“From Digital Currencies to Digital Finance: The Case for a Smart Financial Contract Standard.” Dr. Paolo Tasca, Journal of Risk Finance.
This excellent article uses the perspective of the blockchain movement to analyze a very complex conventional financial ecosystem: the management of financial contracts by banks and their suppliers.  It identifies major failings, notably gaps in the layers of management.  Because of the historic, organic development of separate transactional and analytical systems, there is a vast array of dissimilar systems that perform similar work, producing dissimilar results, creating the need for imperfect systems of reconciliation, consuming profits and embedding risk.
This bracing perspective can be described as part of the “technology deficit” of banks.  Because banks were among the first users of IT systems, they have among the least modern and most complex systems.  Their systems evolved patch by patch, becoming systems of systems.  See also the “Digital Banking Manifesto: The End of Banks?” (https://cdn.www.getsmarter.com/career-advice/wp-content/uploads/2016/12/mit_digital_bank_manifesto_report.pdf)
The great merit of this piece is to bring the radically simplifying perspective of the blockchain movement, and a nuanced approach to the problem and solutions.  The author identifies that the banks already use “smart contracts” in their automated transacting systems.  The financial contracts are mathematically modeled and algorithmically acted on.  The problem is that different banks use different models and algorithms, indeed many banks use multiplicities of models.
The author calls for these to be standardized via open source.  Note that the author focuses on the substantive standard for financial model – ACTUS – and not on the database level – such as blockchains.  The major, practical impact can come from standardization of the model and algorithms, without industry-wide adoption of a particular database system or replacement of the actors in the sector.   The fintech/blockchain revolution may be about the financial industry discovering open source, not any particular technology.  As the author says, ACTUS is “not an invention, but a discovery.”
The author identifies adoption as the major barrier to standards.  The current system works inefficiently, but it works everyday, and it is critical infrastructure.  Incumbent intermediaries have vested interests to protect and mindsets to overcome.  The author remarks that the fintech revolution has focused minds in the financial sector.
As an advocate for open source applied to legal documentation (CommonAccord.org), I add that adoption may be facilitated by open sourcing the documents of finance.  The efficiency and risk-reduction advantages for incumbents of a systematic approach to legal documents are powerful and immediate.  Symbiotically, open source mathematical models and algorithms can emerge from and contribute to standardized financial documents.
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