Rethink Trust 2018: Mariana Gómez de la Villa ,The state of trust—can DLT help rebuilding it?
[Music] thank you much Christmas was great that was a great opening for the conference for those who are joining us my name is Alexa Carver from the founder of everything trusted by the bay conferences welcome our second keynote speaker is mariana gomez de la villa she is global program manager for guilty technologies at ing and we're very happy to have one of the global leaders who is a local company and she has actually a history of collaboration with abided by events and g's for instance one of the strong users of Scala programming language which is used in spark spark is written Scala Pasha Kafka's written Scala and Angie has strong expertise and implementing market service architectures and scalable systems data systems in Scala so they send speakers regularly to our flagship conference scale by the bay wishes in held in November in San Francisco and this year we'll have again representation so we knew Angie as a technology leader in addition to being a finance letter and and we found mariana has done some really interesting work you should look at the blog post that angie was it from my understanding they approached air exactly as we approach this conference they identify some verticals they saw what the problems are and so they really went and the proactive way to solve this so very happy to have a run before before she takes the stage I'd like to invite folks in the back please join us we have a lot of because we don't have a sound barrier here so we ask everybody during the talks to please keep a conversation volume low we have the whole second floor if you see around here each of the curtains you can take the stairs on both sides of the common area and you can go to any of the dozens of rooms for meetings which you're welcome to use right so we please ask you be cognizant of the voice carrying through the the curtains from the common area to hear and with that I give the stage to Mariana thank you hi everyone how are you um so my name is mariana gomez la Villa I'm the program manager for ing for blockchain technologies actually and the reason or actually what I do in a normal day is to see it with different business lines to see actually how blockchain can help us deliver new added value services to our customers right this may be in Amsterdam this may be in a different location for example but as you can imagine different markets have different needs and therefore we are there to help these from business lines to create these new products we started as ing in 2008 more or less looking at obviously what was going on with regards to Bitcoin right and there was the release of the white paper some people was enthusiasts personally and then a more or less in 2014 the first member actually of the exploration team as we call it I started you know gathering interest internally they started looking you know what who actually was interested on the technology who what actually was already buying Bitcoin who was already maybe doing something with my name or what was the day well the interest from the people actually internally within ing to research this technology further in 2014 more or less is when a lot of people gathered ten people actually were part of this exploration team and then the exploration team is starting looking into what actually this technology could mean for ing and for the things that we actually do as a bank in 2015 more or less people decided this exploration team decided that actually the technology could be really interesting for ing the reason behind that is as you can imagine as ing we have a ledger we have you know we to keep record of those transactions that our clients do with other parties right and that record of transactions is our own version of that history and then another party will have their own version and then you have fragmentation on those Ledger's you have two different stories right and blockchain was coming actually to solve that problem yeah how can you look at the same time at the same information without having a third party actually telling you what the truth of that transaction was so then we decided in 2015 to join r3 which was a consortium form of different institutions in order to research what blockchain could do in different industries is this is not only for financial institutions other industries also join for example health for example energy and so on and so on and then these different institutions starting to research what blockchain could mean for him in 2016 we started actually with exploration hands-on that means we set up a team of engineers it was not like a huge team it was only 8 engineers for example that really proved you know to be quite good at for example making some smart contracts in the solidity already starting to research what hyper laser was doing started to research what other blockchains were doing what we did in this year was we started mixing different asset classes right so for example maybe a bond with one a specific blockchain maybe an interest rate swap with another specific blockchain and see how those assets could actually fit in different block chains because each one of them was evolving in a different way each one of them would have a specific hurdles each one of them would have a specific ways of modeling that data and that was actually a really important turning point for ing right that sometimes you would have one blockchain that will fit better and a specific asset class than others in terms of transaction throughput in terms of you know when the transaction finality was happening and so on and so on so in 2016 we deliver over 30 proof of concepts I believe it was in different areas of the bank for example in payments we also deliver some in financial markets Bank tracery yeah lending identity kyc and so on and so on and then we decided okay you know what we have learned so far is that these technologies still evolving and is evolving really fast but it has a specific hurdles it has specific points that we need to take in consideration in order to know where can we really add the value at the current state of the technology so we decided to leave proof of concepts aside we chose five different cases that we believe we could actually move forward towards delivering a real value proposition and then we started what we call the JIT of the pilot the leader of the pilot was because we deliver that year six yeah pilots actually in production with different technologies to see how they would fit to serve our clients in a better way so 2018 we believe is going to be the year where we're going to go in real production in terms of you know delivering those products into a commercial cycle the reason behind the year there you know the whole year is because as you can imagine as financial institutions