Chris Finan has had to wrestle with the most pressing cybersecurity issues affecting the United States. The Obama administration’s former cybersecurity director, Mr. Finan is one of the founders of Manifold Technology, providers of a high-performance blockchain as part of Microsoft’s Business-as-a-Service suite and to institutions like RBC, where Manifold helps improve their rewards program through instantaneous account synchronization across the settlement process.
Spend a few minutes with Mr. Finan and it is clear he is capable of accomplishing great things. That is what initially attracted him to the White House and also is why he left.
Pair government bureaucracy with an industry that changes as rapidly as technology and the results are legislative gaps that leave law enforcement a few steps behind cyber criminals, Mr. Finan explained.
There were other reasons. As bright minds take fintech in new and exciting directions, Mr. Finan wanted to be at the forefront of that wave, not back in a reactive position watching others take the lead.
“It’s not just creating a better cybersecurity mousetrap,” Mr. Finan explained. “It’s also a means to a better end.”
Then Mr. Finan met Robert Seger. Mr. Seger began his career as a researcher with the National Security Administration before becoming the lead network security architect for the Food and Drug Administration. He also founded and served as CTO for Morta Security, an Andreessen Horowitz-funded company focusing on multi-faceted cyber threat detection that was acquired by Palo Alto Networks in early 2014.
The pair looked at the state of government and banking technology and knew they could do better by employing distributed ledger technology. What they have created two years later is the only end-to-end platform to integrate asynchronous contracts, multi-chain data segmentation, high throughput blockchain, and distributed data storage.
“Asynchronous contracts are programmable logic for any kind of bid-ask transaction,” Mr. Finan said. “We created the concept to allow financial institutions to build automated contracting logic consistent with their existing legal agreements for decentralized execution on our platform.
“In other words they can automate the contracts they already use with their clients (and which are backed by case law), rather than have to conform to an entirely new paradigm with no legal basis.”
Mr. Finan said multi-chain data segmentation is Manifold Technology’s solution to providing confidentiality for entities using the platform. Platform owners can segment transaction activities into subchains for each client which provide means of auditing and verifying transaction record integrity with gaining insight into other clients’ transaction records.
“We felt this was essential because a typical blockchain gives every participant insight into all transaction activity, albeit with quasi-anonymous guarantees, which many financial institutions are uncomfortable with,” Mr. Finan explained.
High-throughput blockchain permits larger volumes of transactions, a crucial feature if the blockchain is to scale and fulfill its potential. Because Manifold Technology’s platform scales linearly, it’s throughput is theoretically limitless, Mr. Finan said.
Distributed data storage is Manifold Technology’s solution to being able to support the operational and infrastructure integration requirements of institutions, Mr. Finan said.
“Existing operational workflows demand support for ad hoc queries and queries on unstructured data,” Mr. Finan explained. “To us the choice between a blockchain and an efficient data storage platform was a false one, so we created a hybrid by fusing our blockchain with a distributed data base.
“This allows us to integrate more easily with bank workflows and also provides additional data availability benefits.”
Most fintechs in some form exist because they develop technology allowing them to provide a service that is more responsive than traditional finance. In that sense Mr. Finan agrees companies like Manifold Technology do threaten modern banking approaches but he thinks they should view Manifold as an opportunity, not a threat.
“Are we a threat to modern banks? Yes, but we are building something that helps banks. They reduce the cost of their services while provide better and more engaging service to their clients.
“It’s a win-win.”
Manifold Technology’s relationship with RBC initially focused on securities trading, but grew to include improving its’ reward system, an issue concerning many big banks.
“A lot of big financial institutions with reward programs wanted quicker feedback and engaging services,” Mr. Finan said. “They were hobbled by the challenge of aggregating the data more quickly. Sensitive client data was at risk.”
The blockchain provided the solution, Mr. Finan said, because it can perform the aggregation while preserving data security and client trust.
“It’s false that one has to make a choice between the blockchain and data bases,” Mr. Finan explained. “Why not build the best of both?”
Mr. Finan does not think the fintech revolution will end with a bankless society – the banks have too much going for them.
“Many people do trust their banks,” he said. “They seem to have a great deal of admiration.”
Trust isn’t the issue in most cases, speed is, Mr. Finan said. Provide the same quality of service and speed as a mobile app and many will choose the bank. In order to reach that point banks need to focus on harnessing distributed ledger and the other technologies disrupting modern finance.
“Address internal inefficiencies you have control over and making sure it does not take days to provide value to the client.”
Government has a role to play if the fintech revolution is to fulfill its potential, Mr. Finan said, by enacting policy facilitating more widespread acceptance of revolutionary technologies through funding and education.
People won’t fund what they can’t understand, nor will they fund what they perceive as a threat to their existence. Manifold Technology learned those lessons first hand.
“There wasn’t a lot of understanding in mainstream finance. It was tough for us to find institutional investors and get our early series funding.”
There is no question that as long as traditional finance controls investment dollars the most disruptive technologies will struggle to get funded, he added.
“The mainstream financial system continues to be caught by surprise because there isn’t enough government attention and focus (on disruptive technologies).”