Austria is a country with a long musical history. Straus, Schubert, and Berg were all born in Vienna. And the likes of Mozart, Beethoven, Hayden, and Brahms all chose to live there.
Filled with pristine vistas, captivating forests and the mighty Danube River, Austria remains a pristine nation filled with natural beauty and culture.
Austria is also a country making enormous strides and advancements in the world of blockchain technology. We asked Vienna-based blockchain expert Igor Pejic to take us on a stroll along this emerging scene in Austria, offering his assessment on the future of FinTech.
Please share a bit about your professional journey
I started my career as a business journalist, before spending formative years in management consulting. As a consultant, I worked extensively with IT-companies, banks, and telcos. Most of the clients were global giants, but some were also startups. So I got to understand the markets and the different strategies very well. Then in 2013 I joined Austria Card, a European leader in digital security and secure transactions. It’s a company positioned at the nexus between IT and banking and is therefore ideally suited to my background.
What are your general views on blockchain technology and its long-term potential?
In my view, the cryptographic technologies that are being used today are offering higher security levels than at any other point in history. However, making transactions secure comes at a significant cost in terms of time and value. A host of intermediaries with giant global networks is necessary to move money around while ensuring that it’s not spent twice. It takes days, sometimes even weeks to move money or assets from one account to another. And it costs more than many people are willing to pay in today’s globalized world. It’s this search for cheaper and faster alternatives that has culminated in the blockchain technology.
So how has all of this further fueled your interest in blockchain technology?
I work in the payments and transaction technology industry. And since banking is at the heart of the transformation caused by the blockchain, it was essential for me to understand how it will impact market structure, products, and business models. After a phase of intensive research, I concluded that most of what you find about the blockchain is either highly technical or speculative.
Please elaborate. And can you talk about your work which led to being voted by Financial Times and McKinsey to the Bracken Bower Prize finals in 2016?
Sure. I decided to write a proposal for a book on Blockchain that analyses it from a strategic management perspective, based on empirically tested theories but written in a practical, easy-to-understand manner. The book unmasks common myths about blockchain, arguing, for instance, that the major challengers to banks will not be FinTech start-ups, but data collectors. An example of this is Google and Apple, which have grown into Goliaths at unprecedented pace and banking being the last bastion they have not yet conquered. An excerpt of the proposal can be read here.
Can you offer some insights into the bitcoin/crypto and blockchain tech landscape in Austria? Can you talk about a couple of companies that are contributing to this space there?
There are notable efforts of Austrian companies that go beyond the use case of value transactions. I would like to point out Minebox, a Viennese company specializing in private data storage. They have developed a decentralized and safe cloud solution which helps users to rent out excess storage space on their computers to other participants in the network. The memory capacities can be used for backups to protect against unexpected hardware failure, natural disasters, accidental deletion or cyber attacks. The network is powered and secured by a blockchain; this way the data is more secure than in conventional cloud storage systems.
Another Austrian startup to watch is Grid Singularity. It works on a blockchain-based, decentralized energy data exchange platform. The platform hosts a range of applications, including energy data analysis and benchmarking, smart grid management, trade of green certificates, a decentralized mechanism for investment decisions, and energy trade validation. I believe they are onto something as the potential in the energy sector is vast and largely untapped.
Are there a couple of emerging trends you see for blockchain technology in Europe in 2017.
Yes. For European banks, it was very difficult to free up resources for innovation after the financial crisis. And with some notable exceptions, they lag behind their American peers. This can be seen in the number of patents US-banks are filing. I expect European banks to ramp up their investments into blockchain technology, but to take a different approach. Instead of hunting for patents like banks from the other side of the Atlantic, they will intensify their cooperation with FinTechs as Barclay’s and Santander are doing right now.
A second trend is that the European FinTech scene will get more diversified with regards to technologies, but less diversified geographically. Applications apart from the financial sector such as smart contracts and the internet of things will gain weight. The European blockchain scene was always stronger on Ethereum-based than on Bitcoin-based applications; I expect to see even more Ethereum projects in the future. At the same time, I believe we’ll see regional blockchain-centers emerging. With the exception of London, which is a major cluster for FinTech blockchains, no real clusters exist in Europe.
Any final thoughts?
European states and the European Union are taking notice of the blockchain. And though adoption might outpace regulation, a clearer picture on regulations will emerge. The EU’s soon-to-be-released PSD2 will point the way with regards to payments standards. Also, we still don’t know which stance The European Securities and Markets Authority (ESMA) will take towards the blockchain. The EMSA seems to be waiting to see into which direction the market will go. But 2017 will give us a better picture of whether they will be supporting or blocking it.