Qureshi Financial Revolution on the Horizon

How digital networking, blockchain and connectivity are creating billions of new customers and a fresh financial market
1. Auflage 2019
ISBN: 978-3-96092-406-7
Verlag: FinanzBuch Verlag
Format: EPUB
Kopierschutz: 0 - No protection

E-Book, Englisch, 208 Seiten

Excessive costs, cumbersome processes, disincentives and what's more: all manner of isolated, self-serving sector solutions. A financial system with methods and processes from yesteryear shapes our banking. Indeed, our entire life and society-especially the state and administrative bodies-are based on such archaic processes. In addition, billions of people worldwide are excluded from the financial system as they are not even in possession of a bank account. Banks, currencies, payment methods and administrative transactions are, on the whole, not sustainable. They are responding neither to the needs of many customers/citizens, nor to the challenges of the times. Politically and socially, we are drifting about aimlessly, lacking control and efficiency. Financial expert and entrepreneur Yasin Sebastian Qureshi-at age 29 the youngest person ever licensed to run a European bank-describes groundbreaking solutions that have long been in existence: digitalisation and its offspring the Internet, mobile phones and blockchain which are actively determining progressive developments, and whose most radical embodiment so far has been the rise of Bitcoin an other cryptocurrencies. The revolutionary thing about blockchain, however, is not the mere payment process, but the underlying technology, the more efficient processes and, in particular, its decentralised character and interconnectedness. Together with Benjamin Bilski (Forbes '30 under 30'), Qureshi outlines the future of finance and all the relevant administrative processes in business and state, even entire states, on the basis of such blockchains. The authors also dissect the history, meaning and nature of money; it has always been in a state of transformation-but now is in one of complete upheaval. The two also shed light on the social, economic and political consequences of these mutations. But what will happen if everything is organised into blockchains? The answer is certainly not one that should be feared. The new foundations of our daily and working existence are unleashing forces that have so far been pointlessly and inefficiently tied up in technocratic working environments. Following on from, and leaving behind, the Industrial Revolution, a new revolution is now on the rise. Starting in the financial system, it will turn everything there on its head and qucikly expand to other areas. Blockchain is restoring time and its potential to all us-which we can use for other, better and more creative things. Cash, however, is likely to disappear in the medium term-as well as banks, at least as we know them today..

Yasin Sebastian Qureshi is a banking and finance professional who has been in the business for a long time. He was the youngest person in Europe ever to have obtained a banking license, and subsequently founded and ran his own investment bank successfully going public in 2007. Yasin is an investor in technology start-ups and film and also co-founded the Global Citizen Foundation. He has a strong focus on finance, brokerage, and technology. Indeed, he is a hands-on, passionate entrepreneur aiming to seriously disrupt current financial business structures. Benjamin Bilski, a Forbes 30 under 30 Member, is a serial internet entrepreneur. He is the Founder and Executive Director of one of Europe´s fastest growing FinTechs, The NAGA Group AG. The company performed Germany´s most successful IPO 2017 only 21 months after its incorporation and is valued $250 Million on the Frankfurt Stock Exchange. He also is one of the key persons behind the NAGA COIN ($100m Market Cap), a digital cryptocurrency for stock and virtual item trading. Benjamin also founded Germany´s leading Online-Shop for Fishing & Outdoor equipment, angelplatz.de. He holds a M.Sc. in Management from EBS University of Business & Law. Benjamin is a is a former German swimming champion and was part of the German National Team in swimming.

Autoren/Hrsg.

