Articles related to fintech (financial technologies) and fintech software development.

How does Blockchain work and how can it change our lives?

How can Blockchain tech work?

Before attempting to understand how blockchain ledgers operate, it might be worth having a look at traditional ledgers. For centuries, banks have utilized ledgers to keep databases of account transactions, and governments have utilized them to keep records of property ownership. There’s a central authority — that the bank or government office — that manages changes of all transactions, so that they could identify who owns what, at any given time. This allows them to check whether new transactions are valid, that the same $1 isn’t spent twice and houses aren’t offered by people who don’t own them.

Since users trust the manager of this ledger to check the trades properly, people can buy and sell from each other even when they have not met before and don’t trust each other. The middleman also controls access to information regarding the ledger. They may decide that everyone can find out who owns a construction, but only account holders can check their balance. These ledgers are centralized (there’s a middleman, reliable by all customers, who has total control over the system and mediates every trade) and black-boxed (that the functioning of the ledger and its information aren’t completely visible to its customers).

Digitization has made these ledgers faster and simpler to use, however they remain centralized and black-boxed. Blockchain delivers exactly the same record-keeping performance but without a centralized architecture. The issue is how it may be sure that a trade is legitimate when there isn’t any central authority to check it. Blockchains fix this problem by decentralizing the ledger, so that each user retains a copy of it. Everyone can request that any transaction be added into the blockchain, but transactions are only accepted if most of the users agree that it’s legitimate, e.g. that the request comes from the authorized person, that the house seller has not already sold the home, and the buyer has not already spent the cash. This checking is performed reliably and automatically on behalf of each user, creating a extremely fast and secure ledger system that is remarkably tamper-proof.

Each new transaction to be recorded is bundled together with other brand new trades to a ‘block’, which is inserted as the latest link on a lengthy ‘chain’ of historic trades. This chain forms the blockchain ledger that’s held by all users. This work is known as ‘mining’. Anybody can become a miner and compete to be the first to solve the intricate mathematical problem of creating a legitimate encrypted block of trades to add to the blockchain.

You will find numerous means of incentivizing people to do this job. Most frequently, the first miner to make a valid block and then add it to the series is rewarded with the amount of fees for its transactions. Fees are currently about $0.10 per transaction, but cubes are added regularly and contain thousands of transactions.

Miners may also receive new money that’s created and put into circulation as an inflation mechanism. Including a new block to the series means updating the ledger that’s held by all users. Users just accept a brand new block when it has been verified that all of its trades are valid. If a discrepancy is found, the block is reversed. The block is additional and will remain there as a permanent public record. No user can eliminate it. There can be no ‘imitation ledger’ since all users have their own real version to check against. These blockchains are described as ‘permission-less’, since there’s no special authority that could deny permission to participate in the checking and adding of transactions.

It’s also possible to install ‘permissioned’ blockchains, in which a limited group of actors retain the capability to access, assess and add transactions to the ledger. This enables ‘mainstream’ actors such as banks and governments to keep substantial control over their blockchains.

How Blockchain technology could change our own lives

Blockchains are a remarkably clear and decentralized way of recording lists of trades. Their best-known use is for digital currencies like Bitcoin, which declared blockchain technologies to the world using a headline-grabbing 1000 percent increase in value at the course of one month at 2013. This bubble quickly burst, but steady expansion since 2015 means Bitcoins are currently valued higher than previously. There are many different means of utilizing blockchains to make new currencies. countless such currencies are made with different features and aims.

How Blockchain-based currency transactions create fast, economical and secure public records means that they also can be utilized for several non-financial tasks, like casting votes in elections or demonstrating that a document existed at a particular moment.

