by Diana Ngo
Crowdaura, a startup that offers a blockchain-powered platform for the issuance, execution and administration of financial products. It provides an end-to-end solution for established financial services firms to offer investment and wholesale banking services to the lower end of the capital markets for financial products such as mini-bonds, retail loan and private placement.
Crowdaura leverages machine learning, blockchain technology and digital platforms, to enable financial services firms to provide automated self-service banking services to clients for security trading.
Similarly to typical crowdfunding platforms, Crowdaura Markets’ client-facing platform lets investors discover investment opportunities, execute trades, and share with other members of the community. Each client gets an individual dashboard with a news feed, and can view and manage their investment portfolio.
For issuing clients, the platform lets them manage investor communications, monitor know-your-customer checks and cashflow payments. Crowdaura’s blockchain connectivity enables the automated generation of smart contracts, as well as distributed clearing, settlement and administration of securities.
Using Crowdaura’s technology for private placement of mini-bonds would provide approximately a reduction of 70% in the cycle time (from issuance, trade execution to coupon administration), and a 10 times reduction in costs, the company claims.
For instance, a company looking to raise £50 million through a mini-bond offer would have to pay an investment bank approximately ~£5 million for the whole process (issuance, trade execution, administration, etc.), which would take around 40 days. In parallel, using Crowdaura would make the same process being reduced to ~20 days and cost ~£500,000. By using blockchain technology and smart contracts, Crowdaura is automating and digitizing a large portion of the trading process.
Crowdaura joined both Accenture’s 2016 Fintech Innovation Lab and Microsoft Ventures’ Accelerator London in early 2016.
“We gained knowledge, developed a strong pipeline and are executing projects that will enable us to test our technology in a production environment and help our clients assess the impacts of digital platforms on wholesale banking,” Crowdaura’s CEO and founder Dr. Avtar Sehra said in an interview with BTCMANAGER.
Sehra said that integrating both programs gave his team “the opportunity to gain feedback and advice from leaders in investment banking and technology to refine and modify our value proposition, and define a roadmap that will help us deliver a world class banking technology product.”
Currently, says Sehra, his company is working on a number of projects in France, Germany, Switzerland and Russia, in the areas of reinsurance securities, EMTNs and equities. The company cannot disclose any further details yet due to non-disclosure agreements with clients, he said.
Crowdaura has submitted a number of patents based on the projects the company is currently executing and planning. “All this R&D and current projects are intricately connected with Crowdaura’s long-term vision and mission of making transaction of value easier, faster, cheaper and safer,” Sehra said.
These patents include a technology that would connect functions within a trade-lifecycle (issuance, trade execution, administration, etc.) with a blockchain network.
Benefits are that a large organization can remain agile and scalable even as the organizational complexity grows. For investment banks, this means that a bank’s operational chain can interface with an external global financial services blockchain to execute confirmations, clearing and settlement.
“We have patent submissions on how the software and hardware data adapters will work from enterprise applications to the blockchain infrastructure, and how the data adapters would work on privacy and security of data, as well as interfacing (pegging) between internal (local area blockchains) to external (wide area blockchains), and relevant firewall mechanisms in this pegging,” Sehra said.
Another technology patent is for the management of allocations of investment returns such as coupons and dividends through a pro-rata mechanism using blockchain tracking and smart contracts.
Sehra said the technology would allow securities to be transacted quickly and easily at any time without the need for calculation, negotiations and distribution of accrued returns for complex products where returns might depend on multiple factors and delayed information.
A third patent is for embedded clients for autonomous physical capital asset management. The technology would allow physical assets to generate and allocate returns, and manage issuance and trading of debt or equity directly, using the Crowdaura platform and blockchain connectivity.
“This means infrastructure debt and other securities linked to physical assets can be self-managed through interfacing with the blockchain so the physical asset becomes the return generator and investment security,” Sehra said.
We have given the example of driverless cars. These will become perpetual bonds with variable returns that have a life span as long as the viable life of the car. Then the returns can be generated as the cars autonomously work for companies like Uber and Lyft.
“In this case, the patent point 2, above, is very important as not all information of costs associated with the operation of an asset are immediately available; hence, any dirty price at point of trading will be wrong. This means the asset should only enable transaction at a clean price, and the final returns annually are calculated and allocated pro-rata autonomously.”
In addition to the aforementioned patent applications, Crowdaura has announced that Warwick Hill, the CEO and managing director of Microsoft Ventures Accelerator London, has joined Crowdaura as a board advisor.
Sehra hopes that Hill’s expert commercial guidance, industry network and support will enable the company to become “one of the future leaders in wholesale banking technology.”