The Blockchain and Us: Interview Paul Meeusen, Swiss Re

Transcript

I realized there was an amazing correlation between the problems at least in my case that I've been seeing for the past 20 years in finance and treasury management and the opportunities that that blockchain could give and it had to do with basically a new way of people and businesses exchanging value my name is Paul Martin I'm a director in finance at 3-3 I am responsible for our finance and Treasury services and we operate them in two regional centers one in Asia and one in

Europe the Internet has allowed us for 20 years to exchange information but that is largely still copying information and just copying is not a good idea with value unless you are the national bank that is allowed to print money so we started first internally and looked at an internal process actually within a large insurance company like ours we even have reinsurance amongst us so we blockchain that in a prototype and then some months later as different companies started to get together to exchange experiences very much in an open source thinking we share that with many others in the industry and as things have

evolved we now have 15 members in an initiative called blockchain insurance industry initiative or short name called b3i to all with humbleness admit that our financial service industry has rather been focused going towards what we call with nice terms the high net worth individuals that our financial service industry when it got into troubles was also not quite by going out and helping with my crew into microfinance to the underprivileged was rather with under other complicated transactions that normal people find hard to understand so that and a number number of reasons is

actually not a great start for many in financial services to claim that they are the party to go to they are the party to trust when you actually want to bring banking and insurance services to the 90% that don't have it there's also a a new region this is where very in a very fascinating way something like blockchain comes in is that this new technology now actually brings an opportunity that you do not really need a third party anymore as a central authority when we want to do a trade you now have technically actually this opportunity that when we want to exchange a value a currency that we use

that can be verified by us or by a community of us by using actively trust that is embedded in that network so what we have actually is a coming together of two interesting phenomena number one that people have some questions whether it's always that third party banking institution that's the only one to go through which is frankly somewhat a oligopoly number two the technology seems to really clearly show also that there is an alternative and I think we are all also in the financial service industry trying to recognize that we don't have to be defensive of that but we rather have have to embrace not just

this technology but this in a blur that it brings us to actually access a vastly underutilized or under undiscovered market that we have to really do business with an eye to eye level BOTS internet-of-things I still still still see as technologies that will surround this thing called mutual distributed ledger which blockchain is that ledger has to obtain its information from somewhere so a robot can actually help you rather than human hands having to structure the data to do that for you and put it on the

blockchain Internet of Things this can be a box in your car or a satellite above your farmland those can be also means to capture data so that you and I agree these are data that we hope you truly can take as the basis of our contract the loss has happened I know you were claimed so it is the uniqueness of this one ledger that we can trust that has a mechanism of consensus consensus finding that we don't necessarily need Big Brother governor government for it we also don't need some central bank or financial institution this technology can very much be self-regulating I find it's

quite important to not look at this as some strange science fiction big machine that takes over but rather something that is a common basis of trust but we also feed it with very tangible small pieces of technology that actually feed that ledger with information from the real world in a way that we actually can transact and do business with each other I do believe there is actually a much more agile approach that we apply so we have a put input put in place a plan that is much more an iterative plans of

what we call iterative scrums or iterative sprints where in about a handful of such Sprint's over the next half year we will incrementally every time add a bit of more functionality and a bit of more technical sophistication step one will simply be that we set up a contract between these participating nodes or insurance companies and we make sure is that actually this does that give us the same starting base as the way we used to do it in the pre blockchain world so a much more iterative driven use case driven rather than a massive technology and financial investment hoping to be the Holy Grail

as things evolved quite quickly and with this iterative approach we hope to go step by step meaning and also continuously share with the market even with those companies currently not actively involved we hope we entertain a quite open dialogue to make sure that the focus that we have is actually the right one and we can evolve to other use cases as this first one develops it is true that the blockchain crowd is a little bit different here in Zurich for example I love to go a couple times to these hackathon events and then you

were there somewhere in a kind of a basement type of office underneath this place called heartbreaker and it is quite refreshing and so you get there on a Friday evening and people work there almost 48 hours and it's quite interesting how a very interesting mixed group of people from university engineer academics to people who are have good jobs in good big companies they rather than going off to the ski resort they spend doing their weekend doing that and I really found them very fortunate to be part of that a couple times so that is a little bit call it pirate atmosphere or quite a new new vibe that is going on I

