How the Blockchain disruption will play out – Is your organization ready?

As midnight strikes, the bank of future is not at rest. While its employees sleep, the bank’s balance sheet is busy settling the business of the previous day. Loan positions are collecting repayments, bonds are collecting coupons and cash holdings are accumulating the interest they are due. At the same time, the bank is automatically settling its obligations to its creditors.

These are some of the possibilities enabled by Blockchain.

Depending on who you ask, you might hear that the concept of Blockchain is as dramatic as the creation of the internet itself. A more simplistic definition is that this is a new way of storing, transferring, and accessing information in a secure and fast manner – just like TCP/IP with information and data over the internet.

But while most everyone seems to agree that the technology will disrupt financial services, there’s no consensus as to how it will play out.

 I believe there are two ways disruption will play out –

1. It will first make existing financial and banking processes more efficient, secure, transparent and inexpensive

1. New products like ‘smart contracts’ that solve a specific problem, such as digitize registration and custody of assets such as financial bonds and securities and car registration and ownership (non-financial), will start to see mass adoption in the market

 A few solutions that Banks can develop using Blockchain are:

• Digital wallet solutions - digital wallets, where banks can become the custodians of the private keys their customers use to sign transactions. These wallets could be used for making payments across all channels including NFC at point-of-sale
• International payments - allow customers to send money cross-borders
• ATMs—allow customers to buy and sell digital currencies using physical cash
• Corporate cash management - to support corporates in managing cash, including sweeping and pooling into digital currencies and for near real-time cross-border transfers
• Analytics - Provide corporate customers with balance and cash-flow information and forecasts
• API services - allow third parties to have access to customer wallets through APIs, embedding them into their own applications and services

To dismiss Blockchain as irrelevant - or take a “wait-and-see” approach - carries high risks for any bank seeking to keep up with today’s fast-changing digital economy

There is no time to lose.

Is your organization ready?

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