Blockchains are particularly well suited to situations where it is imperative to understand ownership histories. As an example, they can help manage supply chains better, to provide certainty that diamonds are ethically sourced, that clothes aren’t made in sweatshops which champagne comes from Champagne. They could help finally resolve the problem of video and music piracy, while allowing digital media to be legitimately bought, sold, inherited and given away secondhand such as novels, video and vinyl tapes. They also present opportunities in all sorts of public services such as health and welfare obligations and, in the frontier of both blockchain development, are self-executing contracts paving the way for companies that run themselves with no human intervention. Blockchains shift some management over daily interactions with technology away from fundamental elites, redistributing it among users. In doing so, they create systems more transparent and, perhaps, much more democratic. Nevertheless, this won’t likely not result in a revolution. Indeed, the authorities and business giants investing heavily in blockchain development and research aren’t trying to make themselves obsolete, but to enhance their services.

There are additionally some wider issues to consider. For instance, blockchain’s transparency is good for matters of public record such as land registries, but what about bank accounts and other sensitive data? It is possible (albeit just occasionally and with significant effort), to recognize the people associated with transactions. This could compromise their privacy and anonymity. While some blockchains do provide full anonymity, some sensitive information simply shouldn’t be distributed in this way. Nevertheless, although blockchains aren’t the solution for every issue and even though they will not revolutionize every aspect of our own lives, they might have a substantial effect in several places and it is crucial to be ready for the challenges and opportunities they pose.

 

A brief guide to Initial Coin Offerings (ICO)

Initial​ ​Coin​ Offerings​ ​(ICO)

The introduction of Bitcoin in 2009 gave us resources and infrastructure to transact primitive digital tokens of value (bitcoin in the event of the Bitcoin blockchain) over the open public internet without trusted intermediaries. However, so as to create new tokens one either needed to scale and deploy a new blockchain network (likely forked from Bitcoin), or problem tokens on top of an existing blockchain network like Bitcoin (through metadata encoded into raw transactions). The former was an uphill struggle due to challenges of scaling and achieving network effects to get a new blockchain, and the latter was challenging due to the complexities of trying to encode sufficient information related to new tokens into raw Bitcoin transactions. Neither model was perfect.

But with the introduction of Ethereum in 2015 arrived the the Ethereum blockchain not only provided the infrastructure for transacting primitive digital tokens (ether in this case) but also provided the capability for easily creating and autonomously managing other secondary electronic tokens of value within the open public internet without reliable intermediaries.

Applying this concept of smart contracts, which can be effectively applications running a top a decentralized network, tokens can be generated and allocated to users, and made to be readily tradable. This process of creating tokens and distributing them to customers in exchange for a network’s primitive electronic token (cryptocurrency) is called an ICO process, and can be viewed as a novel distribution channel for assets.

Not all tokens are created equal

This post Isn’t supposed to be an introduction to the technically rich world of cryptography, blockchains and consensus mechanisms, for which there are numerous excellent entry level resources. However, the key point to bear in mind is that secondary tokens are not like primitive tokens (cryptocurrencies such as bitcoin and ether) that are inherent to the “structural integrity” of a blockchain network.

Open peer-to-peer worth transfer networks, for example Bitcoin or Ethereum, need to endure complex attack vectors within an open hostile environment – where all parties (hosting or accessing the community) are assumed to be self interested and focused on optimizing their own value. In this scenario the key question is how do all parties be incentivized to work for the greater good of securing the community while fulfilling their self-interest. This leads us into the real innovation of this blockchain network, the primitive token (or cryptocurrency).

In addition to being the subject of transaction between parties On the network (the users), the crude token is also used to incentive key parties competing to reach consensus (the miners) as quickly as possible on the state of this blockchain ledger (i.e. who owns what primitive token). The reward for securing the network and reaching consensus is either new supply of crude tokens or transaction fees. In this model, trust is made from mistrust through expending energy in the mining process, which makes the violation of the “sanctity of the blockchain ledger” costly and economically unfavorable to the option of procuring the system and being rewarded in the native store of value for the effort of doing this . It is a self-contained system that is simple and beautiful in its implementation, and requires no more controls and rules than are necessary.

Here you can see the core purpose and the unique nature of a cryptocurrency, and why it is fundamental to a blockchain network: cryptocurrency is the atomic element where the open public blockchain network is forged. On the other hand a secondary token, that is made in addition to a blockchain network, is merely a representation of some “property rights” that may (or may not) be external to the blockchain e.g. “real world assets” or access to products/services.

