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Riding the Blockchain Wave Presented by: Nancy Amert, Director, Trade Innovation Lab at CGI November 13, 2018

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Where we are…

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1. Top Blockchain/DLT Initiatives over the past year

2. ~1% of companies are actively using Blockchain/DLT

3. Top barriers: scalability + stability, security

4. Strong desire remains for Banks to cut costs, replace paper & reduce manual tasks

5. Road ahead: IoT + AI emerging as top Blockchain/DLT use cases for 2019

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2018’s Top Blockchain/DLT initiatives*

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Banks Corporates Government Other 3rd Parties

Trade finance platforms • Major trading hubs develop

DLT-based trade finance platforms to facilitate domestic and cross-border trade in specific corridors

Trade platforms • Provide efficient post-transaction

mgmt. solution for physical energy commodities trading

Supply chain tracking solution • Provide ability to track movement

of goods

Supply Chain Financing • Provide one-stop credit

facilities with shipment booking

Trade platforms • Launch end-to-end digital

shipping information on platform

Leverage DLT to record movements of wellbore rock and fluid sample Ensure timely delivery

Form a consortium with other trading houses and banks to manage physical energy transactions

Provide end-to-end shipping information and automated trade paperwork services

Provide easy access to capital without collateral Ensure faster release of funds Develop a DLT based

Letter of Credit application to test with select corporates / shippers

Partner HKMA, 5 banks and Deloitte for POC using DLT platform for trade finance

Partner to form Global Trade Connectivity Network (GTCN) to digitalize trade finance between the two cities

HKFPCL

CGI

Open Account

Doc Trade

Trade 360

Voltron

Marco Polo

Banks lead DLT Trade Finance initiatives • Multi-bank JVs develop and

test private DLT networks • Large global/ regional trade

banks conduct bilateral POCs • Bank consortiums mobilized

by DLT infrastructure providers (e.g. CGI, R3, IBM)

*Not a fully inclusive nor exhaustive graphic – for discussion purposes only

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Blockchain/DLT solutions for Banking and Trade*

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Trade 360

• Manage, track and protect trade transactions between SMEs

• Guarantee auto-payment when all agreements are met

• Manage documentary trade finance for SMEs, large

corporates globally Corda (R3)

Corda (R3)

Quorum

Skuchain

IBM

• Digitize and execute all documents involved in a full end-to-end trade transaction using Quorum technology

• Includes pre-sale term negotiation, issuance of Standby letter of credit/guarantee, presentation of documents

• Improve visibility into trade flows and simplify access to credit and risk mitigation services

Ope

n A

ccou

nt

Doc

Tra

de

Voltron

Marco Polo

INITIATIVE PARTICIPATING BANKS SOFTWARE DESCRIPTION

*Not a fully inclusive nor exhaustive graphic – for discussion purposes only

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2018’s Leading Bank-led Initiatives*

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Voltron Marco Polo We.Trade Trade Information Network HKMA

Focus Traditional Trade Open Account Trade Finance Procurement Order-to-Cash for SME Optional SME Financing

Corporate Working Capital Optimization Open Account Trade

Services Letters of Credit Trade Document Digitalization

Open Account Trade Platform and Business Network Pre/Post Shipment Financing Open APIs and Core Infrastructure Factorin

Procurement Application SME Marketplace/Catalog SME Financing

‘Utility’ non-profit to create trade applications on an open structure

Pre/Post Shipment Financing

Geography Global Global Western Europe Global APAC

Customer Carriers, Corporates SMEs, Freight Forwarders

Corporates Mid-market SMEs

SMEs SMEs Large Corporates

Corporates SMEs

DLT Protocol R3 Corda R3 Corda IBM Fabric None Undecided

Tech Provider(s) R3, CryptoBLK, essDocs, Bolero, Intellect, CGI, BankTrade (TBC), Finastra (TBC)

TradeIX, R3 IBM None Undecided

Governance/BNO Universal Trade Network (TBD) Universal Trade Network IBM Swift Undecided

Number of Banks 12 11 9 (?) 7

Banks BBVA, HSBC, US Bank, Scotia Bank, ING, RBS, Intesa San Paolo, Mizuho, SEB

ING, BNPP, Commerzbank, RBS, Wells Fargo, BBVA, Barclay’s, Shinhan, CTBC, Bangkok Bank, Bladex, BCP, Natixis, Intessa San Paolo, Standard Chartered, SocGen, DNB, SEB, Danske, OP, Nordea

Deutsche Bank, HSBC, KBC, Natixis, Rabobank, SocGen, Unicredit, Santander, Nordea

BNPP, Standard Chartered, Citi Bank, Deutsche Bank, Santander, ANZ

HSBC, Stan Chart, DBS, Anz, Heng Seng, Bank of East Asia, Bank of China (HK)

Phase 2 pilots completed. Additional pilot phase to complete Q1 2019. Go Live 2019

