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Blockchain Technology

will complete the decentralization of finance and the way financial services of smart

cities of the future will be implemented.

In this chapter, the sectoral disruptions within the financial management and ser­

vices industry that we discuss include cryptocurrencies, capital markets, and asset

and portfolio management, and we provide an example on tokenizing agriculture and

livestock. The identified DeFi¹ applications for financial management and services

are in the tokenization of assets of value and the subsequent processes that involve

client onboarding, financial prediction, management of model portfolios, payment

systems, trade clearing and settlement (Mohamed, 2020a). We begin with the fun­

damentals of money and the evolution of cryptocurrency issuance from initial coin

offerings (ICOs) to security token offerings (STOs) and then to stablecoins like cen­

tral bank digital currencies (CBDCs). We then examine the concept of tokenizing

assets and deliberate on a conceptualization of a tokenized capital markets trad­

ing platform. To further clarify tokenization and its many benefits, we provide an

example on the tokenization concept for agriculture and livestock in raising capital

for small farms. As in all digital transformation concepts, we include discussions on

concerns for privacy and security, which emphasizes self-governance, self-regulation

and cybersecurity measures.

The financial management and services industry plays a critical role in our econ­

omy, such that it supports all economic activities through capital formation, preser­

vation and distribution. However, it suffers from a trust deficit as a result of persistent

financial crises due to unethical and non-performance of fiduciary duties by entities

that have been entrusted with such duties. Technology was seen as a viable way

to automate or make operationally inherent such checks and balances that would

improve the governance of financial services. The fallibility of human judgement, or

the lack of it, makes digital transformation more crucial when a code of ethics and

corporate governance fails to live up to its noble expectations. Fraud and abuse detec­

tion mechanisms can help enforce accountability and security in financial services.

Digital transformation is also important to the financial services industry for

competitiveness and stability in the markets. The sustainability of any organization

relies on its ability to innovate and embrace change and new ways of doing busi­

ness to scale and substantially enhance efficiency and elevate performance within

the organization. Without the reinvention and transformation of existing processes,

services cannot reach the evolving levels of financial efficiency and rising utility of

the people who use such products and services.

13.2  CONCEPTUAL FRAMEWORK

The conceptual framework investigates and proposes various use cases for the appli­

cation of artificial intelligence (AI) and blockchain to support the range of financial

services and the essential underlying services associated with financial institutions

and their customers. Our discussion intends to demonstrate the right use of each

technology to bring out its benefits when applied appropriately and to understand the

relationships of technologies and how they can be used to serve the shift in consumer

behaviour. The paradigm shift brought on by digital transformation is altering the