Prominent figures from the banking and broader financial sector gathered together during the New Age Banking Summit 2018 in Qatar last week. The conference focused on the future of Islamic banking, as well as concentrating on the traditional, conservative values upon which Islamic finance is founded. This article will focus on the influence of technology on the banking sector and the current state of affairs between the two industries.



A reoccuring theme can be recognized when listening to representatives and high-ranking bank officials of the cash rich and conservative Arab nations. Sentiments like »Innovation for the sake of innovation is unnecessary«, or »more and more Fintech cannot and will not solve problems. « are a common theme, which I noticed in previous conferences. Warnings against the risks of Fintech are another common concern, sometimes developing into the age-old debate of the ever-increasing risk that appears in the market due to the presence of FinTech.

I have had the privilege to be able to discuss these topics with powerful influencers in the financial industry and the conclusion I can make from it is that there is a multi-faceted solution behind establishing this type of communication with the public.



The prevailing sentiment is that finance and economic professionals expect that a market disruption is inevitable, and that change must be embraced. However, even with this foresight in mind, the current approach for solving the structural problems discussed above seems to be outdated. This approach combines the main values of streamlining, fortification, modernization, and a bigger focus on user centers.

I believe these points are all valid, but there is nothing groundbreaking about them, and they do not satisfy the core problem that creates fear among market participants. It is an oversimplified rationalization of a situation that cannot be resolved using old methods; it is becoming more and more obvious that the real concern is whether banks in general will be pushed completely into a corner by new technologies, and how quickly this could happen.

The general answer is »Yes, it can happen relatively quickly«. The response of banks to these disruptive trends is not up to par with the nature and agility of this new technology. True, optimizing a business can help in the short term, and the strongest of institutions can resist change for a long time. The elephant in the room however, is the power of informational science, which remains misunderstood. Crypto has been used with a negative connotation by skeptics of informational science, but it should not detract from this potent and relevant field. On the contrary, without informational science, businesses run the risk of falling behind their competition.



The predominant belief is that there is no real value in cryptocurrency. They are simply a digital phenomenon; numbers and code, with nothing tangible backing them. Taking this perspective means turning a blind eye to the fundamental progress that informational science has made over the last several decades. Regardless of how it is perceived, informational science brings a real value added by utilizing more advanced numeral systems and systems of calculus.

Some might have heard that the hexadecimal system can be many times more efficient when storing and processing information than the more commonly used decimal systems. For example, the value 16.581.375 takes up 8 numeric places, but can be described by only 3 characters in another language for computers. That is more than 100% difference efficiency! However, this is just the most generic and rudimentary example. Now, the game has been stepped up several notches.



Informational values that may take up tens or hundreds of numerical places can be described by a few characters with this new technology. In extreme cases, a single character may be able to describe the same information for the computer that pages of written text or numbers otherwise would. Storing information in this way becomes much more efficient and can mean the difference between success and failure of businesses in the future.

But assembly and meta-assembly calculation techniques are not the only techniques that enable improvements in the efficiency of mathematical calculations and the storage of information. Geometric principles help further leverage the power of mathematics where information is not lost, even if it is transformed into a more compressed format. Using shapes can sometimes solve complex problems in mathematics in just a few moments, while traditional calculus may take weeks, months or even years to come to the same solution.

The point is, today’s computers are not dealing with too many numbers anymore. In fact, they are not even utilizing traditional characters to a certain extent either, even though they are a more effective to increase performance in most cases. Different sorts of new mathematical concepts have risen to prominence that use triangles, squares, hexagons, octagons and various fractal elements to describe the same information with fewer elements and come to the final, precise result with fewer steps and resources.




The new value that decentralization brings to the table is closely connected to these principles. However, this trend is not finished yet. Various blockchain technologies have just started to tap into this power; combined with decentralization, the mathematical operations mentioned above can become even more efficient.

It is a similar process to what various standards have gone through in the past – competing for which solution will be able to perform best. Blockchain is currently in the phase where there are many different potential standards competing for dominance. As seen with similar developments in the past, this trend will take some time before an ultimate protocol is established and the trend tapers off.

When this peak is realized, the old methods of calculus will be similar to old vacuum tube computers, and the new methods like today’s best microchips: a million times faster, a million times smaller, and a million times more energy efficient per same mathematical operation. This hypothetical ultimate decentralized protocol will be able to connect any individual into the hyper computing network of the future. The network will always be more powerful than any entity, regardless if it will be an institution or an individual.



Traditional technological approaches will eventually be overpowered by a decentralized network based on geometric computation operations. Decentralization will add an improvement of how we as a society know how to process information, by a factor of as much as 1 million. The importance and the impact of this hypothetical decentralized network is greater than any other factor that might be introduced on the individual business level.

In the ancient past, people started to use numbers and manual calculators for rudimentary mathematics, and remained blissfully unaware they would need anything more than than these simple tools for their everyday lives. They used calculations only for specific purposes where calculus was required. Conversely, the current era digitizes everything and translates it into numbers in order to create records that can be read from anywhere and copied to any device. The next era will take us another step forward and will use numbers as fuel to propel intelligent processes. Rather than spending energy in a form of a physical fuel, spending informational fuel will be just as effective, but less costly. This analogy gives us a glimpse into a perspective of how the intangible world of information is connected to the world of tangible value. With the advent of the crypto era, the world has just started to embark on this journey.



I personally believe that the biggest financial institutions are largely unaware of the importance of the breakthrough that this technology has enabled for us. CPU power has increased exponentially, and the uses for this power are only limited by our creativity. Those who refuse to adapt to this trend will fall behind and consume more time and resources to perform the same tasks. The lessons and discussion from the Banking Summit in Doha only serve to reinforce this belief.

So where does the blockchain and the world of finance currently stand? All indicators point towards the FinTech world giving the green light for additional innovation in the form of decentralization. This acceptance will only serve to fuel blockchain’s momentum and help forge a new economic reality that will leave the old, antiquated business world behind. On the other hand, it is a reminder for the average consumer to stay up to date with new technology, invest in knowledge and education, and learn how to understand and utilize real opportunities when they present themselves.

Gregor Kozelj

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