John Powers

Findora’s building the world’s next financial services infrastructure

Findora, a Stanford-based startup, is developing a blockchain-based common financial infrastructure it believes will solve many problems plaguing the current version, leadership team member John Powers said.

For 10 years Mr. Powers ran Stanford’s $25 billion endowment fund. That decade included 2008, an experience which is helping shape Findora.

“It gave me a unique lens on the financial system and how we have to provide better solutions for end users,” Mr. Powers said.

Following his time at Stanford, Mr. Powers was working for Credit Suisse when he began to meet what would become Findora’s founding team, many of whom are top researchers at Stanford. At the time he was aware of blockchain technology, but Mr. Powers said his introduction was through Bitcoin, which he was less impressed with as he doubted its ability to serve as a replacement for fiat currency.

But once Mr. Powers separated blockchain technology from Bitcoin, he became more excited as he saw its possible applications in financial services. Financial services firms operate what are essentially proprietary databases that are inefficient in the digital economy. They tend to have bad interoperability, slower processing speeds, poor throughput and are difficult to monitor for compliance and certification. Even then the control rests with the owners of those inefficient databases and not with the consumers generating the data.

“At its core blockchain and cryptographic technology focus on translucency and performance,” Mr. Powers said. “We are trying to create something that is universal and places the power in the end user rather than the database owner.”

Findora’s vision is to develop a common infrastructure which brings key benefits. A common ledger eliminates proprietary data silos which are both costly and laborious to protect. That frees up capital to develop better services and lower financing costs.

A single infrastructure will also foster entrepreneurism and benefit people in need by lowering the barriers to entry into financial services. That brings competition, better capital efficiency and reduced risk. A common ledger fosters interoperability and allows users to manage, authenticate and authorize direct transfers and asset transactions, a key step on the path to a new global economic model prioritizing the end user.

“We believe we can act as a public platform in the middle that mediates between two islands of proprietary (or not) blockchains and create a Switzerland with appropriate revealed information that allows enterprises to operate on their own while their information gains access,” Mr. Powers said.

The transfer of power begins with zero knowledge proofs, Mr. Powers said. They are translucent and allow for regulatory oversight without giving actual access which the end user may not want to provide. Some members of Findora’s founding team are from the crypto labs at Stanford and they are well-versed in zero knowledge proof applications, Mr. Powers said.

Peer-to-peer lenders are one group who benefit from zero knowledge proofs, Mr. Powers said. They allow platforms to retain proprietary information while also increasing their credibility and accountability.

“It provides that translucency by allowing regulators to come in without knowing things about the business they shouldn’t know,” Mr. Powers said.

Findora has built upon zero knowledge proofs by introducing “Bulletproofs”, Mr. Powers said. Designed by chief scientist Benedikt Bunz, Bulletproofs are designed to increase throughput efficiency. Their cryptographic accelerator will provide the high levels of throughput financial services firms require. The Finsense consensus model supports the infrastructure and validators by providing trusted validators with economic incentives to maintain integrity, a crucial trait as transactions become more valuable once Findora scales.

“Then we don’t have to worry about the fox guarding the henhouse and validators running off with wealth,” Mr. Powers said.

These measures, plus Findora’s base as a public domain service and not private business, has it well-positioned to be a neutral broker and the underlying platform for the Internet of Financial Services, Mr. Powers said. Their technology is open source, and they hope entrepreneurs use it to develop a broad range of applications that form the foundation for a transformation of financial services as we know it. More trust, more creativity, more inclusion.

Establishment banks, known to be slow to change, will eventually have to get on board as sentiment shifts, Mr. Powers believes. And as these new applications prove their worth and the big banks respond in kind, regulators (who are still learning the technology) will see a reduced burden.

While the developed world will see significant benefits from this shift, what will happen in emerging regions will truly be remarkable, Mr. Powers said. Just as mobile technology allowed regions to leapfrog the landline, blockchain technology will let many of those same places quickly go from no financial services infrastructure to a robust system.

By providing a harmonized infrastructure early in blockchain technology’s development, Findora hopes to be a key contributor to the improved financial wellness of people around the world, Mr. Powers concluded.

“We think we have a big vision that puts power in the hands of the end user and fosters interoperability while preserving confidence. Ultimately this will allow for an explosion in the delivery of financial services.”