we really need to make sure that what we are delivering is temper proof right that actually the products that you are as clients using and that are offered by all these different groups are working into the liberating something on blockchain is actually something that you can trust and that you can actually use without having to worry I bet you already know this but finance was the first industry that actually pick up on blockchain I already explained a little bit why right we saw the difference yeah in the way Ledger's weren't being well being handled at that time and we have seen a pickup actually not only on the on the banking and finance industry but other industries are starting to catch up for example we see that insurances are starting to do their first proof of concepts they're a little bit lagging behind in terms of experience but they're starting to catch up as well Healthcare is starting to have as well some of the cases I don't know if you have heard about the blockchain baby right which was a livery in Holland actually and was you know how can you track actually the administrative part of having a baby that is born in the dodge society with for example the grants workers etc using media and entertainment as well being a yeah one of the industries where disintermediation is also happening heavily and you see other industries like energy and utilities having already their own conferences having ordered their own proof of concept and their own things delivering production right but trust if you really think about that and if you think back obviously blockchain was born because of the lack of trust in financial institutions we created a track the crisis in 2008 maybe most of you by looking at the faces might not remember that because you look quite young but but indeed there was a huge crisis worldwide right and then that crisis actually it was a one who made that yeah banks lost trust on the people and then the rise of the cyberpunk community right that wanted to take over and said ok I don't trust banks anymore I don't trust the the governments anymore I want to have actually you know access are being able to send money peer-to-peer without having a third party involved there so I think it was awakening for the financial industry we changed not only obviously the fact that that we do things different but we also changed the way we deliver services right as I ng you have probably seen we have a huge amount of yeah programs going on internally to change that culture to change the way we look at our customers to change the way we actually do things internally and to change us well hopefully the message and to reinstate the trust within the society for the financial industry again so going back thinking about it block chains were not created to serve financial institutions on the contrary right and that means that they were designed without the requirements that we currently have we are a regulated financial institution we need to comply with a lot of requirements for a reason I'm not saying that those are bad you know there are there a recent order to protect ourselves and to protect you guys and therefore we needed to help as well for this echo system the Co system of these religious ecosystem of lodgings to evolve so then they could also cover our requirements so thinking on the history you can see all the way in this side the cryptocurrencies for example I beat going where the first ones created right that had blockchain then everybody start looking unto okay Bitcoin is only one of them we Sur create another type of launches that have different things that can solve different problems and that have different functionality and as a time evolves then we start really talking about distributed Ledger's this is actually that knowledge that ing is using we're not using blockchains we're using these rooted Ledger's and there is a really significant difference right in the way for example consensus is rich in the way these technologies are deployed and as well in the way they can solve different hurdles that we currently have with specific block chains so we believe as strongly the financial industry is moving away from block chains into actually distributed ledger technology and if you really think about the potential of it I mean besides the use case as a typical use cases on operational simplification and you know reduction on liquidity and a better collateral and so on and so on if you think about it on the macro ecosystem way you see for example that we could think of also banking and retail you know as to part of this of the of the quadrants and then you can think about this related technology to help for example deliver the severe infrastructure like in the in the music industry like for example you work good also also used you can have a store of value like the I cos like bitcoins like cryptocurrencies or you could also have for example a new technology stack or creation of new asset classes what I was mentioning before right so how do you talk a nice an asset that is already existent and how would you deliver that value to the customers what kind of rules will they need and what kinds of problems are you actually solving and in those two quadrants is actually where most our experimentation took place until now so I was mentioning okay we lost the trust we know we really need to regain it and we want to regain it and in this course of the last probably 10 years we have been working really hard as ing to change that right how are we doing it we're doing it by creating an innovation culture this is really really important to understand because the way we look at things and the way we do things right now is not any more by saying oh you know I'm Mariana I know it all you know and I can tell you that the best product that I'm going to build is it is the amazing one and you're gonna want to buy it no no that's not the way we look at things anymore we have a client centric culture where we really have to go and interview a lot of clients on what exactly are their needs what are the problems we involve them in what we believe that is a creation of a Minimum Viable ecosystem so instead of Minimum Viable Product remember when when yeah you do an iteration of a specific product and then you release it to production we do the same but with a bigger ecosystem so that means you evaluate a value chain in a specific asset and then you get involved different peoples of that value chain in order to do for you sorry to deliver the value that the whole ecosystem is looking for that's the only way that you can actually influence for the changes that you need and that's the way that you can actually solve the problem that is relevant for everybody and not only for financial institutions for example write a proof of that is for example the launch of the pilot that we these we call it