Coin Republic’s Founder speaks with FST Media about the future of cryptocurrency and what digital payments will look like in 2020.
FST Media: What are your thoughts on payment platforms like Google’s Android Pay and Alibaba’s Alipay and how can banks learn from them?
Moskowitz: Payment platforms like Android Pay and Alipay are an excellent example of how technology companies are increasingly encroaching on the traditional banking landscape.
Facebook is also getting into payments and Microsoft is exploring this space with great interest. Clearly, the next area of disruption is financial institutions. Overall, I see this as a positive as I think they will replace some of these entrenched systems and networks with a more sophisticated and faster data network.
FST Media: Where do you see the future of crypto-currencies like Bitcoin and how will this change the financial services sector in Asia Pacific over the next five years?
Moskowitz: Over the next five years, we will increasingly see technology and fintech companies replace a lot of the functions that banks are currently responsible for. For instance, investing is one area that is being targeted by fintech companies in the crowdfunding equity space.
With regards to the challenges in managing bitcoin transactions, banking is definitely one of the most difficult parts of this industry to regulate. We are still very dependent on banks for cash coming in and out of the system.
I think that in the coming years we are going to see more technology companies taking over the different functions of the banks. Obviously, the banks are not going to sit back and let this happen, they are going to be developing their own internal technology groups to combat this.
FST Media: How significant is the problem of cybercrime with bitcoin transactions and what are the key security issues that need to be addressed?
Moskowitz: With respect to cybercrime in bitcoin transactions, one incidence that I have seen is to do with cheating scams, where people think that they are buying a good or service online. They purchase bitcoin to make the payment and then never receive the goods. The other incidence is Ransomware, where a perpetrator gets malicious code onto the victim’s computer and asks to be paid in bitcoin or dollars, in return for decrypting the files. As far as I can see, it has not been really significant in bitcoin transactions but it is definitely not a nice thing to see.
At Coin Republic, we try to prevent cybercrime as best as we can. As far as cheating scams go, we make notices to customers and when they sign up we send out an SMS with a individual verification on the user’s ID to make sure that they have it properly set up. We also have links with phone numbers, user IDs or passports and other forms of individual identification. By accessing this information, we are being able to verify that this is a real person in Singapore, and I also put a message in the authentication process telling them to not verify for another user (in case it is a cheating scam). The only thing that we can do to genuinely prevent these scams is education and the proper verification of people creating accounts.
FST Media: What are the key regional pressures and challenges that governments face with regulating crypto-currencies like Bitcoin in Asia Pacific?
Moskowitz: The key area that Singapore wants to concentrate on is the conversion of cash into bitcoin and vice versa, specifically to prevent terrorist financing and money laundering. In the industry here, we have been very cautious about those sorts of issues and we have been careful in conducting identity checks and identifications. Currently, it seems that the Monetary Authority of Singapore (MAS) has been satisfied with our approach.
FST Media: What’s next for your online Autobuy system and what will digital payments look like in 2020?
Moskowitz: It is quite interesting to look at the digital payments landscape as we are seeing exchanges behave more like banks. Ultimately, banks will have to adapt and become more like digital wallets. I think we can expect to see a convergence of the two. I think we will also see an increase in regulation on the exchange side, possibly a decrease in regulation on the bank side so that they can remain competitive with that move to market entry. I do some consulting on blockchain technologies and the banks are quite interested in looking at blockchain and bitcoin as well to see if it can add some cost-savings and perhaps make things more efficient – either through transferring funds or inter-bank, intra-bank, internationally or just for clearing the paperwork faster.
It is about putting paperwork in the blockchain so that other branches and other companies that they are partners with can see that paperwork and improve the overall processing efficiency. They are quite proactive about it, however it is still an early development in the industry at this stage.
FST Media: What are your thoughts on the success of EMV Chip technology and what will be the next big innovation in contactless payments?
Moskowitz: I like contactless payments, it is a great technology that makes the buying experience a lot simpler. Ultimately, the smoother the buying experience, the better it is for the customer. Any of these technologies – whether it is Bluetooth, NFC or EMV – are better for the consumer as long as the protection is there as well with the tokenisation of your data.
In general, I find most of these solutions to be band-aids on top of a somewhat broken system where you are transferring so much information over to the merchant. Inevitably, there are going to be hacks where people are going to be able to obtain your data. In the cryptocurrency space, however, you are just transferring the asset itself so there is no personal data transferred and it is fundamentally safer from a user privacy perspective. I definitely think we will see the growing proliferation of tokenisation when it comes to the use and management of data. Anytime you can send over that information in a more safe and secure way, I think the industry is going to take a hold of this innovation and make use of it.
FST Media: What is the ‘holy grail’ that is yet to be delivered in financial services?
Moskowitz: If I knew that, I would be building it! For something like payments, the holy grail is for payments to be seamless and for the customers to not be feeling any sort of discomfort of pain with moving money from their wallets to their merchant systems. There should not be any delay or downtime in the system. I think all these things are happening incrementally, but I have not seen a real revolution in payments except for the bitcoin network.
FST Media: What skills will be in demand for tomorrow’s digital banking leaders?
Moskowitz: I think more people in different industries are going to be learning the basics of coding. If you look at other industries, the best example of this is Dreamworks and Pixar, where they took artists and taught them the basics of coding and tools to make these great pictures. They did not teach programmers to make great art, it generally goes the other way when you have a special skillset and then you are given the tools to make that into a technology that can really change things and create new innovation. I think it is going to happen in the legal sector, where we will see lawyers who will need to learn about coding to create smart contracts and programmable money. The expertise of other lawyers will be needed to be able to interpret that code. I think something similar will happen in the banking and financial sector where you will have traders who are high frequency programmers.
FST Media: Every leader has a legacy that they wish to be remembered for. What is yours?
Moskowitz: I hope that I am able to help people see that the world around them is as we construct it; that we have the ability to change it, to make it a better place, and use technology in positive ways to make that happen.
David Moskowitz will be speaking at FST Media’s 6th annual ASEAN Technology & Innovation – the Future of Banking & Financial Services conference in Singapore, in addition to a distinguished panel of executives across financial services from July 22-23. For more insights and information about the event, register for your complimentary pass here.