Inherent blockchain and its cryptocurrency to create and issue (through an ICO procedure) secondary tokens for any purpose, but this only uses the open public blockchain as an independent “custody or notarization” data layer.

ICO and token issuance

Among the most obvious and natural use cases for ICO based Secondary token issuances is to represent some form of conventional security e.g. equity, debt, participation in profit sharing, etc.. In addition to issuance, allocation and transferability being programmed into an immutable smart arrangement, one can also predefine a set of events like cash flow rules which could be triggered either at set times or by particular external events. There are a number of reasons why a public blockchain infrastructure is logical for the issuance and management of financial securities, which are mostly associated with custody regulations around how client money and asset are managed through their life cycle.

However, since the “offer and sale” of securities is in and Of itself highly controlled, many models have been devised by startups to allow the issuance of tokens through an ICO distribution version whilst not falling afoul of securities regulations. As well as the question around whether a token is a security or not there are also lots of other unanswered questions related to tax of capital gains and KYC/AML rules. These are a few of the regulatory and statutory financial considerations which are currently an ongoing area of development and appraisal.

Recent SEC investigative report, these aspects will be the most crucial on how ICO And the issued tokens are classified by regulators globally.

Implications of Blockchain in Securities industry

The exploration of Blockchain applications in the securities Industry has already begun and seems possible to pick up steam in the next several years. Many financial institutions have created in-house teams and study labs to construct and examine Blockchain networks, or are working together with third party sellers specializing in this space. In addition, companies have sought to participate in collaborative efforts with consortia to develop a frequent Blockchain frame and make industry standards.

The used cases of Blockchain applications are between the equity, debt and derivative markets. Since the implementation of these Blockchain applications advances, issues are being raised concerning how processes involving Blockchain fit within the present regulatory framework. In light of the trends, this section highlights some key factors linked to Blockchain execution and regulation.

Implementation Considerations

Developing Blockchain applications in the securities Industry can present many challenges. In trying to overcome those challenges, some of the essential considerations for market participants in executing a Blockchain network may consist of governance, operational architecture and community security.

Governance

One of the key governance principles of the Bitcoin Network Was to establish a “trustless” environment open to the general public, where no single party is responsible for, or enabled with, governing and operating the network. Although this kind of network may offer certain advantages like providing a decentralized system which isn’t dependent on any particular party to operate, it may also pose some vulnerability in case it contributes to inefficient management of the machine. As an instance, recent events have shown that lack of a central governing body for its evolving Bitcoin Network has generated concerns for the system, as participants try to ascertain an approach to handle greater transaction volume. Therefore, a Blockchain network dependent on the use of a trustless system, where no party is responsible or liable for the appropriate operation of the machine, may pose risks to investors and markets. Many market participants are working to use private Blockchain networks using a governance structure that takes into consideration that participants in the network are generally known and trusted parties.

When setting up or engaging in a private Blockchain Network, in which multiple organizations across the sector are involved, a number of the first governance questions that need to be answered relate to the operation of the network and deciding that bears responsibility for it. Below are the types of questions that market participants may wish to consider when creating a governance structure to get a Blockchain network.

· Can the governance arrangement for the Blockchain system be determined by a single entity or a set of firms? How would the pursuits of end-users, that aren’t participants on the community, be represented?

· Who would be responsible for ensuring adherence by amateurs to the prerequisites established for the Blockchain network, and how could this be ran?

· Who would be accountable for the day-to-day operation of this system and resolving any technical problems on the network?

· Who would be responsible for setting and maintaining a affordable business continuity plan (BCP) to your network, to address some unanticipated emergencies or significant business disruptions?

· How would any conflicts of interest in the performance of or participation on the community be addressed?

· How would mistakes or omissions about the Blockchain be mirrored or rectified?

Operational Structure

A Vital concern for market participants in executing a Blockchain system is discovering the operational structure of the network. The operational structure of a Blockchain system would normally include creating a framework for: (1) network participant access and related on-boarding and off-boarding processes; (2) trade validation; (3) asset representation; and (4) data and transparency demands. Following are a few locations that market participants may want to consider when creating such a framework.