easy trading connect it was a winner of an innovation boot camp and we did two pilots on did on this the first one was with a cargo of crude oil that was on 2017 it was on on aetherium and that cargo was going from Africa all the way to China and it got sold three times on its way in that case we for example included people in this pilot such as oil companies we included for example as well a different Department right or different regulators the agents and we created this distributed ledger so then the energy sector could actually start trading those commodities on blockchain so it was not a thing imposed by ing but it was actually the creation of a whole group or consortium of people you know that so they are at value of this technology and we put it in practice but as you may remember maybe you know but in 2017 more or less in in that time which was February aetherium didn't have yet a way to handle confidentiality and privacy right so if you would to deploy for example a transaction then all the notes that are validating the transaction will have insight into that a specific transaction so obviously we did it in a private way in a private group let's say in the private blockchain but still the validators nodes would have access to that information so we have to redo that and for that we use quorum so the second transaction that we did and was launched actually in February in January this year in 2018 was with a cargo of soya beans and once again we included for example the Department of Agriculture in the US it was such a huge effort that actually even it was commented on the Senate of us you know as a proof point on how this technology was achieving that different people within a value chain were actually arriving to a consensus and were actually cooperating each other with each other instead of actually being competitors from each other with this in cooperation with another bank receipt a general and then we also included odors like ABN AMRO and now we're in conversations with with more banks in order to create a bigger ecosystem in that sense well we're talking about in real estate in trust and a huge part of it was as well regulators right regulators need to over look at what we are doing they also need to learn what we are doing they're also need to learn how this really our technology will impact what they regulate currently and they're in the part of learning and I must say for example that a Dutch regulator is quite advanced in the understanding of this rare technology they're one of the ones that are really willing to listen they are really smart questions and they have been doing their own pilots themselves but still they need to happen and a little bit of shift right in those regulations there are parts that still need to evolve for example if I were to do the trade case that I mentioned before you know even though if the Dutch central bank would be like oh my god I totally understand smart contracts and it's cool for you ing to do it on a such a way if I if something goes wrong and if I go to the court of law in another country and I tell them a you know the transaction was done by a smart contract the judge will tell media sorry but in here smart contracts are not legally enforceable right so the ship doesn't need to happen in Anoka way but it needs to happen in a global way as well and we believe that by creating those minimum biological systems is the only way that we can actually leverage each other to make the push and the shift on that specific piece of salt another important thing is a liability sharing so for example I believe I BM was talking about yeah what do you do with identity write some regulations in certain countries are you know Pro let's share identities from each other you know and then you don't have to bother the person to go to the branch to identify themselves and then you can give them the bank account for example but in some other countries the same regulation is interpreted in different ways and for example in Harlan we're not allowed to do that right me as I ng I need to check that whoever is doing the transaction is who he says his and I cannot rely upon the KYC or the anticipation of a third party to tell me that actually you are who you say you are I have to do it myself otherwise I am liable and that shift on mentality also needs to happen in order for us to really deliver you know a true identity on distributed ledger and last but not least obviously the central bank cryptocurrencies or central bank currencies issued by central bank so then they're backed you know imagine for example that I would give access as financial institution to crypto assets right and then with the volatility maybe my corporates you know a deep problem because suddenly there was a price on the change and then what the product was worth one minute ago now is worth totally something different that's a reason why we cannot rely upon cryptocurrencies at this stage and that's whether that's also one of the reasons why we do not offer cryptocurrencies within our services because we are regulated and we need to make sure that whatever we do is stable and it's properly overseen by the regulators we also did something for example with regards to a kyc as I explained before you know the fragmentation sorry on the regulation makes that actually sometimes you can deploy something in a specific market but then you cannot deploy it in another market because that interpretation is totally different right so then how do you really achieve a distributed ecosystem when it's still there's a lot of fragmentation in that regulation we need to push for that together and we will only do it if we do it together really the technology keeps evolving and there are new features there are new items are new yeah things being developed as we speak I think on a weekly basis using new releases from different technologies right and different ways to tackle the hurdles that we currently see as a financial ecosystem one of those is a scalability we need to ensure that the transaction throughput from different cases is there if you think about a payments case you might need for example a transaction put throughput of five thousand transactions on two thousand five hundred transactions per second but maybe in mortgages you don't need that transaction throughput right in mortgages how many mortgages can you give a second as a bank so then there are places where the technology is already of value and there are places where it still needs to evolve a little bit in order for you to really deliver the value that you're looking for and how can we help that evolution well for example you have also interoperability we already know that different Ledger's are going to exist there with different assets right and those you're gonna have to talk to each other how are we gonna do that Harlan ensure that