Leaders Series: Devika Darbari at Cobalt

Issue 35 — Jan 16, 2018

This series highlights the unique stories of leaders from various communities across the growing digital currency and blockchain technology industry.

Devika Darbari is the Global COO of Cobalt

Devika has been working in the financial services industry for the last ten years, and joined Cobalt in April 2017. Prior to joining Cobalt, she was the Americas CEO of JDX Consulting and a Director at IHS Markit.

How did you get dragged into the crazy world of blockchain?

I got into the blockchain industry when I joined Cobalt in April 2017. This was my first introduction and experience in the blockchain space with a real case study.

Cobalt was looking to harness the potential of distributed ledger technology (DLT), to deliver a private network that significantly reduced post-trade cost and risk for financial market participants.

Cobalt’s technology looks to leverage blockchain-derived concepts of encryption, digital signatures and consensus to deliver a single, immutable record for each trade. By creating a shared view of trade data leveraging shared infrastructure, Cobalt’s offering will free up back and middle office resources, and provide efficient workflows.

Not only is Cobalt at the forefront of truly using DLT versus some other POCs (Proof of Concept), but at the time I joined they had some key participants from the financial market signed up to their beta program. This made their service real and tangible. The company interested me as DLT was the next up and coming solution in financial markets and I could leverage my previous experience in this new exciting industry.

During my time at Cobalt, we have not only managed to prove that we can post trades onto a distributed ledger (DL), but we have also solved for the ability to leverage key concepts from DLT. Cobalt has successfully been building out a POC that allows us to prove that we can ensure data is immutable. The solution can demonstrate that the data has or has not been tampered with. If the data has been tampered, Cobalt can highlight what has been changed down to the actual trade detail.

During my tenure at Cobalt, I’ve also gotten exposure into the ICO (Initial Coin Offering) world and how services in financial markets may be able to leverage this to provide better, easier, and transparent services. Cobalt is currently exploring options in this space.

This is truly game changing it’s an exciting time to be part of this journey.

What did you do before you got into this?

Prior to working in the blockchain space I have always been in financial services. In my last venture as a Board Member and CEO of JDX Americas, I was responsible for breaking new ground for our consulting practice. My key areas of focus were entering new sectors, client acquisition, client retention, staff growth and business development, whilst creating consistency, structure and brand awareness.

I started my career at Markit, a data vendor in London. Markit took me from London to New York in 2007. At Markit, I built and developed several business lines within Markit from standardized identifiers for OTC Derivative Confirmations, building new derivative indices, developing industry benchmarking services, and building partnerships with vendors. My last stint at Markit was running the Derivative Reconciliations and Collateral Management services group on a global scale. I spent much of my time contributing to various industry initiatives, including participating in forums, panels, and industry papers.

I joined Cobalt DL as its Chief Operating Officer (COO), and I’m responsible for the day to day running of Cobalt and getting the company ready to go to market. I spend much of my time thinking about how to marshal resources to their most productive uses, developing and mapping out the organization’s strategy and mission into an operational plan, and driving performance across the organization whilst implementing appropriate practices to align personnel with company goals to create maximum value for the company.

I am also in charge of expanding the business in the US, engaging with key stakeholders in the institutional FX community to bring the benefits of Cobalt’s post-trade processing network to clients based in the FX hub of New York.

What’s been the most interesting experience you’ve had in your role so far?

Every day that you are challenged and you stimulate your intellect are the days that are the most interesting. In my experience these have come from building businesses from scratch to self-development coaching and constantly striving to become an inspirational and motivational leader.

What problem is your company, Cobalt, solving? Why do you feel passionate about this?

Post-trade processing has always been a cost center to many financial institutions where innovation has not been at the forefront of acceptance or importance. I think in today’s environment, there is an appetite to look at change and innovation to help drive the cost reduction and risk mitigation agenda. Technology and using innovative, cost-efficient solutions are the only way to achieve this.

Cobalt is harnessing the latest technology to solve post-trade settlement challenges. The benefit is that there is no legacy technology to change or protect, and the ability to start from scratch is what allows the Cobalt solution to be game changing for the industry. We are using DLT technology in a proven capacity, which has not been done till date by some other solutions. As a small vendor, we have the ability to be agile which allows us to continuously challenge ourselves and build new solutions and products with quicker times to market.

Being in an organization where you can make a difference and drive positive and significant industry change is what drives me and gets me out of bed daily.

Blockchain technology was supposed to make banks obsolete, but that hasn’t quite happened. Why do you think the financial services community has been slow to adopt blockchain technology in a meaningful way?

This is a great question, and one that I wonder how many people actually stop to think about. There is certainly a place and time for innovation and it is my personal opinion that the financial markets are ready for this. I believe that as an industry, we have not truly taken a step back and thought about the practicality of how to effectively leverage blockchain or bitcoin. Education and practical application are key catalysts for adoption and growth in this space.

In an environment where cost reduction is at the top of the agenda for many financial institutions, DLT has yet to be implemented in a certain way to achieve this. The ask to create a network, for each institution to run their own node(s), is a challenge and incurs cost. Creating a network is not easy, many vendors have tried this in the post-trade space and there are only a few that survived, as it’s a costly business to run. The potential to ask each financial institution to run their own node(s) is cost creation, not reduction. I think the financial services community needs to ask what is it they really want to achieve through DLT that will have the right impact.

In today’s post-trade environment, information is being sent in a highly insecure manner, and leveraging concepts from DLT can change this. The question is, at what cost. I don’t believe we as a financial community are asking the right questions — we are looking at something new and shiny and trying to get it to fit, versus truly dissecting the business problem and then trying to see how these new innovative solutions can solve them. This is hindering the ability to propel the industry forward and limiting meaningful adoption. Current solutions and POCs are more theoretical than proven. Communities are split, and I’m not sure we have one vision of what problem we are trying to solve.

The financial services industry has always to some extend been like herding cats, but times are changing and we need to change with them. Post-trade functions are not revenue generating and do not differentiate one financial institution from another in the ability to sell services to their clients. A solution that can reduce costs, create efficiencies, and provide transparency is key. A basic way to achieve this is to leverage shared infrastructure. This is where the community can come together without hindering anything proprietary to them and achieve true results.

What changes do you think bitcoin or blockchain will accelerate in our world?

Bitcoin has definitely catalyzed the growth of a new asset class. It has provided communities with limited access to goods and services secure ways to solve the access problem. Bitcoin has leveraged innovations from this digital age that we are in to create something practical that solves a real problem. This in the short and long term will bring benefits to many enterprise and consumer use cases. I think as the world educates itself more on cryptocurrencies and continues to focus on solving practical problems, we may see something that has created a game changing product and will have an economic and social impact for this generation and the next.

As for blockchain technology, I believe we overestimate the benefits of blockchain. In 5 years, I think the industry will be disappointed that it has not really leveraged the technology to the best of its abilities to implement change and cost savings. The disappointment will come from the fact that the bubble and hype will die down and there is nothing tangible yet to show for it. This does pose a great opportunity for small FinTech firms who do solve real business problems to potentially become successful faster with limited competition — great first mover advantages.

I think we still have a lot to learn about bitcoin and blockchain and as long as we as consumers and enterprises keep challenging the status quo and looking at the world through a different lens, the potential is unlimited. We may surprise ourselves in 20 years and see that we as a community across various nations have achieved and created more than we expected, that we have created positive outcomes on a social, environmental and monetary level.

Let’s see how long our rose-colored glasses will hold, and if we can make our grand visions into reality. After all, we are our own biggest obstacle.