Interview with Laurent Pellet, Member of the Board of Directors of the Blockchain Association for Finance, Global Head of GFE, Banque Lombard Odier
By Jérôme Sicard – Photos: Karine Bauzin
On the initiative of Lombard Odier, Pictet and Edmond de Rothschild (Switzerland), the Blockchain Association for Finance was created. It aims to govern the working relationships between banks and external managers present on the blockchain platform developed by Wecan. This platform was designed to facilitate administrative exchanges between banks and asset managers. Having defined the standards and governance rules, the Association now intends to guarantee its durability. Laurent Pellet, a member of the board of directors, explains.
What is the Blockchain Association for Finance?
Laurent Pellet: It is a non-profit association whose main objective is to govern the relationships that will develop between the blockchain platform developed by the WeCan Group in Geneva and its users, namely external asset managers and custodian banks. Let’s take a quick look at this platform. By exploiting blockchain technology, it aims to facilitate the exchange of information and data sharing between banks and external asset managers. On the one hand, managers simplify the compliance procedures with their custodian banks. On the other hand, the banks get better quality data, while reducing the time invested in collecting it.
From this point on, it was important to create an association that ensures that the platform is always in line with the needs of its users. Furthermore, we also felt it was necessary for this association to be able to play a driving role in the future development of the platform, depending on regulatory changes.
What were the reasons for its creation?
First of all, there was a common desire among custodian banks and external managers to create a more efficient working environment thanks to technological innovations like Wecan. There was also, as far as the banks were concerned, a desire to forget the fact that we were competitors in order to develop new solutions together, based on digital technology, in the obvious interest of the Swiss financial centre. We were all ready to work and move forward together, especially as we were all attracted by Wecan’s proposal. However, once we were involved in the project, we were keen to ensure that the relationship between the platform and its users was perfectly defined. We had to be sure that it would last and that we would have final control.
What is the nature of the relationship between the association and Wecan?
We agreed on a Service Level Agreement between the association and the Wecan Group, the main aim of which is to guarantee the continuity of the platform. For example, the association has ensured that it will be able to recover the source codes in the event that the Wecan Group is no longer able to manage the platform or to continue its development. The Association is chaired by Stéphanie Hodara, a well-known legal expert.
Can the association make money from the growth of the platform?
This is not the way we work. The aim of the association is not to make money from Wecan’s work in bringing the technology. On the contrary, we are delighted to be able to contribute to the success of a Swiss fintech with very good potential. For the association and its users, banks or external managers, the gains will be generated elsewhere. For the association, and for the Swiss financial centre more generally, there will be a premium for innovation. For the banks and external asset managers, there will be new ways of working together that will benefit everyone.
How is the association financed?
Banks pay a membership fee. External managers do not. We really want to gather as many people as possible around this great project.
How many external managers have you gathered so far?
More than fifty.
How is it that this project is the first to bring together so many banks in Switzerland?
That’s a difficult question. I would say that it is the combination of several factors. The first trigger was the entry into force of the new laws that now regulate the activity of external asset managers. With the LSFin and LEFin, there is much greater recognition of this profession, which now has a framework within which it can evolve much more easily.
When Wecan approached us at the very beginning, the outlines of the project were still quite limited. They limited themselves to the exchange of documentation. There were three banks around the table: Lombard Odier, Pictet and Rothschild. We very quickly realised that we could go further, to the point of completely digitalising the process of onboarding managers, with all the compliance aspects that go with it. As we were three major players who initiated this project, we thought that we would not have too much trouble motivating others.
What is the most important unifying element for you?
The definition of standards! From the outset, we were convinced that we needed standards that could be accepted and used by everyone, both custodian banks and external managers. This seemed to us to be an essential point. We worked for several months on formalising these standards by bringing together banks and managers around the table and ensuring that everyone’s needs were taken into account. Today, these standards are validated. Insofar as the interests of all parties were perfectly aligned, we moved forward fairly quickly.
How do external managers find their way around today when they join the platform?
Clearly, the aim is to lighten their workload by automating compliance checks in a perfectly secure environment. Today, thanks to the platform, information exchanges and document sharing are managed from a single data set that the manager uploads to the platform and then gives access to the partners of his choice. He no longer has to repeat the same manual operations each time. Ultimately, with the digitalisation of these time-consuming administrative formalities, he will be able to free up more time to focus on his core business, namely portfolio management and client relations.
And for Lombard Odier, to take your specific case, what advantages do you think you will gain?
Exactly the same as for the managers. We are going to save a lot of time by minimising the burden of the compliance stack and have a more rewarding working relationship with our external managers. By broadening the framework, it is true that it is also a good way for Lombard Odier to reiterate its taste for and commitment to technological innovation, which is at the heart of its development strategy.
What difficulties do you see in the adoption of this blockchain platform?
Anything that is very innovative, like this blockchain platform, requires a certain amount of time to adapt. Especially since blockchain technology is a wonderful tool for digital transformation, but its image is still a bit too much associated – wrongly – with crypto-currencies. To convince future users of the Wecan platform, it is therefore necessary to explain its mode of operation and the advantages they will gain from it. Over time, adoption will come very naturally.
How do you see blockchain transforming the world of finance and more specifically wealth management?
It is clear that blockchain will have a huge impact on the financial services sector and will create a lot of value in the process. I would just like to mention, as an example, the digitalisation of intangible assets and their appearance on new financial markets. The blockchain will allow the tokenisation of real, illiquid assets, such as real estate, works of art or even prestigious vehicles, in order to offer access to a much broader investor base. Frankly, these are new worlds that are opening up to us today, and they hold great opportunities.
Click here to find this article in French: https://sphere.swiss/creer-un-environnement-de-travail-plus-performant/
Click here to find this article in German: https://sphere.swiss/de/baf-auf-dem-weg-zu-einem-leistungsfaehigeren-arbeitsumfeld/