Banca IMI report: From blockchain hype to real business cases in financial markets

In order to change the traditional financial business model and learn more from digital currencies such as Bitcoin, Massimo Morini, head of interest rate and credit model business at Banca IMI, wrote a new report on blockchain technology. At the same time , he pointed out that the essence of blockchain technology is not to make the financial market more efficient, but to change the banking process based on trust institutions and reduce the dependence of banks on trust institutions. The new business model based on distributed ledgers and blockchain smart contracts requires the establishment of a clear regulatory system.

Translation: Nicole

Massimo Morini, head of interest rate and credit modeling at Banca IMI, the investment banking and capital markets subsidiary of Italian bank Intesa Sanpaolo, has written a new report on blockchain technology.

Follow the WeChat public account “区块链笔Blockchain” and reply with the keyword “Banca” to view and download the full text of this report.

Massimo Morini's report focused on the 'real business case' for blockchain technology, arguing that more should be learned from digital currencies such as Bitcoin, and that traditional financial business models need to be reformed, not just improved.

Morini wrote:

"There is a very serious misunderstanding that the reason why blockchain technology was introduced into the financial market is that blockchain can make the financial market more efficient. This is meaningless. Blockchain technology is used to change corporate processes based on trust institutions and reduce corporate dependence on trust institutions. If the banking structure is not changed, the essence of blockchain technology cannot be utilized, and only some inefficient functions can be used."

Massimo Morini

Morini went on to argue that the financial industry should now take a completely different approach to using trust institutions and rethink current corporate processes.

At the same time, he also knows that not all markets need such high efficiency, and he said that the financial industry should focus on use cases where the risks outweigh the costs, so that there are fewer disputes and faster processing speeds. Morini emphasized that such a market is over-the-counter derivatives, and analyzed existing and theoretical methods for its design.

Morini went on to conclude that new business models based on distributed ledgers and blockchain smart contracts require the establishment of a clear regulatory system while allowing digital currencies and assets to circulate in central bank accounts or financial institutions.

However, he said the change was happening faster than expected, concluding:

“If regulators see advantages in a more transparent and less risky blockchain architecture, legal and regulatory frameworks could come sooner than expected.”