Enabling Enterprises to Launch More Powerful Financial Infrastructure

  • Lex Sokolin , Global Fintech Head , ConsenSys

  • 11.06.2020 03:03 pm
  • 592

Financial IT interview with Lex Sokolin, Global Fintech Head at ConsenSys

Financial IT: To kick off this, could you please tell us more about ConsenSys?

Lex Sokolin (LS): ConsenSys is a global blockchain technology company that develops protocol infrastructure, scalable developer tools, enterprise-grade networks, compliant digital assets, and programmable payment systems on the Ethereum blockchain. Ethereum is the most trusted open-source blockchain in the world with easy-to-use tooling, advanced security, always-on reliability, and privacy and permissioning features that leading businesses need.

Our products — MetaMask, Codefi, PegaSys, Infura and Diligence— serve millions of users, ranging from financial institutions to developers and retail users of Ethereum. ConsenSys products digitize business processes in global trade, asset management, payments, capital markets, and decentralized finance. Our tools for building compliant digital assets are fundamentally changing the way institutions approach the exchange of value.

Financial IT: What is unique about ConsenSys?

(LS): ConsenSys delivers real answers to major infrastructural challenges which will allow participants across a number of industries to securely transact in a highly efficient, digitized way. As one of the earliest companies delivering enterprise blockchain solutions, ConsenSys has played a central role in the delivery of the technology’s potential. For our clients, this results in industry-wide simplification of operations and documentation— My focus is on payments and global trade.

Blockchain technology enables novel innovative ways of managing money and facilitating payments. From remittances to microloans, blockchain technology is ushering in an alternative open and rapidly scaling global payment infrastructure. ConsenSys has been a pioneer in delivering such systems. Applications like Sempo, an Ethereum-based Cash and Voucher Assistance (CVA) program built for digital cash transfers in some of the most remote regions, successfully dispersed tens of thousands of dollars at a time to hundreds of people  — in minutes  — essentially for free. Used by Oxfam and over 8,000 beneficiaries, Sempo is used to transfer digital money via SMS, an Android application, or an NFC card. The application is built for marginalized community members, and has already piloted in Syria, Greece, Vanuatu, Kenya, and Australia.

In the Philippines, 10% of the GDP comes from international remittances sent from overseas workers to family members across the country. Union Bank created a decentralized, cost-efficient, real-time inter-rural bank payment platform that operated autonomously outside of existing payment infrastructures and existing platforms such as the Philippines’ PhilPass and SWIFT. The platform connected rural and national commercial banks to the central bank, helping remote banks integrate with the domestic financial system, while also improving banking access for local citizens.

The impact of blockchain technology on international trade finance has spurred many companies and consortia to update their technology. Major trading companies around the world are recognizing the deep impact of Ethereum blockchain technology in operating global supply chains, managing trade finance, and tokenization. Further, blockchain-based commerce enables the tokenization of existing documents, letters of credit, and other instruments, which implies more efficient processing and faster execution along the value chain.

One of our keystone projects is komgo - the world’s first blockchain-based platform for the commodity trade ecosystem. One year after its public launch, komgo supports close to 1 billion USD of financing channeled by network members. komgo is backed by 15 of the world’s largest global banks, trading companies, and oil giants, and is adding new members at a rapid rate. Another market-leading project is Covantis, for which we are developing a post-trade execution platform to standardize and digitize global agricultural shipping transactions.

Financial IT: What are the benefits of implementing ConsenSys' solutions and products? 

(LS): My main focus area is understanding what the infrastructure for the future of financial services looks like, and building the operational improvements the industry needs today. ConsenSys Codefi’s blockchain operating system includes four core products built to power global commerce and finance. Together, our products accelerate blockchain development with configurable, easy-to-integrate tools and modules. By deploying shared data standards and common workflows, our products also reduce infrastructure and operational costs across business processes, payments, and digital assets.

We deliver flexible, scalable, and secure blockchain modules for customized decentralized applications. Through rapid deployment APIs, we offer private-label user interfaces and user experiences, and also custom solutions development. Our vast global reach enables us to build networks and markets at the highest level of the industry.

Tokenization, which is a digital representation of an asset or store of value on a blockchain network, is a major innovation that is just starting to be applied to financial services. We worked with France-based Mata Capital to do this for the processes of distributing fund shares and maintaining its investor registry.

With asset tokenization, Mata Capital wanted to enable greater participation in real estate investment by decreasing the costs associated with investor registration, investor onboarding, and subscription operation. The long-term vision is to reduce minimum investor subscription amounts from €100,000 to €1. To achieve this goal, Mata Capital partnered with ConsenSys Codefi to issue security tokens for three separate funds worth a combined total of €350m.

The first of these tokenization projects entailed ownership of a planned 11-story hotel currently under construction on the outskirts of Paris. The resulting €26m issuance is the among the largest real estate tokenization projects in Europe. With reduced operating costs and growing digital functionality of blockchain-based finance, Mata Capital seeks to attract a wider pool of investors to real estate asset investments.

Financial IT What excites you most about the prospects of blockchain disrupting the financial sector?

(LS): Financial products tend to operate across completely different systems that are not interoperable -- consider loans, equities, deposits, real estate. This doesn't have to be the case.

The tokenization of real world assets can fractionalise virtually any asset, making it tradable and investable, including property, company shareholdings, oil, aircraft, cruise ships, or fine artThe Codefi platform allows users to create, issue, and manage the lifecycle of tokenized assets and digital financial instruments on a blockchain network.

While much of the financial sector will continue to function as it does today, we have an opportunity to improve how products are manufactured and distributed. This will remove deadweight loss from society and the economy, and help people focus on more productive pursuits rather than reconciling financial statements.

Financial IT: To conclude, what is next ConsenSys?

(LS): Over the next 5 years, ConsenSys will continue to offer a robust blockchain operating system that will enable anyone— from governments to enterprises and individuals— to harness the power of the Ethereum.

One of the most significant digital transformations that we will witness in the next 5 will be the use of CBDCs (central bank digital currencies built on blockchain architecture) as a means of transacting in the modern global economy. We anticipate that some of these CBDCs will be built on Ethereum and central banks will be using ConsenSys Codefi software to do so. Massive distributed systems will underpin our financial lives, accessible openly by anyone anywhere.

 

Lex Sokolin is a Global Fintech Head at ConsenSys, a global blockchain advisory firm. Prior to joining ConsenSys, Lex was COO at AdvisorEngine (acquired by Franklin Templeton), a digital wealth management technology platform, CEO of NestEgg Wealth, a roboadvisor that partnered with financial advisors, and Global Director of Fintech Strategy at Autonomous Research (acquired by AllianceBernstein). He has also worked in investment management at Barclays, Lehman Brothers, and Deutsche Bank.

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