Last Friday an exclusive gathering of tech-entrepreneurs, crypto-anarchists and blockchain enthusiasts met to design “The Bank Of The Future”.

Under the lead of experts Adam Back, Ceo of Blockstream as well as Kenneth Farrugia, Chief Business Developer of Bank of Valletta the attendees joined workshops to come up with a future-proof model bank.

One of the attendees wrote up his impressions of the event which we gladly publish below.

While I was visiting Malta, I was invited to stop by the Bitcoin Club Malta’s “Bank of the Future” event at dSpace 3 in Birkirkara. Malta is the premier place in Europe, if not the world, where the brightest minds in traditional finance & blockchain technology can come together to create the financial innovations that will fuel the engine of economic prosperity for the 21st century. This event, with Adam Back, CEO of Blockstream, and Kenneth Farrugia, Chief Business Development Officer at the Bank of Valletta / Chair of FinanceMalta as the keynote speakers underscored exactly this ethos.

The event opened with a debate between Back and Farrugia about their visions for what the delivery of financial services might look like in a world has been irreversibly transformed by Bitcoin and other decentralized virtual currencies. Their views tended to reflect their respective areas of expertise. Back came from the perspective of a technology vendor supplying price data feeds, a secure Bitcoin wallet, and a platform for settlements between crypto exchanges. Farrugia shared his experience as a veteran of the banking industry in Malta spanning from retail banking to asset management.

What stood out to me was how the debate was more like a conversation, where Back and Farrugia agreed their industries faced common challenges that represented new opportunities for both software developers and bankers to tackle together. Like Back, many Bitcoiners have big dreams where Bitcoin can foster a more inclusive economy not tied to the whims of central bankers — up to and including the adoption of a “Bitcoin standard” that could eventually replace fiat currencies. Despite his enthusiasm, even Back conceded that the ease of use of today’s Bitcoin wallets have not reached the standard needed for mass adoption, and that price volatility and cybersecurity continue to be a challenge. Farrugia explained that the world’s predominant international banks who provide correspondent services to smaller, local banks such as Bank of Valletta would need to buy-in to enable more fiat banking options for crypto businesses. The speakers agreed that providing secure custody and trustworthy authentication of real-world identities is a strength of traditional banks, which could represent fee income for forward-looking banks embracing Bitcoin and/or blockchain. Back added that technological innovations such as multi-signature addresses could allow users to retain control, while being able to lean on a centralized authority to recover their funds or arbitrate disputes if need be.

The next part of the event which followed was a workshop and pitch competition, where Back and Farrugia each led a team of attendees to imagine the “bank of the future.” The teams spent 1.5 hours whiteboarding, and developing a business plan for what such a bank would look like. I personally spent time on Farrugia’s team, where he walked us through a “crash course” on the basic requirements of setting up a hypothetical digital bank “uBank” — from onboarding, accepting deposits, making loans, dealing in investments, to marketing & business development.

Some of the more innovative, digital ideas which my team proposed included:

  • Branchless model relying on KYC via video chat, and retail outlets to accept cash deposits/withdrawals, reducing cash reconciliation costs for retailers
  • Messaging Hub in mobile banking app, centralizing messages between WhatsApp, Messenger, and Telegram and enabling real-time P2P payments with an open API
  • Permissioned blockchain to settle payments between banks using a fiat-backed stablecoin token, bypassing payment rails such as SEPA or SWIFT
  • Scorecard lending driven by AI/ML analysis of customers’ banking profiles with “just in time” credit approvals pushed via mobile channel, based on geo-location
  • P2P lending platform matching lenders/borrowers permitting customers to get liquidity from their blockchain assets without triggering taxable gains

As the representative for my team to pitch the “bank of the future” to the panel of judges, I enjoyed the thought-provoking Q&A which reflected the judges’ backgrounds as leaders of the blockchain industry in Malta. The conversations I shared with Mr. Farrugia during the workshop helped me better appreciate the regulatory, risk, & compliance challenges that banks face when trying to innovate — and the hurdles a real bank would have to overcome if they were to implement some of these ideas.

Mr. Back’s team took a radically different approach, imagining what the financial system might look like in the face of automation, in a post-bank world, with cryptocurrencies being on the same stature as Dollars and Euros today. He touched upon the feasibility of distributing a universal basic income (UBI) using digital currency, and the more philosophical aspects of whether citizens’ should be able to borrow against their future UBI, and its potential impacts on inflation, scarcity, and incentives to work.

The educational evening closed with drinks and networking, where I had the opportunity to meet the people who are driving Bitcoin and blockchain forward right here in Malta — from payment integrators, ATM operators, to consultants and co-working space community managers. Despite the chilling effect that the crypto bear market since December 2017 has had on enthusiasm among traders and investors, it is encouraging to meet other entrepreneurs who continue to BUIDL on in the most progressive jurisdiction for blockchain, security token, and virtual currency regulation. As the Lead Infrastructure Architect with Autoize, it is my passion to be at the cutting edge of emerging technologies such as blockchain to provide inspired insight to my customers how they can cost-effectively deliver & scale related services in the cloud.

I look forward to returning to Malta soon to partake in a future event hosted by Leon Siegmund, the founder of Bitcoin Club Malta, and hope it becomes the #1 gathering place for our community of technologists and business professionals.