Institutional adoption of blockchain is happening!

Is Blockchain already used by Big Companies?

 

I have recently been discussing with some smart developers if Blockchain has already been used by big financial institutions, and if so, how. I was so inspired by it, I have done some digging, which I would like to share with you.

First, we must look at a few reasons why blockchain would be interesting to any business at all. I have identified several, but I am sure that this list is not exhaustive. My top 3 are:

1.    Its nature: it is transactional, possess immutability of records, excellent security aspect, tamper-proof transfer of value, etc.

2.    The impact it can have on the business: cost savings, increase of efficiency, leaner processes, automation of processes and validation.

3.    Shift to the next level: by moving from internet of information to internet of value.

All these reasons and many more have made big businesses look deeper into blockchain technology itself. The technology solves multiple things, such as: multiple truths, manual processing, intermediaries, asymmetrical processing, limited audit trail, high settlement risk, etc. However, there are many challenges ahead. My top 3 challenges are:

1.    Crypto hangover (shift of sentiment, doubts, shying away from change), anything blockchain related can be percived by wider public as anarchistic, but that is changing.

2.    GDPR compliance,

3.    Infancy stage of the blockchain industry itself and lack of traction.

As I browsed through Ernst and Young’s blockchain roundtable documents, I had to agree that there were few milestones to be passed in order to achieve broader mass adoption, such as – again – my top 3:

1.    Demonstrate the ability to handle volume resiliency,

2.    Achieve technology standards,

3.    Achieve interoperability with legacy systems.

Nevertheless, the whole blockchain and cryptocurrencies space has attracted a lot of attention in 2017 and 2018. Despite some gloomy facts outlined by Morgan Stanley’s end of 2018 report, such as, 32% of start-ups failed immediately after raising $1.3bn in 2017, or 64% failed in the first year vs the standard first-year failure average of 25%, there are those that took some significant steps in the space, such as:

-      Fidelity with its crypto trading and storage service,

-      Bain who led Series B in CX Institutional Trading platform,

-      Goldman and Galaxy who invested $58.5m in BitGo; or

-      Schwab, Fidelity, Nasdaq valuation of Conbase to $8bn.

All this showed that, despite all the challenges of new market entrants, and regulatory problems, crypto winter, and crytpocurrency stabilization at levels which are not cheerful for speculators are worth it. The technology itself entered big time to the financial arena and big business has already fallen deep into it.

My research has shown that most of the banks are already testing blockchain, if not using it.  Let me share with you several top choices; and yes, they are not open source, but they are still changing the world of finance as we know it.  

Please note that mentioned solutions are all in different stages of development and usage.[1]

Europe

1.    ABN Amro – escrow management solutions (launched)

2.    Allied Irish – domestic interbank (pilot)

3.    BNP Paribas – trade finance (pilot)

4.    Credit Suisse – syndicated loans (launched)

5.    Deutsche Bank – KYC (launched, PoC)

6.    ING – zero knowledge membership (in service since Nov. 2017)

7.    Societe Generale – agricultural commodity trade (successful testing)

8.    Multiple banks are looking into identity solutions.

I am proud to mention that our client Sedicii is providing amazing identity (KYC/AML) solution that manages GDPR issues and is talking with significant number of the Global Tier 1 banks for implementation of their ZKP solution.

 

North America

1.    Bank of America – trade finance (PoC)

2.    BNY Melon – US Treasury bond settlement (rolled out)

3.    Prudential – fast-track trade for SMEs (in service)

4.    Fidelity – trading platform (set to launch in 2019)

5.    Citigroup – dig. payment solution for private securities (pilot)

6.    Goldman Sachs – equity swap trading (testing)

7.    Wells Fargo – private label MBS securitization (testing), and my personal favourite

8.    JP Morgan – cross-border payments (rolled out)

 

Asia

1.    HSBC – trade finance (rolled out)

2.    HANA Fin. Group – digital loyalty network (under construction)

3.    Mizuho – derivatives trading (testing successful)

4.    Woori – cross border transaction processing (pilot)

5.    Korean banks – customer identification (pilot)

 

But it’s not only banks that are deep into blockchain space, but also corporations. Let me just mention a few of them:

1.    Wal-Mart – food traceability initiative (planned for 4Q2019)

2.    MetLife Asia – automated insurance product for diabetes

3.    IBM Maersk – TradeLens DLT platform for supply chain (in use)

4.    Pemex – Beluga pay used on gas stations (since Nov 2017)

As things progress while I am writing the articles I have to add few more interesting additions to the above list that are trending in April/May 2019

1.    Facebook - talk of the town, Facebook is to introduce stable coin and will board the blockchain ship soon

2.    FedEx, DHL and UPS - jointly with another 500 members ae pushing for blockchain standards as part of their Blockchain in Transport Alliance

3.    Saudi British Bank (SABB) announced Ripple based solution for instant cross border payments, and they have already tested the pilot project for Indian Rupee (INR)

4.    First crypto transaction between Central Banks of Canada and Singapore was successfully performed. Canadians aligned their test payment system called Jasper with Singaporean DLTR network called Ubin to test the cross border payments. All this was done under watchful eye of Accenture and JPMorgan.

5.    BMW goes blockchain with VeChain.

6.    Euronet subsidiary RIA partnered up with Ripple for payments on blockchain.

 Is this final and complete list? No it is not. I am convinced that there are many other projects under the radar that I am not aware of.

Should I mention new phones are enabled for blockchain apps? As you can see, the shift is already happening. We are already well ahead on the path from the Internet of Information to the Internet of Value; and blockchain technology made it all possible. The only thing that has not changed yet is that my autocorrect still does not like the word “blockchain” typed this way; but that will come to our dictionaries soon.

 

 

 

 

[1] Source Morgan Stanley report from November 2018

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