Henk Marsman - Blockchain & IAM: A Perfect Fit or a Squared Peg and a Round Hole?

Good morning. Thanks for keeping a call for giving me this stage. The main stage, making me a keynote. I'm still recovering from receiving the award yesterday for most innovative IOT OT solution as a bank, I thought all the fintechs were cool, but we're doing something right? So that is very nice. I'm also trying to cope with all the information and input that I'm getting. I counted them 14 keynotes. I've had so far, and that's a lot of information and that makes me wonder what can I add to all these bright and smart minds?

And luckily in, instead of looking forward, I'm gonna start with looking backward on what have we actually done with blockchain? Cause a lot of people will tell you that, Hey, you need to get into blockchain. And a lot of ations that I've seen today, give me the impression that they tell me that you need to do it. Good. You need to do a good job. You need to do it right.

But, but how do I do that? So today I'm gonna look back a bit on what is Ram bank doing with blockchain? What are some practical examples? And then try to extrapolate on saying, okay, if we want to take this forward into identity, what should we look for? What should we pay attention to? So it might be a perfect fit. Might also be that we have this big wall with all round holes and we have this square pack and we're trying to put it in the holes. Maybe there's a square holes somewhere a little bit on Rabobank. We are one of the three large banks in the Netherlands.

We have a history in food and agriculture. So Rabobank started off long time ago. And by a couple of farmers who said, you know, we have some money left and this guy needs some money let's work together. So the cooperation is a big part of our DNA in our culture. And our mission statement is growing a better world together. So of course you can do that with blockchain as well. I'm gonna really quickly go through this one because after a couple of presentations on blockchain, you should know blockchain.

But what I like to emphasize on blockchain itself is not that we already had it with the Merkel trees a while ago. And not that we already had it 5,000 years ago with the sums having clay tablets and writing down what they had, et cetera. But that is very geared towards a specific problem. And that's a double spend problem not being able to spend a Bitcoin twice and that it has some challenges in the typical early Bitcoin blockchain type of solutions.

You had a wallet and if you lost the key, the key was gone and it already implies something for using enterprise environments or using in global solutions as an Abba bank being part of food and Ari in our, in our DNA, we did a, a pilot in Australia with farmers of wheat. We have big, big farms. There are a lot of wheat and when the farmer harvests it, he wants to sell it.

Then there are wholesalers who buy it and then they're getting it processed, going to the mill, making flour, going to the baker, making a bread and selling it to the consumer who hopefully has an excellent experience, but rabu is involved there in the financing part because what the wholesale wholesale actor does is that he, he buys the wheat. Then he stores it for half a year because prices just went down because of the surplus. He waits until the prices go up a bit and then he sells it. But in the meantime, he still needs money to pay the farmer.

And the farmer of course needs money to get new seeds for the next season. Cetera. So we call that the grain to cookie chain and we helped those farmers in digitizing that by making a Porwal, where they could do all the administration and that Porwal was using blockchain solution for all the trades and agreements that the people made was using a Bitcoin type of solution. So the farmers would get Bitcoins or could use Bitcoins to buy stuff.

And this is what the process model looked and before, and after one of the big differences, what that initially they had to do 130 administrative tasks in the whole chain. And we were able to bring that down to 26. So that's a huge step forward in terms of efficiency gain also gave us the impression after a while, like, Hey, maybe hand blockchain is not really that much FinTech. It's more like admin tech. It really helps you solve this administration problem. It gave in addition, faster payment, we had the single version of truth.

And what Rabobank did there specifically to increase the trust is that we stated we will guarantee the Bitcoin. So their farmer, if you have five Bitcoins and something goes wrong, we will always swap them for the real Australian dollars. It also says something about why this worked, because we were able to put some additional trust in the system. Another application is we trade. We trade is a consortium of a number of banks in Europe, mainly Europe. And what we trade does is that as a bank, we know our local customer, but we have customers that do business with customers in other countries.

Now, as soon as I sell something off to Poland or to Austria or to the UK, of course I make the contract, I send it back and forth and ship the goods and get the money. And if something goes wrong, I have a problem because I need to figure out which jurisdiction is there. And we trade is a solution where we say, we are gonna use the block chain to register who we know as a bank in Netherlands and the same bank in France, the bank of France does the same. The bank does the same.

So we're gonna actually use our KYC processes to be able to identify these companies and these people, we will tell you, this is a real person. This is a real company. And we build a platform around that where you could search for business parties within Europe, where you could also make a contract, do a business deal, and you could process and track that business deal, which was all then stored in the blockchain. And that gave a lot of these mainly small, medium sized enterprises, a way to get some trust in their doing business, but also making it faster at the same time.