On-boarding, Off-boarding and accessibility:

It is vital for a Blockchain system to launch, as portion of its operational infrastructure, the standards and processes for establishing and keeping participating members and determining their level of access. Especially, in developing a Blockchain community, applicable parties may Want to think about how they would:

· Establish eligibility standards for participants to gain access to the network;

· Establish a vetting and on-boarding procedure for new participants, including establishing an identity verification process and executing proper user arrangements prior to on-boarding;

· Grow an off-boarding process for participants that may be non-compliant or disqualified for violating securities laws, rules and regulations or for violating system rules; and establish exclusion criteria to discover previous participants which might have been disqualified;

· Memorialize the terms of engagement and code of conduct required from all participants;

· Establish varying degrees of access for different player groups (e.g., direct network participants . indirect users running transactions via direct participants)–that might include restricted access to certain data sets, and even constraints on ability to read or write about the shared ledger; and when the network includes global participants or entities from different countries, it may be desired to present special focus on regulatory requirements in those various jurisdictions, particularly as it relates to privacy and information sharing; and

· Determine which sort of access would be given to regulators.

Transaction validation:

As previously described different kinds of methodologies before launching a transaction identification methodology, network operators are most likely to evaluate the advantages and disadvantages of each methodology. In doing this analysis, some prospective questions network operators might desire to consider are mentioned below.

· If consensus-based, would it take a proof-of-concept or would it be an easy consensus algorithm? How much latency and sophistication would that add to the validation process? What is the risk of collusion by multiple parties to validate a fraudulent transaction?

· In case single-node verifier (i.e., one single node will be responsible for confirming all transactions), how would that verifier be determined? Is the simplicity and speed of a single-node verifier value the concentration of risk? What would be the backup or recovery process in the event the single-node is unavailable or endangered?

· How would the amount of nodes needed for verification be determined? If other nodes or arbitrary nodes are put up as verifiers, how could the order be established? Does this procedure expose the network to possible dangers from a number of nodes?

· What procedure will the system embrace to rectify or correct any erroneous entry that may be recorded on the shared ledgers?

Asset representation:

To the extent an asset is represented on a Blockchain network, Operators will need to determine how those assets will be based on the community. Following are a few factors operators may want to take into account in the investigation.

Will assets be directly issued and digitally represented on The system? Or would they be issued in traditional form and subsequently tokenized on the community? Would the network consider both kinds of asset representation?

• If tokenized, what extra security dangers and complexities are posed? How would any loss or theft of the conventional off-chain advantage be managed? How would asset fluctuations (e.g., stock splits and conversions) be handled?

• Will the network only permit new advantage issuance or can it allow on-boarding of present assets?

How would money be represented on this network? Industry participants are contemplating a variety of versions to ease the cash aspect of a transaction settlement. For instance, in a recent effort, a few banks are tinkering to create a virtual “settlement coin.”

• If cash-backed settlement tokens are utilized, would these tokens be termed as virtual money? Could there likely be a scenario where multiple such native tokens are made by various networks or companies? In that case, are they tradable?

• If fiat money (i.e., money that’s created by the authorities of a country to be utilized as cash) is used and settlement happens off the system through a conventional cash payment process, how, when, and from whom will the trade and asset transfer be recorded on the network?

• How will a participant’s ability to fulfill the money obligation be determined? Can a deposit be accumulated from network participants to be utilised in the event of non-payment? How will this type of deposit be calculated?

Read more about Blockchain based capital market systems here.

Empirica presented robo advisory software at FinTech Connect Live in London

Empirica took part in the biggest FinTech Event in Europe with almost 2500 attendees from 44 countries and 145 exhibitors & partners, taking place in London this December (6th & 7th). FinTech Connect Live combined a large scale expo, with 180 experts speaking in 120 dedicated conferences focusing on different FinTech subsectors, like WealthTech, InsurTech or PayTech with strategic discussion based sessions, keynote presentations, product demos and interactive workshops.

fintech-connect-live-2016Empirica proudly presented own white label solutions like an intelligent Robo-Advisory Platform, Algorithmic Trading Engine and FinTech Software Framework as well as development services among both tech giants and brand new start ups with sophisticated niche product offerings. Anyone interested in speaking with Empirica about building the bespoke FinTech solution behind own service could meet our team at the stand. We shared experiences gained for over 6 years of developing solutions for financial institutions and FinTech companies, including robo-advisors. We ran many interesting conversations about new market trends and needs, specially in wealth management space. Our Robo-Advisory Platform received huge attention from asset managers and investment companies participating in the event.