Qureshi, Yasin Sebastian

Weitere Mitwirkende

Bilski, Benjamin

Leseproben

2. SOLUTIONS

Drivers, forces, inclusion—and the power of disruption

Contactless payment at the point of sale, real-time payment processing, smartphones for trading in cryptocurrencies and virtual goods—all these amenities are enjoyed by private and business end customers thanks to advancing digitalisation and its partial elements, such as mobile radio, Internet, networking, data acquisition and evaluation and modern systems and end devices. And this, as mentioned, without spatial and temporal restrictions. “The new technologies simplify access to information as the basis for decisions, reduce costs and increase reaction speed,” says the Bundesbank.162

Of course, this progress and these precursors of digitalisation have existed for decades, especially in the IT systems of banks and in the business-to-business sector. On the other hand, the combination of communications technology and mobile terminals with financial services of all kinds has taken quite some time from the consumer’s point of view. But now this trend is advancing—driven with full force by FinTechs. All these innovations, apps and the driving forces and key elements discussed in more detail in this section will fundamentally change the financial sector, wiping out professions and services and creating new ones. Just as Joseph Alois Schumpeter surmised with his creative destruction.

Banks are only one sector—the forces of change are universal and apply to all enterprises. The problems of banks are not only of a financial nature. On the contrary, parallels to major bankruptcies and crashes of global corporations or entire industries, which overslept technological upheavals or simply did not recognise them, are literally inescapable. “As in Kodak’s case, neither age, size, reputation nor current sales figures can guarantee that a company will still be able to compete in the market tomorrow,” writes Salim Ismail in his superb book Exponential Organizations. And so the driving factors are not financial in nature, but are representative of developments in so many industries, from shrinking mobile phone companies to manufacturers of 35mm films. The latter is actually a victim of digitalisation, because the product is no longer needed to this extent today. The former, Nokia, was itself a driver of digitalisation, but then set the wrong course.

In addition to technology, industries and companies are naturally influenced by many other aspects that determine their weal and woe, and especially their management decisions. Included here is the organizational form. This is not intended to be a business management book, but we would like to briefly pick up on the idea of Salim Ismail and his Exponential Organizations. After all, market-ready top products do not fall from the sky and scientific findings are not automatically transferred into functioning devices and systems. Rather, the appropriate form is needed, and for Salim Ismail the “exponential organization” is best. His first point of criticism is: “Pharmaceutical companies, aerospace companies, automobile manufacturers and energy companies repeatedly make investments whose results they will only know in many years’ time. This is a functioning system, but not an optimal one. Too much money and too many valuable talents are put into decades of projects whose chances of success are hardly measured until they finally fail.... This is an intolerable and unacceptable situation....”163 From his perspective, we simply need to find better ways for the organization: “We’ve learned how to scale the technology; now it’s time to learn how to scale our organizations. This new age calls for a different approach to building a new economy, improving performance indicators and solving the challenges ahead.”164 For him, these solutions are exponential organizations.

The background to this is the extremely rapid development of technologies of all kinds, coupled with comprehensive networking, data processing and sophisticated and often self-learning algorithms. From this mixture, which accelerates everything once again, innovations and oft-cited disruptive changes emerge—and the success in doing so determines the existence of the company, at an unprecedented pace and in almost all, even and especially in traditional industries. Ismail notes that “in history, disruptive breakthroughs occurred whenever separate fields overlapped.... Today we basically connect all innovative areas.”165 One of the entrepreneurial mistakes in not recognising and shaping this dynamic is that we continue to assume linear changes instead of exponential ones. Another shortcoming is often not understanding the power and importance of information and data. “An environment supported by information offers fundamentally disruptive possibilities,”166 says Ismail, who immediately draws the watershed between linear and exponential thinking. Change, even rapid change, has always existed. Especially since the Industrial Revolution, our lives, jobs and entire industries have undergone fundamental changes over the past two centuries. Knowledge of the fact is important, but also a trap: “Automation, mass production, robotics and even computer visualisation have changed the slope of this line, but it remains linear.”167 Because: “If you think linearly, if your operational processes are linear in their measurement of performance and success, then the result will be a linear organization that looks at the world from a linear perspective—as the innovative technology group Nokia itself did.168 With the known consequences. After all, only old-school organizational structures and ways of thinking, planning processes and proceedings can result from this.169 As if it were a field study on banks, says management author John Hagel: “Our organizations are structured to withstand change from outside.”170 Even if these changes are useful, they are rarely used.