Cuz we, we were already doing all these things, but it was a slow cumbersome paper based process. So we trade is, is making that really simple and digital. So the grain to cookie shows that you can get rid of a lot of administration. This one shows you can even find people and start doing some kind of cross border business. If you put some trust in the equation there. And the last one that I want to share is about the real estate market. If you rent an apartment or rent a house, first, you need to find the house. Then you need to bring this big pile of papers.

Again, saying I have enough money. I can pay the rent. I'm gonna sign the contract. Here's my passport. I really exist. The renting party says, oh, I also exist. And the apartment is really 96 square meters, cetera, cetera. So we build a, Porwal also making use of blockchain technology to get all these parties and data flows, being done much more efficiently in a blockchain solution. And that looks a little bit like this. So it was split in two parts. One was where the renting party could submit their property and make sure that everything was clear there.

And the other parties where people looking for apartments could search find and do a lot of the administrative tasks online and then immediately store it in the blockchain that worked really well because what we're going, what we're gonna do here on this part is that we're gonna add the real estate taxonomy in there. So we have now a, a solution that can be used in the real estate rental market in the Netherlands.

We're now gonna make sure that it fits the kind of global real estate taxonomy, so that it's also possible then to much more easy connect other solutions and other geographies, so to speak in this solution. And that shows that in order for blockchain to really grow, it's not just everybody uses blockchain cuz within blockchain, there are differences, but also on the use level, you need to make really clear agreements on what taxonomy are gonna use. How's it gonna inter-operate.

And then the last one that I want to show is really more geared towards identity because the past couple, couple of examples are really on dealing, trading, walking transactions, making sure that the transaction is really registered. This is an example that we did together with AB and Emer bank and the chamber of commerce in the Netherlands, where we gave a person an an app on this phone. And that app was actually a wallet into a blockchain. And because this person is banking at the Rabobank, Rabobank says, I know this person, I did my KYC.

I'm gonna put a claim in the blockchain that I know this person. And then this lady wants to start her own business. So she goes to the chamber of commerce, say, Hey, I want to start her own business. And in the plus she would again, need to bring this big pile of papers, bank, receipts, passport, et cetera. But what she says now is I'm gonna do this online through my app. I'm gonna share only the information that the chamber of commerce needs in order to start this business for me. So she says, I'm gonna share my name fact that I exist.

Cetera, chamber of commerce checks. The blockchain says, oh, there's indeed a validated claim. So RA banks says, this lady exists. Good. I'm gonna give her a business. Then that lady goes to another bank, let's say AB. And EMRO also a good touch bank. And he said, I now have a business. I want to have a business bank account.

And ER, looks in the blockchain. He says, okay, but in order to give you this business bank account, I need to know that you exist and that you have a business. So chamber of commerce put a validation claim in the blockchain as well saying this business exists. So this process goes really fast and the other bank says, oh yeah, I see that you are actually there. You have this business, I'm gonna give you a bank account. I'm gonna put claim in the blockchain that you have that.

And the, in the demo, man, if everything is sorted, this went through in like two minutes where in the past you would need to bring a lot of paper, go through the office physically, but also would have the challenge of showing your passport, showing your passport, showing your passport again. So identification and authentication again and again, and in this still in pilots face, but we're really exploring the actual use of this. It's made much easier. And I think that then ties into other solutions that, well, the previous speaker this morning already mentioned the software and framework.

So we're now starting to see solutions that help people around their identity. And that's the self ING identity. But I have a feeling that when we talk about authentication and I wholeheartedly disagree with one of the speakers yesterday that said, we can use blockchain for authentication. I don't believe that yet because blockchain has again been developed or is for a specific use.

And I think that it's much more about claims and attributes and data that you can store immutably in the blockchain than that we're actually gonna use it for authentication, but I'm happy to discuss that afterwards. So what I did is on the level of identity management, I'm gonna use a little model that we have in a bank where we separate identity authentication and access to help us in the discussion on what are we talking about on identity management. I think what would be very interesting to have a look at is the validated attributes and also the user consent.

Could we not use the blockchain to store that we have this consent or that it was revoked? And the challenge there is anchoring? And what do I mean by anchoring anchoring is that now I have my identity in the blockchain, but I needed to get it from somewhere first to put it there. So in a lot of cases, in a lot of use cases where you wanna make sure this is what I'm gonna do, when things go wrong, I'm gonna go to a judge. I'm gonna find a lawyer. Yeah. Which lawyer cuz blockchain is global. And it's a technology says nothing about legal jurisdictions, et cetera.

That's where anchoring comes into place. That's why I think when it comes to identity, apologies, governments will also play a big role in the direction that these identity based solutions will be heading on the side note, the world bank. I don't know if you know, that is working on a project called ID four D identification for development. Cuz there are over a billion people who have no form of legal identification over a billion people. So we can think of all nice blockchain type of solutions, but there are countries where people have no birth certificates have no passport.