actually the data provenance is not been lost within the modeling of the different assets in the different Ledger's we're also working with your institutions on that and last but not least privacy and confidentiality we actually open source last year an algorithm to ensure privacy and confidentiality it was warned by for example the cases that I mentioned before on the payments you know I don't want someone else which is validating this transaction to know what is happening and therefore we chose to your knowledge proofs and what we did was increased performance and we did it non-interactive so what you can do is you can hide a number within a range of numbers with it meaning let's say you know I'm Mariana and then I want to go to Albert Heijn and I want to buy a pack of cigarettes but I don't want our behind to know that I'm 40 because I'm dating a guy that is next to me you know and maybe he thinks that I'm too old for that and maybe I don't want as well are behind to know what my birth date is so therefore I could tell them you know okay I can buy these cigarettes because I'm above 18 without them learning what my birth date is and what actually my age is right but you can do this in a lot of different aspects for example I can also apply for a mortgage without telling them what actually my salary is right or you can also hide for example the location if you are doing a tracking for an insurance or for a internet-of-things type of a container transaction you know you can also hide for example yeah the fact that you are I don't know applying for for a specific payment and you don't want to disclose what the balance of your bank account is so we thought okay as financial institutions most of the times we're going to talk about numbers whether that's a lay alone where it does have payment whether that's a specific location whether that's a trade so how can we make or how can we improve actually this technology to make it perform better and what we did is we open-source it we open-source it because again we believe you know that we have to create a record system we don't know best and we needed as well different parties to testes to help us whether you know they have maybe better ideas on how to improve it maybe they have better ideas on how to apply it you know and that's the reason why we actually open sources instead of keeping it as patent or private so in a nutshell ing has a liberal until now 44 proof of concepts including for example laughs six thank you six live pilots I mentioned three already of them but we have done as well some transactions with HSBC we have done for example an atomic swap in a high quality liquid assets change which was by the way the first legally enforceable transaction in the ecosystem we mean by that is remember when I said that if you go to the court of law and they say okay this wasn't a smart contracts in here that's not legally enforceable well we included for example in that sense a custodians of those assets right we included as well observatory notes from regulations and then they could actually Bouch that the transaction was happening on this at the swap the ownership of those assets the high quality versus a non high-quality liquid assets were being exchanged real time right so the transaction was legally enforceable we do this by the creation of minimum by a lack of systems again are in different incumbents from different value chains in order for us to really have learnings as an industry rather than in silos we have created a we call double option university where we actually train different people inside ing internally to see what can this really do for them right in their day to day how can actually that impact their day-to-day and how can it improve as well the services that they are currently rendering to our clients we open source solutions such as the seer knowledge range proofs and last but not least we also work on different industry collaboratory groups if we don't do this as an industry then we are nowhere right this is a network effect type of technology and that's also what is cool about it so what we believe is the way we can actually regain that trust is by capitalizing on the industry knowledge there's a lots a lot a lot to learn out there there's a lot being created as a lower being talked about so then you really need to you know talk about it with your peers with different people within the industry you don't have to know it all by yourself or learn it all from scratch how about very strict evaluation on what actually you do and where do you put your resources you know if you are gonna do something think about are there any regulatory hurdles for example that or any law that we will have to change maybe there's something that you can do that can already deliver the value without you having to wait for years you know for the shifts to happen and last but not least they sign always exploratory partnerships in a consistent type of way the insights that you can get from peers say insights that you can get from people that looks at it in a different perspectives are huge so don't underestimate that value yeah thank you very much guys [Applause] Thank You Mariana so at this point we have a fork a hard work in the program we have ten minute coffee break if you guys need to do the rest around the back of the building and that also there on the second floor so there is a workshop track which starts with hyper laser fabric workshop taught by Arnold the horse with a core number or the Heppell a larger team and he is with IBM so if you want to get hands-on there is a two-hour block on hyper logic fabric which begins in on the second floor at the baragas all which is behind the screen so you need to go to the back of the building you need to send the stairs and highly recommend that you do that then you can peek through the curtains you can get an amazing view of this hall and then you go all the way back and the workshop is there and this is where we're gonna have the whole day for instance if you want to understand why you should build your block chain and function programming languages like Scala you need to attend the Topol workshop exactly for this purpose and and please familiarize yourself we have a whole second floor we'll have a lot of meeting rooms which you can use for yourselves you can sit there and work on your laptops you can have conversations it's really an amazing facility for separate conversations highly recommend you guys check it out we have unlimited continuous and uninterrupted supply of coffee which is going on with all the other things at the bar so we don't have coffee just during the coffee breaks we have it continues it's a hallmark of all by-the-by events please take advantage of this and we are gathering here back at 10 after 10:00 sharp so please be on time for the for our next series of talks