In a more candid moment at the DTCC’s day-long Blockchain Symposium yesterday, CEO Michael Bodson asked Digital Asset Holdings CEO and former JPMorgan executive Blythe Masters for advice about the role his company should play as the financial system begins to adopt blockchain innovations.
The comments come at a time when many entrepreneurs and academics are envisioning a future where the emerging technology will replace traditional financial intermediaries, especially those that facilitate transactions in the capital markets.
When asked for advice, Masters was first flattered by the request, but quickly moved on to discuss the real threat she believes the DTCC faces from what could be a new wave of lower-cost providers of clearing and settlement solutions based on the blockchain.
"I would say, as someone said earlier, ignoring or trivializing what other people are up to is a very dangerous trade. It makes you feel better when you dismiss your competitors. It feels good when you’re talking to yourself, but the risk of ignoring the opportunity is gigantic."
Masters went on to discuss how such feelings initially made it difficult for her to see past the hype surrounding bitcoin to understand that the technology offered real innovations in the form of its underlying distributed ledger.
"The reality is there was more going on under the surface, and the imperative is to stay focused on your competitive position, even if you’re the sole provider of infrastructure," she continued.
The conversation found Bodson talking about his first discussions with Masters on blockchain, at which time Masters had assured the CEO that the technology would not necessarily put the DTCC out of business.
Still, Masters emphasized the point that financial incumbents face a real possibility of "losing" in the transition to blockchain, as many media providers were removed by Internet innovations.
Overall, Bodson showed good humor and resilience in his remarks, positioning the conference as part of a strategy by the DTCC to embrace innovations and understand how it can best harness its expertise even as the specific technology solutions it offers may evolve.
In one of the more telling moments, Bodson said:
"If anyone is going to disintermediate us, I’d rather have it be us than someone from the outside."
The fireside chat capped off a day of discussions that included a diversity of participants from representatives of the White House to bitcoin and blockchain entrepreneurs.
The exchange followed news earlier in the day that the DTCC would embark on its first trial of blockchain technology with Digital Asset Holdings, using blockchain to expand its involvement in repo trades.
Image via Pete Rizzo for CoinDesk