Blockchain: digitalisation, drawbacks and due dates
The hype surrounding blockchain technology continues to build and 2017 promises to be another year full of huge potential, trials and experimentation. FX-MM’s Luke Antoniou looks at where the technology is heading, when it might become mainstream, and what stumbling blocks might stand in the way…
Blockchain, the distributed ledger that underpins bitcoin to create an immutable, auditable and transparent record of transactions, has become incredibly big business in the last few years, and is set to occupy many more column inches in 2017 and beyond. From that description, it’s easy to see why, addressing as it does a number of issues long thought of as problematic in financial services.
There is seemingly no end to the talk that surrounds the technology, no end to the trials, think-tanks and experiments from financial institutions who are investing time and money to find the perfect real-use case for it.
According to recent research by Synechron (supported by survey data from TABB Group), blockchain investment is one of the top priorities for financial services firms in 2017. 23.4% of respondents said they would reallocate resources to work on blockchain technology, with 6.1% saying they would support training around it.
There is no question of blockchain’s potential to overhaul several aspects of financial services, from trade finance to payments. The transformative power of distributed ledger technology (DLT) can bring aid to the mass digitalisation effort that is underway in almost every industry, but especially in financial services.
“Paper and manual processes are a decelerator,” explains Roger Oliphant, Chief Architect at ACI. “Large global banks with sites around the world have no mechanism to move money between themselves without going via an external network, like SWIFT. Blockchain has the potential to improve transaction efficiency without looking to outside service providers for processes including cross-border finance, trade finance and ‘paying myself.’”
Paper-based processes, then, are increasingly a hindrance in a world that is focused on doing everything more efficiently, faster, and in some cases instantaneously. James Wallis, Vice President, Blockchain Markets and Engagements at IBM, explains that blockchain has the capability to maximise efficiency, and that IBM expect ‘process efficiency’ to be at least the short term focus of financial firms when it comes to blockchain.