Demo delivered at SIBOS; commercialize in Q1-Q2 2019

Prototype and Pilot Developed Target Q1 2019 NewCo established in Ireland

Demo delivered at SIBOS; NewCo to be established; commercialize in Q1 2019

RFP has been issued

Voltron Marco Polo We.Trade Formerly Project Wilson HKMA

*Not a fully inclusive nor exhaustive graphic – for discussion purposes only

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Future Ecosystem*

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Direct ERP Connectivity

Future ecosystem will enable global interoperable business networks, allowing trade parties to connect, transfer assets and value across business networks – creating a “network effect”

*Not a fully inclusive nor exhaustive graphic – for discussion purposes only

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Today’s fragmented banking platforms and disparate solutions hinder visibility and efficiency

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The challenge • Disconnected, specialist systems • Multiple parties; fragmented

processing • Costly and slow • Limited integration

Bank offerings and solutions today • Costly, non-collaborative • Lack standardization • Unnecessary complexity • Plagued by paper-bound

processes, digital islands • Slow, reliant on central

intermediaries • Even if digital, often multiple

systems required

Source: R3 consortium

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“Investor concern over the threat of new technologies is overstated.”-- Blockbuster analyst report 1999

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• Banks are concerned and want to avoid being the next Blockbuster

• They are fighting FinTech, InsureTech and GovTech startups

• Cloud providers are also encroaching (e.g., Amazon bought Whole Foods. Google selling insurance).

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Gartner’s Hype Cycle

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Widespread artificial intelligence, biohacking, new platforms and immersive experiences dominate this year’s Gartner Hype Cycle, but where is Blockchain?

Source: https://www.gartner.com/doc/3883991/hype-cycle-blockchain-technologies-

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The Road Ahead towards Mass Adoption…

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Recent Executive Survey

1. Banking industry still sees itself as a future leader in blockchain

2. 38% are building awareness & getting educated

3. 11% Actively deploying

4. ~50% Experimenting with POCs

5. ~33% of executives thinks US is most advanced

6. Australia is somewhat more advanced than others

7. The U.K. and India have similar levels of expertise

Sources: https://underscore.vc/future-of-blockchain

https://www2.deloitte.com/nl/nl/pages/risk/articles/blockchain-technology-2018-global-blockchain-survey.html

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Blended / hybrid, emerging tech use cases are increasing ...as banks drive to distinguish themselves as uniquely capable, digital leaders

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Artificial Intelligence

Advanced Analytics

High Performance Computing

Internet of Things

(Smart Things)

Experience

Intelligent Automation

Smart Materials

Cloud Native Development

Applications

Cybersecurity

Blockchain/DLT

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Blending Blockchain/DLT with other emerging tech (e.g., AI, robotics, IoT sensors, video devices)

• It is not just about Blockchain/DLT nor the integration of Blockchain and IoT and it is not about the combined usage of IoT and AI (artificial intelligence) that is gaining traction

• Multiple technologies are de facto being increasingly combined such as AI, IoT and Blockchain or AI, IoT and robotics, hybrid cloud, fog computing and edge computing, next-generation security - you name it

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Overcoming Obstacles – what will it take?

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Stability + scalability, security, speed = top barriers

Blockchain/DLT Regulations are under discussion

Industry Standards ~ progress being made

Challenge of bringing networks together

Trust and connectivity – data privacy

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Blockchain + IoT + AI: solve long-standing issues

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Benefits for

Corporates

Benefits for Banks

• Facilitate more trade (25-40% revenue uplift)

• 80% cost reduction for auto-validation & reconciliation

• Provide more attractive working capital financing

• New projects by banks will create a network of networks

• Operational efficiencies (paper/error/risk reductions)

• Faster trade facilitation • Enhanced risk mitigation • Auto-reconciliation • Attracting working capital financing

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Key Takeaways

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Though no one can confidently predict the magnitude of Blockchain/DLT and emerging tech growth, one thing is for certain: The Promise of Blockchain/DLT is Enticing, providing:

• Decentralized control • Trust • Transparency • New business models • Data resiliency

All of these and more will accelerate its adoption

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Question & answer

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Contact us to continue the conversation.

Nancy Amert Director, Trade Innovation Lab nancy.amert@cgi.com +1 (704) 492-3697 cell

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Appendix

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CGI’s Digital Services: Helping clients transform

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Strategy & Organizational

Change

Business & Process

Transformation

Technology Transformation

Digital Strategy & Roadmap

Technology Strategy & Architecture

Digital Organization

Collaborative Innovation

Human Centered Design / Customer

Experience

Digital Insights

Automation & AI

IoT & Intelligent Machines

IT Modernization Agile & DevOps

Hybrid IT & Cloud Cybersecurity

CGI Capabilities Digital Services

Bus

ines

s Sol

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ns

Pro

prie

tary

and

par

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tec

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base

d se

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Con

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Asse

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Stra

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, an

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I

Out

sour

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M

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usin

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and

tech

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“Low Code” Business

Applications

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Our commitment to you We approach every engagement with one objective in mind—to help clients succeed.

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