Blockchain and its impact in the Financial Technology area

Blockchain is becoming increasingly important day by day. For those who have few ideas of the term, Blockchain is a distributed database or ledger that is shared among the nodes of a computer network. According to Investopedia, it stores information electronically in digital format and is best known for its crucial role in cryptocurrency systems, such as Bitcoin, in maintaining a secure and decentralized record of transactions. It differs from a typical database in the way that it stores information; blockchains store data in blocks that are then linked together via cryptography.

The use of blockchain technology is enhancing the operations of Fintech companies, which is clearly shown in the growth of investments in the blockchain and cryptocurrency sectors. In 2021, these sectors attracted over 32 billion U.S. dollars globally in venture capital, private equity, and mergers and acquisitions deals. This is nearly six times as much as they had attracted in 2020. This demonstrates the increasing adoption of blockchain technology by Fintech companies and its potential to revolutionize the industry.

Also, a report by DevSkiller, an IT skills assessment platform, recently showed that demand for blockchain skills increased by 552% in 2022. With more and more businesses embracing this technology, knowledge of blockchain is becoming a transferable skill. Therefore, employees meeting these requirements probably have an edge over others or may be promoted to a higher position. Under the circumstances, professional Blockchain training for Fintech employees has become a necessity.

Meeting with IFI today, Professor Paul Griffiths, the Former Academic Director of the Master’s in Fintech at the Normandie School of Management (EM Normandie) will be the expert to clarify the importance of studying Blockchain to people who are working in the Fintech area. Professor Griffiths has been in the interface between financial services and technology for over 30 years. He was part of the financial services' global leadership team at several world-class consulting firms. 

Good afternoon Professor Griffiths. It seems that there is a high demand for Blockchain-knowledgeable employees in the Fintech job market. What does Blockchain actually do?

Good afternoon, IFI. It is such a great chance for me to be here and provide some necessary information about Blockchain. As you know Blockchain came to existence in 2008 as the underlying technology for Bitcoin. As other tokens (often known by the somewhat misleading term 'cryptocurrencies') emerged new variations of the technology came to being. The generic name for these technologies is Distributed Ledger Technology (DLT). As the term DLT implies, this is essentially about a decentralized database that operates on a network, where all nodes of the network are informed of changes in records of transactions. In other words, the history of transaction is kept and requires the whole network to make changes. The DLT to a significant extent 'guarantees' the integrity of the data which increases the security and thus reduces the possibility of fraud and data corruption.

We have all seen the turmoil and volatility that is affecting the so-called cryptocurrencies, which in some circles makes people very skeptical about the future of these tokens. But even those skeptical observers understand the potential of DLT in many other uses, especially what are called 'smart contracts', there is a great need for people knowledgeable on DLTs for these other applications of the technology.  

From your perspective, what is the best part of Blockchain that Fintech students can apply to their job?

To make it clear, I can give you an example. I am currently working on the use of DLT to drive society towards a green economy. Specifically, it is to implement the Principles of Responsible Banking (PRB) that have been developed under the auspices of the UN Environmental Programme (UNEP-FI) and adopted by a great number of banks across the world. Complying with the PRB requires including a GHG emissions analysis in the loan origination process of project finance, and monitoring during the whole life cycle of that project that emissions mitigation actions are effectively implemented.

Through research carried out with bankers and DLT experts from around the world, we have detected that DLT in its smart contract application could be extremely useful for this application. 

What is your opinion about the potential of Fintech in Vietnam and what job opportunities may arise?

Vietnam has a highly developed technology sector and we have found, through our research, that there is already advanced knowledge of DLT in Vietnam. For instance, Vietnam has a highly developed gaming industry and much of it uses DLT as its underlying technology. Indeed, Vietnam is a very good country to study this technology. 

The Fintech sector in Vietnam is fortunate to have human capital well-developed in DLTs. The challenge now is for Fintechs to capitalize on that knowledge to offer DLT-enabled services to the banking sector in many areas, one being that of the implementation of the Principles of Responsible Banking and another that of Regtech - there will be many job opportunities in these spaces. There will also be many openings for introducing DLTs in the payments services which are highly developed in Vietnam and will develop a lot further if regulatory restrictions on foreign currencies are changed. 

The traditional banks in Vietnam will have to digitalize further, and this will also bring job opportunities in DLTs. Finally, we must remember that although tokens (i.e., cryptocurrencies) are in a turmoil, many observers believe that they will have a comeback, and when they do, Vietnam will be in a privileged position to move into this space. It should become the referent in SE Asia; if it doesn't, some other national market will.

Thank you so much for your response!