Let’s talk money. The little imaginary tokens that make the world go round - and we’re not talking about just blockchain tokens either. Since the time of ancient Mesopotamian empires promissory notes that represent value have been issued, and it was the financial instrumentation of these notes by the Medici family in the Renaissance, and their evolution by London bankers, that, arguably, led to the rise of what we know as ‘the West’ from global backwater to world dominance in half a millennia. 

These days, the global financial system is an interconnected superstructure of promises - debt and credit - that is the fundamental basis for not just our global economy, but our global society. Money matters, it is the crucible upon which nations rise and fall, an unimaginably vast network of exchange - a chittering chorus of transistors storing numbers on electronic ledgers - that underwrites every action we make as a human race. And, well, you can swap it for food and shelter and World of Warcraft mounts.

Ripe for Innovation, Necessary to Change

Banking software is by now ancient tech, with legacy systems that are decades old. The COBOL programming language, the SWIFT messaging system, the IBM mainframes on which most of the world's transactions still pass through. When it comes to managing money, people are, reasonably, afraid of change. Yet when it comes to managing financial data, everyone in the industry knows that change is paramount - and that change is coming. Of course, the introduction of cloud-native environments has occurred over recent times, but we all know the safety risks and massive bottlenecks that these architectures create. The next step is to move to distributed environments, and that’s where Source Network’s distributed data management tools are required.

The meteoric rise of blockchain tech over the last decade is in part due to the pain points associated with the system we have. The more digital our daily lives, the faster the pace of exchange in global economies, the more that this financial data and the way it is handled is ripe for innovation. Innovation that is necessary to restore privacy, ensure security, maintain compliance, prevent fraud, and sustain appropriate latency in a world which is rife with threat vectors that are evolving in sophistication all the time. And to restore trust to a public who have had their faith in these systems shattered over the previous decades and who have turned to alternatives like Bitcoin. 

Distributing Financial Data and Its Advantages

Source Network’s tools are this innovation. Through them, end-user financial data can be protected. Institutions can more rigorously safeguard their client data in perpetuity. Distributed systems can function more effectively to prevent fraud and reduce latency for trading institutions. Cross-border compliance through multiple jurisdictions can be easily maintained. The bottlenecks of integrating legacy systems with modern mobile applications can be overcome, and securing these systems against modern cybersecurity threats can be guaranteed. 

The essential financial data, currently centralized, exposed and potentially invasive, can be onboarded into protected distributed networks where collaboration can thrive, analytics can run, and previously siloed financial systems can become fully interoperable, not only protecting institutions and individuals alike but also, once established, making everyone in the system a lot more money - including the end user and the developers making financial applications.

Security, Availability and Privacy

Financial data is incredibly sensitive. Any company, from tiny start-up to neobank to global behemoth, must protect it at all costs - or risk being fined out of existence by the regulatory bodies that oversee the finance sector - regulatory bodies that have more teeth than any other. Not to mention the colossal reputation risk to customers who perceive an institution as a threat not just to their privacy, but their livelihood and savings. 

The issue is financial data - to be truly valuable - needs more than other data types to be available and integrated within wider systems. More third parties need access, more analytics must be run. Institutions all over the world - each with their own security paradigms - need to be interconnected. Securing financial data across all these different stakeholders working through ancient low-latency systems is a massively expensive headache and is why you, the end-user, only get 0.1% interest on your checking account when the base rate is 5%.

Better, Safer Data

A money-management account, for example, needs to collate data from all your different banks to present you an overview of your finances. A fintech lending startup needs your data to approve or reject loans. A credit card company needs to identify spending trends for targeted offers. All this raw data is a massive security risk, constantly being shuffled between these companies, flowing through API after Open Banking API - not all of them secure (and barely open at all). Raw data sets from transactions, external market feeds, customer accounts getting warehoused to run analytics represents a gargantuan medley of risks - and every financial application a conduit to expose those risks. 

By distributing financial data management, Source Network’s tools like DefraDB in conjunction with SourceHub allow granular field-level access-control meaning that important financial information necessary to make decisions can be delivered at the field level to where they need to be without handing over data wholesale or having it harvested by competitors. A lending app might then be able to access a user’s credit score and loan history without accessing their PII wholesale.