Empirica presented also company showcase demo at the showcase theater. While presenting our experiences, CEO of Empirica illustrated the most important issues of building tailored FinTech software.

fintech-connect-live-2016-sDuring the conference there were many interesting presentations and panel discussions about future trends of robo advice and advancements in the fields of InvesTech and WealthTech and other FinTech sessions like: the future of banking, blockchain rising, opportunities and risks in the data economy in FinTech, crowdfunding & P2P lending.

Thank you to all the participants who visited us at our stand or watched our showcase demo presentation! 

Empirica Team

 

See our Robo Advisor Software:

See our Robo Advisor Software

Empirica at FinTech Connect Live in London

Empirica takes part in the FinTech Connect Live! this December 6th & 7th in London. This is the most important event in a FinTech space, where finance meets technology. Empirica joined the Advisory Board of this annual global FinTech undertaking.

Were you can meet us?

 

On the Showcase Demo (7th Dec., 11:50 am)

Empirica will shortly present Robo-Advisory Technology for financial advisors as well as FinTech development services. We would like to invite to our presentation: Technology for Robo-Advisors – how to build great software behind your FinTech service?

While presenting our advanced Robo-Advisory Platform, CEO of Empirica will illustrate most important issues of building tailored FinTech software. We will share experiences we have gained for over 6 years of developing solutions for financial institutions and FinTech companies, including robo-advisors. We’d love to welcome all FinTech innovators interested in how properly implemented technology can move their businesses forward.

On our stand number 83

Anyone interested in speaking with Empirica about building the FinTech solution behind own service can meet our team on the stand.

– “FinTech Connect Live creates a global community of FinTech StartUps, financial institutions and investors, where we can exchange thoughts and experiences. That’s why this is a second time Empirica takes part with great interest in this event. Last year we presented our Algorithmic Trading Platform, which is the heart of our robo solution we are going to present this year. I am looking forward to speak with financial advisors who want to go robo as well as any FinTech StartUp about how to build great software behind FinTech service and quickly intruduce it to the market.” – Michał Różański, CEO of Empirica.

If you are interested in setting up an appointment with our team during the FinTech Connect Live, just let us know at: [email protected].

 

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TOP trends and challenges in wealth management

Robo-Advice is not about tomorrow anymore. It’s about today.

A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Robo-advisors are typically low-cost, have low account minimums, and attract younger investors who are more comfortable doing things online. The idea made sense to many, and robo-advisors quickly gained market traction. Full-service, high-value-added, person-to-person activity isn’t for everybody. There are generations of tomorrow’s investors coming through today, who are more attracted to something less person-to-person and more technologically enabled.

The rapid rise of Robo-Advisors

Robo-Advice is changing the landscape of global wealth management. Historically, investment management was the purview of the wealthy. With robo-advisors flooding the investment markets, offering low-fee, diversified professional management, the investing landscape is evolving.

The number of robo-advisors is growing rapidly. New consumer brands are emerging in the digital wealth management industry such as Betterment, Wealthfront and Personal Capital.

In its report, BI Intelligence forecasts that robo-advisors will manage around $8 trillion of total global assets under management (AUM) by 2020.

forecast-global-aum

         TOP trends and challenges in wealth management for the next years

  1. Robo-advisors disrupt the wealth management industry. In the near future, advisors that will wait for the transition to robo-advisor will lose out. Investors will migrate towards those lower-fee providers with technology platforms.
  2. We observe the strong influence of technology within the entire investing environment. Many investors trust technology and expect 24/7 access and reporting.
  3. The competition increases rapidly. New consumer brands of pure robo-advisors appear in the digital wealth management industry, while traditional financial advisors ‘go robo’ as well.
  4. New regulations are directly impacting the financial advisory industry and driving companies to offer robo services as a way to meet the requirements.
  5. Investors increase pressure to lower fees. Robo-Advisors serve a wider range of customers and allow to stay profitable in lower fees environment.
  6. Artificial Intelligence enters the robo-advisory industry and could be the strongest competitive advantage. Robo-Advisors soon will offer more diversified investment products.