believe it is and it's it's quite okay that people have that with different drivers that may be noble I can't change the world type of drivers others actually come to it from a quite scientific point of view that they truly have understood how this new technology can just make things better and more more efficiently and it's quite an interesting public partner public-private partnership and especially in big cities several in Europe also here in Zurich that is taking shape there is a initiative also in jury whereby that City and the Contin are thinking about creating an Innovation Park and but in a in a good public partnership

public-private partnership way so not just something from an ivory tower with lots of tax money that is somewhere put up and the industry then doesn't buy into it vice versa also recognising that someone has has to give a little nudge as the private investors would not just do it on their own they need a bit of incubation a bit of help and that is all part of this innovative spirit that is going on and that as I said before I do believe it's also a different mix of generations I see the 20 year olds young engineering school ETH graduates getting involved in it and also the big baby boomers who are

seem to refi of their career Robert and thinking about the last third of their career there are visiting realizing that it's actually a whole new start they can contribute that's quite fascinating you have the smart minds of of young people put together with expertise of others who've been in the industry and quite an interesting combination and I find it quite okay to live with a bit of a pirate image that's it's for a good cause and that's okay I do believe it's actually we are at a crossroads of a lot of every interesting things coming together we are we are still we haven't still figured out the

challenge of the disparity or the disequilibrium of wealth we are geopolitically also in a very interesting times we have had the fortune of cold war quite Ihnen the benefit of not having had World War since at least my grandparents but at the same time we realized that we also have some side effects of the way we've developed economy of the last 50 years that we really have to challenge based meaning in terms of security in terms of how we use the energy and the scarce resources of our planet I do believe we're at an interest interesting tipping

point as it regards specifically technology for firms like us it goes all to trust I think the key thing is that it seems very obvious why Trust is important for a financial service institution but a very new development I believe is that if we make good use of technology it can be a great enabler to establish trust because this technology can be the unity unique source that makes it much more evident to prove the authenticity which is quite important it is very authentic it is very important to know that I am Who I

am when I deposit money on a bank account or when I redraw it when I want to obtain a loan when I claim I am the owner of a property this may be very straightforward in many countries like India or South America even land register white light rights are not in a cadastre as we know it here so the whole identity management is quite important to trust for a lot of firms and trusts certainly is a key driver and a key prerequisite for companies in the fan service industry and that is in my view really going through a breakthrough and of offering us unique opportunities with

new technology personally I also realized that it's not really something that should be seen as threatening and a personal story that that made it a bit clearer to me is that the one when I came back on one of my trips my son was asking me what is this thing called blockchain that I here's the once in a while and he's preparing to go study in law school so once I had explained it to him especially in the context of it can make our life better and all that a legal work more automated he turned around and said so are you taking away my future job and I have to say I have to pause for a moment and

said well no actually we are working making it more interesting now it's these are things we all have to say every day as managers but it makes you realize the very meaning of that when you generally trying to tell that to your own son and when you're actually thinking through these concepts we often think about is offshore working or automation or robots are they threatening our work and it's a real-life question when your own son who's prepared to go to get an advanced education asking you that question and I concluded that yes I do have a genuine answer that it's not threatening it is

forcing us to think a little bit different but if we do it smarter we actually give also the next generation I create new opportunity to actually reinvent why they get up every morning and why they go to work and make sure they're really made best best use of the degree they studied for and the things they really want to do in life I think in particular for a reinsurance firm with a global scope we have this unique position to connect the dots its core to our business that the insurance risks that accumulates are then reinsure to us and we can actually see

correlations we can see how things match out to each other so we have almost a duty to look this use this unique position to see how risks evolve across the globe and you put that knowledge to good use I believe we also have a little bit of someone once described it to me image of being a United Nations with a balance sheet attached to it so it is at the same time we are of course a publicly quoted private company with the usual demands that the investors have of it but at the same time we can actually

act almost a little bit as an NGO or United Nations do whilst we have a return on capital and equity in mind to actually look over a sufficiently long cycle not just quarter to quarter to look over a longer horizon to understand and act upon what's going on in the world personals you often walk a thin line to be great in your vision whilst at the same time not to be seen as naive and I like working on this fair line and I do recognize we have to be careful not to

make naive assumptions you change the world hunger in one day with whatever technology but we actually are living a very interesting window of opportunity and I'm surely very very excited to fully embrace that and even one little step can be a great step for mankind [Music]