Subhankar Sinha was appointed head of blockchain for BNY Mellon in May. Prior to this role Sinha founded Nabartham LLC, which advised start-ups on ecosystem governance, strategic partnerships, and the market fit of blockchain products. Sinha was also a director at PwC in the US, where he was the co-founder of the firm’s blockchain consultation practice. Bobsguide caught up with Sinha to discuss potential opportunities, challenges, and the future of blockchain technology at BNY Mellon.
Why did you join BNY Mellon?
When I look at this broad franchise of business, and when I look at blockchain or distributed ledger technology (DLT), it has two major impacts. Firstly, it is changing the way traditional securities are being traded, tiered, and settled. It is also creating opportunities for digitization of existing different kinds of assets - whether it is capital assets, or whether it is a commodity.
I’m extremely intrigued and interested to be part of the changing nature of money, or the changing texture of money, and changing texture of assets. That is essentially what is happening. BNY Mellon being the largest custodian in the world, plays a critical role in running the financial infrastructure in the US and Globally. That’s why I thought it would be great for me to join BNY Mellon and be part of the change which we are going to see in the next five to ten years.
What major concerns are you seeing in the market?
In general, whether it is blockchain or not, driving growth initiatives, new business opportunity, or reimagination of existing business is really hard - irrespective of blockchain or any other technology like AI, or RP. That’s because when you start a new venture within a large organization, it does not immediately translate into large revenue. Large organizations are generally driven by large revenue opportunity. So, you have this conundrum with any growth initiative, how do you position a growth initiative where you can show a significant amount of RY from day one? That’s why the fundamental approach to any growth initiative is very different than creating a new product in your existing market.
Blockchain and DLT is a technology which is forcing, particularly financial services enterprises, to change the financial infrastructure. For example, if you take a new machine learning algorithm, you can apply it at a corner of the organization, and you can show value. With DLT you cannot really apply it at the corner or sub-line of business, you have to apply it in the entire value chain.
Most of enterprise blockchain initiatives, or use cases require an eco-system - playing with other competitors and business partners. You cannot deliver value unless you are partnering with other outside entities. So, you can see the complexity and difficulty of driving a use case which looks great on paper, but implementation is exponentially higher, I would say in order of magnitude three times higher than applying AI or something else. In my experience roughly less than 10% of use cases are actually going to see the light of day in the enterprise blockchain space.
What areas of BNY Mellon do you see there being greater adoption of blockchain?
Blockchain and DLT in general having immutable, verifiable, and temporal characteristics, a combination of these three characteristics creates a data infrastructure which increases resiliency of our systems and processes. If it increases resiliency then we can provide more trust to the financial infrastructure in general, and we create new services and new products on top of that. For example, right now we custody $33 - $34trn worth of assets. The question is can we use blockchain technology, or associated technologies in a way that we can provide the services we provide right now on top of those custodied assets can we provide those services more efficiently and more resiliency to our clients?
The world of assets is changing. In the not too distant future, you will see various kinds of assets are being ‘tokenized’ on DLT based platforms. We are already part of Fnality where we are digitizing fiat currency. The first step is representing cash on DLT, which we are already doing. The next step is representing assets on blockchain, now we can do delivery versus payment, delivery versus delivery. Those kinds of transactions we can do on DLT based platforms.
That essentially reduces friction in the financial infrastructure in general. That is what our role is, because we provide trust, we provide the finality that when an investor is buying stock, or any asset against fiat currency, we ensure that the money goes out of the account only when the security comes into the investor’s account. That fundamental service is going to change dramatically using DLT. When we look at this from an asset managers perspective, when we look at it from asset owner perspective this is a good thing.