See our Robo Advisor Software:

See our Robo Advisor Software

About Robo Advisors at Sibos 2016

There was an interesting panel discussion at Sibos 2016 in Geneva with Silvan Schumacher, CEO of Swanest, Michael Mellinghoff foundder of Techfluence, Paolo Sironi author of Fintech Innovation (good read, besides, I am in the middle).
Short summary of main points:
  • advantages of robo – real time information on how my portfolio is doing and what I should do next
  • what drives money to the fund – absolute performance? No Marketing and User Experience
  • what robo changes is putting users portfolios in the center that are allingned with goals of the customer, it’s not about products anymore
  • many people leave asset managers not beacouse of poor performance but because of poor service
  • greatest contributor to alpha is cost reduciton
  • there are currently over 50 robo advisors in Europe, best have 100mio AUM
  • there are 150 robo advisors in the world
  • 80% of actively managed funds do not beat the benchmark, they should not be in the market

Interestingly, no one was brave enough to give sure anwser how digital asset management would like in 2025. No suprise as things are happening so fast.

 

See our Robo Advisor Software:
 
See our Robo Advisor Software

Free version of Algorithmic Trading Platform for retail investors

We have just released beta of Empirica – Algorithmic Trading Paltform for retail investors! It’s lifetime free for development, testing and optimizing of trading algorithms.

Our development team (exactly this team who implemented the entire system) also provides full support in algorithms development as well as connectivity to brokers. If you need help just contact us.

Among many features what is unique is our exchange simulation where you can influence market conditions under which you test your algorithms. No others software offers such a realistic level of simulation.

In paid versions we offer the execution of algorithms in robust server side architecture.

Download free version of Trade Pad at www.empirica.io. We strive for your feedback!

Algorithmic Trading Software

How traditional asset managers GO ROBO. Omni-channel advice and hybrid-robos.

As the robo-advice industry grows it is attracting the attention of traditional asset management firms. These companies want to offer what their clients need — easy money management — while at the exact same time attract more funds to manage. Today they may be losing assets to the startup robo-advisor firms. Last year, Fidelity Investments, Charles Schwab Corp. and The Vanguard Group have either created their own digital services unit or partnered with an existing robo business. We are sure the other large firms will join the trend.

After the great success of robo advisors launched by Ameritrade, Vanguard or Charles Schwab the main question for traditional financial advisors is not ‘if to invest’ in new robo-technology but ‘how to bridge the gap’.

robo-advisors-chart

Traditional financial advisors decide on a hybrid model

Following in the footsteps of the stand-alone digital robo-advisor is a hybrid model, combining both automated and traditional human services. The model offers a live company-employed financial advisor in combination with online automated services in areas such as asset allocation and rebalancing.

Hybrid Robos = Combining Human and Automated Wealth Advice

The report by My Private Banking Research projects a robust future for the hybrid model of the robo-advisor. The research implies that the hybrid models will grow to $3.7 trillion assets world-wide by 2020 and $16.3 trillion by 2025, 10% of all investable worldwide assets.

robo_advisor_digitalization2

The main expectation for robo-advisors is to utilize more human-like interfaces and features, and for human advisors to adopt more robo-advisor-like features.

