An interview with Hendrik Kempfert about his investment in XVA Blockchain GmbH
Almost everyone knows the term Bitcoin. Because in the public debate blockchain is almost exclusively associated with the application example Bitcoin and cryptocurrency in general.
The Mainz-based company XVA-Blockchain GmbH has developed a different blockchain application. It has been offering digital solutions for OTC trading with Smart Derivatives Contracts since 2017. They are one of the first companies worldwide that offer smart derivatives contracts for OTC banking, leveraging the superior security of blockchain technology.
Hendrik Kempfert, investor at XVA Blockchain GmbH, explains what made him invest in XVA Blockchain and why the product will become more and more essential in the future.
Hendrik Kempfert you are one of the investors of XVA Blockchain GmbH. Please tell us a little bit about yourself and your background.
Never Settle ! Parallel to my professional activities, I have always dealt with new technologies. I am curious and always wanted to understand exactly how something works. In 2014 I had contact with the subject of blockchain and bitcoin for the first time and since then the topic has not let me go.
The Mainz company XVA Blockchain was founded in 2017. What exactly is meant by the platform solution they offer?
Platform – as -a-service enables customers to implement a solution in the company much faster. Platform solutions have a number of advantages over on -premise installations, where you have to provide your own infrastructure for the data center/server systems. When implementing on- premises, significantly more departments in a company have to be involved, which also delays projects and requires additional coordination loops.
In the case of platform solutions an already existing infrastructure “ as a service” can be used, on which own solutions can be added. This eliminates many time-consuming steps and possible complications, including “politics” between departments.
Platform solutions enable a concentrated focus on the actual project, resulting in faster implementation and time to market .
You are one of the investors. How did you become aware of the company ?
The contact was made via a former work colleague. We were working for a Danish company at the time and he was a co-founder in the founding team of XVA.
Did you immediately decide to invest as a result?
The issue of risk management at financial institutions has become extremely public since the Lehman Brothers bankruptcy in 2008 and films like Margin Call in 2011. Lehmann Brothers has also had some impact on the private finances of many of us. Even today we are still feeling the effects of the financial crisis of 2008. It was not without reason that the “Bitcoin” project was created via Satoshi Nakamoto and the calculated genesis block of the Bitcoin blockchain. I found it fascinating what potential there is via blockchain, i.a. a solution like that of XVA.
Why did you invest in XVA Blockchain? What were the key reasons that convinced you of the company and its product?
At that time, I was selling digital marketing solutions among other things that made it possible to bid for advertising space in real time via auctions. But why was it not possible to determine the risk of a financial institution with regard to its creditworthiness in real time?
A real-time solution that helps financial institutions to support and monitor whether their risk management is working and the liabilities are covered or not. I thought that was very exciting. Therefore I decided to invest in the idea of the founders and specialists of XVA and to even raise this investment in the meantime.
What explicitly excites you about XVA Blockchain and its product range? Could this be considered revolutionary?
In fact, the XVA helps its customers with a revolutionary approach to keep an overview and to remain meaningful in real time. To put it very simply, the Lehman Brothers case could have been prevented with a solution like that of XVA, as financial supervisory authorities would then have been able to identify the problem much earlier.
Half a year after the bankruptcy of the US investment bank Lehman Brothers in 2008, the financial markets reached their deepest depression during the financial crisis. At the time, governments and regulators were discussing how the crisis could be prevented from happening again. A special assessment was given to the derivatives markets. In your opinion, how can the mistakes of the financial crisis of that time be avoided? In your opinion, can XVA blockchain solutions make a significant contribution to preventing such a massive financial crisis from occurring again?
The products of the financial world have become very complex. At a time when huge financial transactions are being carried out around the globe in milliseconds via , for example, HFT, the control options must be able to keep pace. Risk management in a financial institution is felt to be the last stop in order to avoid a disaster like the Lehmann Brothers. These departments need tools with which they can fulfill their mandate. Tools are needed so that supervisory authorities can fulfill their control mandate. And at best automated! This is exactly where the XVA comes in with its solutions and specialists.
Do you think XVA Blockchain is capable of transforming traditional capital markets? Where do you see the greatest opportunities?
I can only partially answer that. It’s more about understanding which risks and potential for errors are still in the processes and how processes can be changed or even completely rethought. The ” blockchain technology ” is suitable to become part of new solutions with which parameters can be fixed in real time that can no longer be changed / manipulated afterwards . This makes it possible to make KPIs auditable in real time and verifiable at any time, from anywhere. Smart contracts will also continue to find their way into the financial world, especially in the area of risk management.