technology to store
information
Activities that leverage multiple applications to accomplish a
particular goal

6. Page 5 EY Global Blockchain Summit
Platforms
Reconciliation
ApplicationsBlockchain
Customer
onboarding
Inter-line of
business know
your customer
Interbank
transfer and
settlement
Mortgage
securitization
Technology
Business
Tax
Audit
Regulatory
Asset creation
and transfer
Platforms can assist in turning blockchain solutions into
business designs.
EY has developed platforms as building blocks for blockchain-based applications and to focus on the
technology’s fundamental strengths: asset creation and transfer and data reconciliation.
? ?

7. Page 6 EY Global Blockchain Summit
The platform … … allows …
… which enables the following
examples
Asset creation and transfer
Easy asset securitization, exchange
and bundling across multiple unrelated
entities
Data reconciliation
A single, secure source for identity
management and document control
across multiple parties Customer
onboarding
Managed
accounts
Master data
management
Mortgage
securitization
Such platforms can enable a broad number of business
solutions.
Liability
management

8. Page 7 EY Global Blockchain Summit
Example: customer onboarding
Benefits
Data is held on the blockchain
► Unique customer identifier
Every participant in the network is uniquely identified
with a public address (similar to an email address).
► Personally identifiable information (PII)
protection
Even though the customer can be tracked across
legal entities, PII is not leaked outside of legal
borders, unless permission is granted by the
customer.
► Linked identity attributes
Real-world identity information can be hashed on the
blockchain and associated with your on-chain
identity.
► Cross-legal entity operation
Institutions can maintain a shared network and
master registry of know-your-customer information
about mutual customers.
Unique identification via reconciliation
Blockchain Database layer where information is stored

9. Page 8 EY Global Blockchain Summit
Example: mortgage securitization
Benefits
► Data quality
Mortgage data associated with securities is
significantly improved and any changes to the
underlying data ripple across network in real
time.
► Reconciliation elimination
Reconciliation is no longer required because all
entities have the same data.
► Risk rating
Better mortgage data and more transparency
result in more accurate risk ratings.
► Transparency
Transparency provides individual mortgage
visibility into pools and securities.
Asset creation and transfer
Blockchain Database layer where information is stored
Data is held on the blockchain.
I. Individual mortgages II. Mortgage pooling
A
B
D
C
E
F
III. Securitization
A
B
C
E
DF
Security W Security X Security Y Security Z
Investors

10. Page 9 EY Global Blockchain Summit
Immediate opportunities may be in private blockchains, but
don’t ignore public
► Bitcoin is the largest, and most secure, computer system ever developed.
► The network provides absolute proof of existence or occurrence of history in
the digital world: bitcoin (the currency) is the internal unit of account.
► Bitcoin’s massive peer-to-peer network likely will provide more benefit to
applications outside of just bitcoin transactions.
► Criticisms about bitcoin align almost perfectly with the criticisms of the
internet in the mid-1990s — scalability and security issues, ease of use,
etc.

11. Page 10 EY Global Blockchain Summit
The story of the blind men and the elephant.
Source: https://linkiya.wordpress.com/2015/07/13/the-six-blind-men-and-the-elephant-differing-perspectives-on-grades/

12. Page 11 EY Global Blockchain Summit
Innovative technologies require innovative thinking to
manage disruption and old business models may not work.
As the industry matures and
foundations are established:
► Self-sovereign identity
► Consumer protection
services
► Legally recognized coding
frameworks
► Consumer adoption
It will be a catalyst for a new wave of
innovative financial products, such as:
► Peer-to-peer (P2P) retail payments
► Machine-to-machine payments
► Exclusively digital assets
► Digital rights management
derivatives

13. Page 12 EY Global Blockchain Summit
The most significant opportunities will be in new financial products and
embedded finance, likely enabled by public blockchains.
Example: financial applications in automotive may include:
If you can digitize it, you can securitize it!
Auto financing
► Loan payment
► Dynamic lease pay
► Service records
► Vehicle history
► Loyalty program
► Fractional ownership
► Crowdfunding
► Dynamic coupons
► Dynamic insurance
Vehicle access
► Car-sharing access
► Vehicle diagnostics
► Vehicle registry
► Vehicle personalization
► Digital persona
Geo commerce
► Car- and ride-share pay
► Road toll pay
► Electric vehicle smartgrid pay
► Fuel pay
► Drive-through pay
► Parking pay
► P2P sharing pay
► Event insurance
Supply chain
► Transfer of assets
► Assigning provenance
► Serial number
management
► Sharing logistics
information
► Verified metadata
► Event release of funds
► Inventory financing
► Verified transactions

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All Rights Reserved.
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