22 April 2018
IOM FinTech perspective
Brian Donegan

IOM FinTech perspective

Brian Donegan - Isle of Man Govt Economic Development Department

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In the future, banks may hold identity, not cash!

04 August 2015  |  4683 views  |  0

The biggest transfer of wealth in human history is now underway, as “Baby Boomers” (those born from 1945 to 1965) pass their assets onto their children also known as “Millennials” (those born from 1980 – 2005).

The figure for this wealth transfer is estimated at US$41 trillion. But wait, this is not the shocking bit… the Millennials have recently been represented and interviewed in a major research study and they see a limited role for banks in their future, as they do everything by smart phone. This suggests mass consumer adoption of all things digital by Millennials including digital currencies, in the foreseeable future.

Previous decades of technological innovation have coincided with Millennials’ childhoods, and this has shaped the ways Millennials interact with technology and seems to have affected their expectations for creativity and innovation in their own work lives. Millennials are more connected to technology than previous generations and a quarter of Millennials believe that their relationship to technology is what makes their generation unique. Widespread access to cell phones and the internet have changed how Millennials communicate and interact with one another. Millennials use social media more frequently and three-quarters of them have an account on a social networking site, compared with less than a third of baby-boomers.

The sheer amount of computational power and access to information that Millennials have at their fingertips is unparalleled. Computational processing power has roughly doubled every 2 years and storage prices continue to drop. In 1980, IBM’s first gigabyte hard drive weighed 550 pounds and cost $40,000. Today, consumers have access to 3 terabyte hard drives – 3000 times the size – that weigh less than 3 pounds and cost around $100. Under these trends, Millennials have come of age in a world in which the frontiers of technology have appeared unlimited and so the idea of a smartphone handling all banking needs is no problem… and so, in their eyes at least, there’s definitely no need to visit a bank branch when you have digital currency in a digital world.

There is a critical need in digital currency for user ID to be verified (Sanctions Compliance and Fraud Management also refer). A single solution for all of this has proved elusive until now due to the deeply technical nature of the challenge. A future solution, especially for the international finance sector, has huge positive implications for the banking sector as it removes the last remaining impediment- ID verification in banking transactions - to the success of the digital currency sector.

As I write this a dynamic technical team in the Isle of Man is well advanced in its development of a federated KYC model that may have the potential to provide a solution to the entire ecosystem that is the global digital currency community. Millennials understand how this step change in technology will allow them to buy and sell digitised assets with digital currency, in a digitised world, where identity protection (perhaps provided by banks) becomes paramount. The Isle of Man team in question is reworking the provision of a trusted authority that seeks to associate the public key with the identity of a certain individual or business entity, (correctly matching the secret public key with the holder of the private key lies at the heart of effective high speed low cost transactions using peer to peer encryption technology). As the team completes the product development phase and moves to product execution and verification there will be many heads of innovation in the corporate finance world looking towards the Isle of Man with a sense of anticipation and excitement… 

 

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job title Head of Operations - eBusines and ICT Development
location Douglas
member since 2015
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Brian is Head of Operations for the Isle of Man Government Department of Economic Development. He is responsible for growing the e-business sector on the Island, specifically focussing on digital curr...

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