It is exactly the same in the established financial industry. They in particular have the means, the size and the market power to drive these massive changes forward—but not the approach and the necessary philosophy. They would prefer to grow in a more classic manner, for example through mergers or acquisitions, and this is what is currently happening at the interface with FinTechs. This gives them the flexibility and speed they don’t have themselves. We have experienced the fossilisations and rigidities of established financial institutions in our own careers and have described them in the banking section. Ismail confirms our findings scientifically and in a generalised way: “Fast or disruptive change is extremely difficult for large companies with a matrix structure. In fact, those who have tried have found that the organization’s ’immune system’ probably responds to the perceived danger with attack.”171 As we have experienced, such an allegedly efficient approach is intended to reduce risk and maintain planning security. In the medium and long term, it will lead to the end of the company—and since the world is turning much faster today, possibly even in the short term. After all, entrepreneurship means taking risks. Without this risk—with a lot of trial and error, experimentation, failure and continuous improvement—there is no economic success and no groundbreaking innovation. Disruptive innovations rarely come out of the status quo (Clayton Christensen)—and it is no coincidence that the above chapter outlining today’s banking landscape is called “Status quo”.

Technologies are the drivers of change. And among the exponentially growing technologies Ismail counts among other things the “unlimited computing power of computers, sensors, networks, artificial intelligence, robotics, digital production, synthetic biology, digital medicine, nanotechnology”.172 He defines the object of his consideration as follows: “An exponential organization is an organization whose impact (or return) is disproportionately high—at least ten times higher—than in comparable organizations. The reason for this is the application of new organizational methods....”173 The term exponential organizations deliberately includes non-business entities, such as government, government agencies, or non-profit organizations. The core and starting point is the mastery or generation of exponential growth, usually in technology areas, according to Moore’s Law of doubling the computing power of integrated circuits; a phenomenon that can also be transferred to other information technologies.

This phenomenon is driven by information: “As soon as an area, discipline, technology or industry is based on information and controlled by information flow, we see a doubling of performance every year”.174 Once this process of doubling has got under way, it no longer stops. It accelerates by itself—caused by once manufactured devices and systems. All this can be observed in areas such as artificial intelligence, robotics, biotechnology, bioinformatics, medicine and many more.175 In his view, an exponential organization is best able to “do justice to the accelerating, non-linear, Internet-driven speed of modern life.”176 Everything works towards or is there to achieve the Massive Transformative Purpose (MTP)—the overarching, goal-oriented meaning of the organization.”177 The mixture of these elements separates the wheat from the chaff, because many upheavals are massive, but not transformative. 178

Ismail has analysed certain properties that exponential organizations have. (All need not be simultaneously present.) This includes:

• employees as required

• the existence of a community and a broader...

Über Autor(innen)

Yasin Sebastian Qureshi is a banking and finance professional who has been in the business for a long time. He was the youngest person in Europe ever to have obtained a banking license, and subsequently founded and ran his own investment bank successfully going public in 2007. Yasin is an investor in technology start-ups and film and also co-founded the Global Citizen Foundation. He has a strong focus on finance, brokerage, and technology. Indeed, he is a hands-on, passionate entrepreneur aiming to seriously disrupt current financial business structures.

Benjamin Bilski, a Forbes 30 under 30 Member, is a serial internet entrepreneur. He is the Founder and Executive Director of one of Europe´s fastest growing FinTechs, The NAGA Group AG. The company performed Germany´s most successful IPO 2017 only 21 months after its incorporation and is valued $250 Million on the Frankfurt Stock Exchange. He also is one of the key persons behind the NAGA COIN ($100m Market Cap), a digital cryptocurrency for stock and virtual item trading. Benjamin also founded Germany´s leading Online-Shop for Fishing & Outdoor equipment, angelplatz.de. He holds a M.Sc. in Management from EBS University of Business & Law. Benjamin is a is a former German swimming champion and was part of the German National Team in swimming.