Personal Finance, Global Reach

Implementation of ZK-tech can take that further, confirming the values of that data without revealing the underlying points. ZK-tech could confirm a user has sufficient funds for a transaction without, for instance, revealing their account balance to the merchant. Financial data is valuable - being able to share it without revealing it is crucial for a financial application’s competitive advantage, and this implementation can make customers, both businesses and individuals, more willing to hand it over - creating more opportunities for collaboration and financial products that benefit everyone. 

Moreover, non-custodial secret management means organizations can guarantee the protection of sensitive information - indeed making sure it never leaves their end user’s device, drastically reducing the surface area for hackers. Take something like a crypto exchange - Source Network’s tools could create a reality where a DEX looks and functions just like a CEX, but where users still retain complete control over their keys, further protecting traders from the risk of systemic breakdown, a la FTX. 

Staying Compliant

Source Network’s tools, as we’ve spoken about extensively before, can also do wonders for compliance - and nowhere more than finance is compliance so essential. Auditability and traceability of transactions is utterly essential - and Source’s immutable decentralized data trails and the trust anchoring provided by SourceHub when operating with DefraDB means that cross-jurisdictional compliance can be both automatic and watertight. By remaining a non-custodian of financial data, even as your application thrives and derives its value from it, an innovation space for developers is created, enabling them to focus on delivering fantastic financial products without getting bogged down in the essential legalese that protects the customers using them (but without sacrificing that protection at all). 

In a world where trillions of data points (and dollars) flow cross-border, distributed edge nodes with data managed by Source can maintain data sovereignty requirements and adherence with data-laws globally and ensure user data that needs to remain in the US isn’t whisked away to an Australian firm for data-analytics when it's not supposed to be. A US investment firm handling EU customer data can ensure compliance with GDPR by processing and storing data on EU-based edge nodes. And so on and so forth. Tools like DefraDB can also encrypt customer data locally and run analytics on a per-device basis, with only aggregated and anonymized insights returned to the application as a whole. 

Financial Inclusion

Source Network’s distributed data management tools can also create a far grander vision than this, though, and do far more than just protecting user privacy, assuring ironclad compliance, and boosting financial innovation - as if that wasn’t enough. It can also promote financial inclusion. Distributed identity management could create a system where sovereign individuals can protect their identity and their privacy while still being able to access the broader financial system. With DID and local data encryption, underbanked populations can suddenly access credit and banking services in regions where verifying identity in a centralized manner is currently impossible. 

Traditional centralized systems in finance are massively prone to latency issues and single points of failure. Real-time trading, fraud detection, and customer interactions need low-latency and high data-availability to work-as-intended. And too often they don’t. Most banking systems actually work on something of an honor system when it comes to exchanging customer funds between one another - the actual funds trade a lot slower. Fine for a $10 Venmo, not so fine for million dollar investments and other activities plagued by settlement risk. 

Fraud algorithms could run on edge devices close to where the money is actually changing hands to make them far more effective at catching malfeasant activity. A card processor, for example, can run anomaly detection models directly on edge nodes near transaction locations and catch them instantly - not just during clearing and settlement at the end of the day. They could block suspicious transactions on the point-of-sale terminal itself and stop chargeback risks while reducing the window in which fraud can occur.

Making Money Work Better

Data is big business. Financial data is arguably the biggest business. Distributed software environments and edge computing networks are an essential step in opening up the mercurial alchemy of our modern financial systems and making them fairer, safer, more private, more secure, and available to everyone. Source Network’s distributed data management tools can revolutionize every vertical in the digital space. Our technology-obsessed species will forever be adding more devices, more environments, and more connectivity between us. 

Managing that rampant data flow will be ever more essential in a world where the impact of data-harvesting on our privacy and our freedom is ever more acute. By restoring data sovereignty to individuals and institutions, we restore financial sovereignty. Yet we also improve the speed, security and certainty of our magic money systems, creating a more inclusive financial economy where everyone gets a better deal, and everyone gets to play the game. 

Better data management, ultimately, means better money - making us all just that little bit richer.