See our Robo-Advisor Software:

See our Robo Advisor Software

Three use cases of Smart Contracts in Financial services

Savings and upsides from decreasing syndicated loans settlement time

While the High-Yield Bond transactions are settled in more than three days, the settlement interval for leveraged loans frequently extends to almost 20 days. This creates increased danger and a liquidity challenge from the leveraged loan market, hampering its growth and attractiveness.
Since 2008, the global loan market has witnessed negative gain, whereas the High-Yield Bond market grew by 11 percent. We assume that smart contracts can reduce the delay in procedures such as documentation, buyer and vendor affirmation and assignment arrangement, and KYC, AML and FATCA checks, with the assistance of a permissioned ledger. With estimation that with the decrease in settlement times, if the rise of loans may be at least half that of their High-Yield Bond market growth (i.e. between 5 percent and 6%), it would amount to an additional $149 billion of loan demand on the industry. Such loans generally carry 1% to  5% of fees, translating into extra income of $1.5 billion to $7.4 billion to investment banks. In addition, operational expenses, regulatory capital requirements and costs related to delayed compensation payments throughout the settlement of leveraged loans will probably be decreased together with the shortening of the settlement cycle.

Read more about basic idea behind Ethereum and Smart Contracts here.

Mortgage business to benefit from adoption of smart contracts

The mortgage loan process is dependent upon a intricate ecosystem for the origination, financing, and servicing of the mortgages, including costs and delays. Smart contracts could reduce the price and time involved in this process through automation, process redesign, shared access to electronic versions of bodily legal documents between trusted parties, and access to external sources of information such as land records.

Our earlier study on banks back-office automation suggests that mortgage lenders may expect savings between 6 percent and 15% from business $149 billion added leveraged loan volume increase with a reduction in settlement times 11 client fills mortgage application with earnings, taxation and property details Are property documents valid and lien status in order? Reject loan application and inform the client credit mortgage accounts article verification of earlier measures calculation of the cost savings possible from the usage of smart contracts in the US mortgage sector register bank’s lien on land signatures confirmed and mortgage accounts generated customer signs the mortgage document in addition to the witness mortgage record created approved rejected credit history id check KYC & AML check check income and land LTV reject program and notify the customer mortgage adviser creates loan workflow and updates credit, id, KYC, AML information in bank’s loan workflow for mortgage origination predicated on sale of 6.1 million houses of which 64% are being marketed on mortgage mortgage loan origination cost for an average loan of $200,000 in the US (2015), minimum savings US$ 4,349.5 17 billion 396.3 (9.1%) 1.5 billion 1,528.4 (35.1%) 6 billion. These numbers, coupled with our experience and discussions with industry experts, helped us estimate anticipated savings for each of the processes involved in loan origination. For example, in the US housing market, almost 6.1 million homes were sold in 2015. Based on historical averages, 64 percent of them were bought by home owners with a mortgage. We estimate that minimal savings of $1.5 billion could be achieved by loan providers through the automation of tasks in their organizations. Further, economies of $6 billion could be achieved once external partners such as credit scoring companies, land registry offices, and tax authorities become accessible over a blockchain to facilitate faster processing and reducing costs.

We also estimate that loan clients could expect a 11% To 22% drop in the entire price of mortgage processing fees billed to them if smart contracts are adopted. The total of outstanding mortgage loans across the united states and European Union countries in 2014 was valued at $20.98 trillion. Based on the US mortgage market case, smart contracts may possibly save between $3 billion and $11 billion in the new mortgage origination process across the US and EU.

Claims processing cost savings at the motor insurance industry

We consider that, in the motor vehicle insurance industry, smart Contracts that bring insurers, clients and third parties to a single platform Also, third-parties like chargers, transport providers and hospitals — once They are part of the dispersed ledger — will be able to supply faster Support against promises to clients and can anticipate quicker settlement of claims. The united kingdom motor insurance industry dropped 3.7 million claims and spent $13.3 Billion in claim expenses and costs. We calculate that roughly $1.67 Billion, or 12.5 percent of their overall costs, might be saved by adopting smart contracts. Dependent on the United Kingdom motor insurance market, we estimate that each year $21 billion could be spared from the global motor insurance industry via the Usage of smart contracts. A portion of savings can be passed on to the Clients via reduced premiums on motor insurance policies. We estimate that the Cost savings amounts to a reduction of $90 on average on each premium payment In the event the insurers pass on each of the savings generated from smart contracts Adoption to customers, and $45 per premium in the event the insurers decide to pass On only 50 percent of economies.