Wall Street on Blockchain: Is a Revolution Coming?
Recently, a team of veterans from Wall Street and Silicon Valley is trying out a new type of investment banking community using blockchain technology, facilitated by big data and artificial intelligence, to rebuild the traditional investment banking system. The project is named 'Banca', a decentralized investment banking community running on blockchain. The team is based in Shanghai and Silicon Valley, in a joint effort between high-tech and high finance, to create “a Wall Street on Blockchain”.
The Background of Banca
Investment banking services nowadays have reached the very top of the financial industry food chain after over a hundred-year’s development on Wall Street. Names like Goldman Sachs, Morgan Stanley and Merrill Lynch are synonyms for world financial elites. However, the bankruptcy of Lehman Brothers, a well-known investment bank on the street at that time, has pushed the 2008 financial crisis into an abyss. The hidden fact behind this was how hard those 'too big to fail banks' had pushed world financial resources into assets relating to the housing bubble, totally out of their own interests. Their greed eventually cost trillions of dollars of taxpayer’s and investor's money. Wall Street, always at the center of the financial world, has been faced with the most challenging situation in its history as this American financial dream model built after WWII is broken. It's hard to say that this marks the end of the American dream to maintain its power, but this sounds the alarm for the American financial system which is in desperate need for a change. In this context, Banca comes with the idea of an 'investment banking community', aiming to solve the internal dilemma of traditional investment banks and to become the trail blazer of a future investment banking service model.
Banca is a decentralized, intelligent investment banking community
In order to prevent the moral hazards existing in the centralized management of traditional investment banks, the Banca team has set up the business protocol, trust mechanism and reward system based on blockchain technology. In the last couple of years, blockchain technology has improved together with the growth of cryptocurrencies, and now with a more mature underlying architecture setup, is being applied to more and more industries outside the cryptocurrency world. The team believes it will also bring opportunity for the investment banking industry.
Banca community will utilize artificial intelligence and smart contracts to achieve automatic management. As blockchain technology ensures incorruptibility of data and smart contracts provides automation of transactions, the system can be considered highly credible while execution cost and compliance cost are greatly reduced.
The Banca team has cumulated more than ten years' experience in big data analysis and intelligent robo-advising, which will become an important building block of Banca community service. With those technologies, the community will be more accurate in recommending relevant service providers for clients, provide more useful data and information for a specific client and connect fund raising projects with potential investors more efficiently. If the team can further improve Banca’s functions and keep the community services abreast with the most updated technologies in artificial intelligence, the aforementioned procedures will continually evolve into a better shape. Banca shall run as an eco-system by itself.
Banca will track the performance of all primary market and secondary market projects running on its platform, maintain the data on blockchain and generate automatic reports, which are also incorruptible. This performance evaluation process is smart and dynamic and its result will decide the community's rating on service providers and the bonus level each service provider can get in return for his or her work.
The Banca team firmly believes that the financial industry is the core area to be revolutionized by blockchain technology, and traditional investment banking won’t be left out in this trend.
Will this truly revolutionize the investment banking industry? Only time can tell!