Jerome Dwight: “The Future of Finance Is Digital”

The former CEO of Bank of New York Mellon’s Canadian subsidiary and Global Markets Head for RBC on how to grow a competitive Canadian fintech ecosystem

Brane Capital is an independent Canadian crypto-custody service provider bringing credibility and trust to the fast-growing crypto space by building a made-in-Canada custody solution with a team of leaders from technology, banking and government. Its president, Jerome Dwight, has led the global expansion of financial institutions and technology-driven enterprises across Canada, the United States, Europe, Asia and Latin America for years. Dwight received an MBA from York University’s Schulich School of Business and holds Chartered Financial Analyst (CFA) and Chartered Public Accountant (CA-CPA) designations. Dwight has been recognized as one of the top 25 Lending Executives in Canada by the Canadian Lenders Association, received CPA Canada’s Award of Distinction, and is a recipient of Canada’s Top 40 Under 40.

How did your career journey bring you to Brane Capital?

I’ve always been at the intersection of financial services and technology. I started my career in 2001 working as a young CFO for Bayshore Capital, which is one of Canada’s leading private equity firms best known for bringing to market landmark financial technology companies in the late nineties. I had an incredible experience seeing Canadian innovation and technology intersect with financial services. Fast-forward many years—I took on the CEO role at the Bank of New York Mellon’s Canadian operations, joining a few weeks prior to the 2008 financial crisis.

What was meant to be a traditional institutional cash-management and custody role turned out to be quite exciting because of the role BNY Mellon played in Canada following the market crash. As an independent custodian, we had an important part to play in helping governments and regulators take historic and timely measures to safeguard the financial system, like overseeing the restructuring of $32 billion in commercial paper instruments, rapidly administering billions in economic stimulus funds, and taking custody of collateral funds for many of Canada’s largest securitization notes coming due. Seeing the role of a reliable custodian in a time of turmoil and volatile markets made such an impression on me.

I started having conversations with Brane Capital about a year ago, and it turned into this “Aha!” moment: The digital asset class is growing at a fast and furious pace, institutions are taking notice, and Brane was building a custodian platform to instill public confidence. If I’ve learned anything during my career, it’s that custodians are the essential back-end infrastructure connecting market activities, and are important partners to regulators and governments in times of crisis. That’s what got me here.

In your experience, how has financial services evolved in the digital age—and how does crypto fit in?

My definition of fintech is very easy: It’s a technology that bridges the gap between what traditional financial institutions offer and what the modern consumer expects and demands. And if you think about it through that lens, cryptocurrency solves a whole bunch of structural inefficiencies in financial services. Just think of the time it takes us to send money overseas and the cost of doing an international wire transfer. Blockchain and crypto assets can do it instantaneously at a fraction of the cost. And they are here to stay.

Whether it’s Bitcoin, Dogecoin or NFTs, digital assets sometimes struggle to win public and institutional trust.  What is needed to instill and enhance broader credibility in digital assets, particularly at an institutional level?

There needs to be a coordinated build-out of an ecosystem. We need responsible and well-regulated exchanges where investors can buy and sell liquid securities. The other piece is investor education. There’s a huge amount of retail adoption underway, but there’s a big education vacuum in terms of volatility risk. Likewise, for institutions, we need independent research providers and standards of reporting that allows for informed investment decisions.  And you need an independent custodian to keep the underlying assets safe—because the nature of cryptocurrency is such that every unit is secured by a unique private key which, if compromised, could mean losing your assets forever. What we’re really doing is reconfiguring the old-world financial ecosystem for this new asset class. It’s going to look different, but certain features will be the same, and over the next three years, I expect you’re going to have a diverse set of investors—including institutional funds and large pension funds—entering the crypto marketplace.

Are there common values emerging among global fintech leaders, regulators and policy makers as the space matures?

The traditional finance leaders that have moved into the crypto space and are helping drive this industry forward believe that this asset class is about accessibility because it bypasses centralized control. Crypto opens the financial world to a wider range of participants, like the almost two billion people in the world that don’t have a bank account but have mobile phones. There’s recent research showing traditionally lower participation in investment markets from women and visible minorities, but a higher participation rate in crypto investing. It’s exciting because it’s about accessibility, freedom and wealth creation for everyone.

What is the current state of Canada’s fintech ecosystem? What would a “made in Canada” approach to supporting and developing globally competitive Canadian fintechs look like?

We’ve lost some very good talent to the U.S. because businesses down there have the ability to launch and scale faster. Canada is a good starting point for businesses, but we have a scaling problem. We love the fact that Canada is so well-regulated, but it’s always good to look at how we can enhance our flexibility and adaptability to things like blockchain to create an environment for innovation and investment to grow. Governments, regulators, and technology companies need to work together with established financial institutions to create this fintech ecosystem in crypto and blockchain so that we have made-in-Canada custodians that are funded and set up to support the Canadian market.

What advice do you have for institutions seeking to get into the digital asset space?

Most of our prospective clients are asset managers, banks and financial institutions. I would say to them: You can’t afford to not take a serious look at this asset class. Your customers are going to choose crypto to invest in and store value—that is the reality. If you don’t have a business that’s set up for serving that market, you’re risking your competitive position. Having an understanding of the power of crypto as a store of value, and its place in diversified portfolios, cannot be underestimated. The fact that cryptocurrencies’ market cap has surpassed the value of all U.S. dollars in circulation is mind-blowing, and the pace of growth and adoption is massive in Canada and globally. You’ve got to work with a partner like Brane Capital who understands this brand-new technology and the risk management requirements associated with this unique and exciting new asset class. Brane is a mission-driven company focused on safeguarding our industry and serving as a global model for independent custodians.

CB Staff
CB Staff