So how are they gonna be identified in any case and a recent McKinsey report on good identity made an estimate that up to 7% of GDP can be gained if you do the identification part. Well, because it has such a huge impact on doing digital business back to this blockchain presentation. There's a challenge around privacy because if it's in the blockchain, everybody who's on the blockchain can see it. So you don't want to store all data on the blockchain. And key management is I think a challenge key lost is key lost. There's not real recovery.

If I forget my password on my account at the bank, I'm gonna call the help desk. They're gonna reset it. That works differently on a true, pure blockchain on authentication. I think my main challenge is on the right hand side.

Yeah, right hand side, cause authentication still lies for a large part on shared secret. PKI is a different kind of story. But if I really want to demonstrate that me is me, I need to do something with this shared secret. And if it's secret and you put it in the blockchain, it's not that secret anymore. So I'm kind of struggling with the application there. I can see that if we have some really validated attributes in the blockchain that you could use that in showing that you are you, but then again, you have the challenge of what does that reveal about me?

How can others replay that or spoof that and how do I make that secure? And the last part is on authorization. I think that that can also be that that has more interest. So if we are going to use the blockchain for authorization examples, for example, in our case in a bank, I cannot give any advice on mortgages because I didn't have the specific training that is legally required to give advice on mortgages. Now we could, for people put in the blockchain validated claim that they have done that certification.

And that would be one way the other is that in the HR area, we're looking at these type of wallet for saying, yeah, I'm C S S P and I'm CSM and I'm from this university, et cetera. So they're, we're looking at it from that angle as well to get these validated claims. And I think the biggest challenges on the actual use. And I think next time it's better to do the order of appearance on this flight a little bit differently.

But the use, I think that what we see is that blockchain is a fantastic technology and I really think we can do very cool stuff with it, but we're struggling to find the actual use case and application because there are some use case that we can think about. But when you think them through, especially coming from a bank, being about compliance liability, et cetera, those are the things that make it really difficult. Okay. We have a blockchain solution for this, but what if I disagree? What if I'm being frauded? What if the payment is late? Where do I go to? Who can I claim?

What do I do with the liabilities? That is one part. And so I think that that's, we can definitely find applications for blockchain, but as using another Analyst firm, as Gartner says, I think we've passed the hype stage. Now there's a lot of disappointment, I think in the, in the world about blockchain because we thought we it's gonna solve everything.

But as a, as a retina block, someone said, Hey, the, the bubble is gone. We we're disappointed with the actual state of blockchain, but we haven't lost the dream yet. So I wanna close up with this quote and I read blocks cuz they're written by smarter people than me. And it's always good to get connected with smarter people cuz then you learn, this is Chris Skinner, blocking on finance and technology. And he quotes again, another lady somewhere in the world that has been heavily involved in blockchain from a government perspective.

And he said, if you're gonna use blockchain, it's for a very specific need and that need can be characterized by. You need to share a database of records with people that you do not completely trust. And so do you, we did blockchain for an internal solution. Didn't work because the people knew each other and trusted each other. So you could use Excel as well. You need to be able to access these records and update them by everybody without really trusting them. So the network needs to give that trust. That's the core of blockchain.

And if you do not need to share a database or if you trust the people as we've seen in Rabobank as well, then you do not need a blockchain. And I think these are really simple characteristics. There's a flow chart by the world economic forum that says, if this then Excel, if this then database, if this then, and then if all these options fill, then explore blockchain. And I'd like to see more discussions amongst us on that level, where are we gonna apply it? So that was what I wanted to share. Thank you for your attention. Thank You.

Hangs and I, I definitely definitely agree with that around blockchain. I think there's always a good, good thing. And a hype being sort of passed because then it's really starting doing the real stuff and understanding what it is.

And yeah, I think you pointed out if the characteristics of a blockchain are the things you need for solving your business problem, then it makes sense. But not if not, then go for a different solution and never go. And I had these conversations, never go for looking for searching for a problem to solve because you want to use the technology. That was what happened at the beginning of the hype, which was just, we have two questions here.

We have only little time, but let's try maybe to answer them very rapidly as a bank, we have a vision regarding using blockchain for employee or customer identities. So more just the ID and so on stuff. Yeah. I think we have a vision, but that vision is not directly tied to blockchain as a technology. But what previous speaker today already said as well in discussions I have with colleagues in the Netherlands of other banks, is that we see that this decentralized identity is coming. There's this bring your own identity?

I think for us, it's more accept anyone's identity that we need to figure out. Okay.

So yes, I think it will be Decentralized identity is the, the, the thing you're definitely looking yeah. At and if blockchain helps fine, that would be again that if not again, I think we skipped the second question. It's an interesting one, but probably a very long discussion then around PSD two and it could be also turned around, is blockchain helping at at PSD two too process might be also interesting discussion topic. We have a digital finance world went and.