- ByStartupStory | April 24, 2024
Infosys co-founder Nandan Nilekani, together with Agustín Carstens, the General Manager of the Bank for International Settlements, have unveiled a concept paper detailing the framework for an innovative financial ecosystem named Finternet. This system is envisioned to seamlessly integrate interoperability, verifiability, programmability, and robust governance into a unified platform designed to enhance the global financial landscape.
Finternet aims to address and eliminate the inefficiencies prevalent in the current financial systems by removing obstacles such as slow transaction clearances and restrictive minimum transaction values. The proposed framework will empower both individuals and businesses to manage and trade financial assets on their own terms through a user-friendly interface of applications facilitating transactions within and across multiple financial ledgers.
Explaining the technical underpinnings of the Finternet, the concept paper describes how financial assets would be treated as executable objects on unified ledgers, enabling their transfer via pre-programmed smart contracts. This feature is anticipated to revolutionize how transactions and asset management are conducted by embedding flexibility and automated compliance into the system’s core.
The paper highlights, “Regulatory compliance would be simpler. Asset programmability would make it possible to embed adherence to relevant rules and regulations within the tokens and transaction instructions in the system. In other words, policy would exist as code.”
The architecture of Finternet includes multiple building blocks such as token managers and a diverse ecosystem of trust and value service providers, allowing for a highly scalable and interoperable financial environment. Users will be able to create accounts on any chosen unified ledger and set up multiple, human-readable virtual addresses for transactions, enhancing both usability and security.
Nilekani emphasized the transformative potential of Finternet, stating, “This is more than just a technological upgrade; it’s a reimagining of financial infrastructure. Our vision is to create an open and competitive financial landscape that fosters innovation, lowers costs, and puts control directly in the hands of users.”
Furthermore, the Finternet model supports the continuation of central and commercial banks’ roles, ensuring that while innovation leads the way, the stability and integrity of the financial system are not compromised. Stringent regulatory adherence remains a cornerstone of the proposed system, safeguarding the interests of all stakeholders involved.
