• Progress Report – Is Blockchain Blooming in 2016?  

Progress Report – Is Blockchain Blooming in 2016?

Earlier this year, we highlighted a report that urged potential beneficiaries of blockchain technology to stop talking about the shared-ledger revolution and become actively involved in bringing it to pass.

That same call to action is once again prevalent in The Paypers’ newly-published guide to Payments, Supply Chain Finance & E-Invoicing in 2016 – although the report is also replete with examples of financial institutions that are already invested in making sure they’re not left behind when “private” blockchain technology goes mainstream.

Just last month, Silicon Valley start-up Chain released a new open source platform designed to help financial institutions explore how blockchain technology could work for them. Their partners at launch included the likes of Visa, Citi, Capital One, and Nasdaq – while similar collaborations, such as the R3 consortium and Hyperledger Project, have brought J.P. Morgan, Deutsche Bank and dozens more to the table. Interestingly, R3’s exploratory work into blockchain attracted its first partner from China only a few weeks ago in the shape of insurance group Ping An. Overall, banks are expected to invest around $400 million in researching blockchain by 2019, while venture capitalist firms already exceeded that figure last year.

Blockchain Market Uses
An overview of some of the many uses for blockchain technology in financial services.

But in many ways, such impressive facts and figures are old news. The promise that the technology behind Bitcoin’s blockchain will one day be leveraged to make all transactions faster, cheaper, and safer has been in the air for some time now. Likewise, debates have long been raging about whether a private, bank-operated blockchain is even a blockchain at all, and, indeed, why banks are needed when – as one contributor to The Paypers’ report puts it – the truly disruptive aspect of blockchain tech is that it “makes banks, payment service providers, and credit card companies redundant.”

These conversations will run and run, but The Paypers’ comprehensive study does introduce another angle to the debate around blockchain that is all-important but often-overlooked. In their contribution to the report, the Aite Group cites a study they conducted in January that claims over 80% of corporate executives are not even familiar with the term blockchain.

It’s a fascinating statistic, and one that reveals banks will have work to do on the blockchain front that goes far beyond aligning with, or acquiring, start-ups. As Aite’s Enrico Camerinelli puts it: “Banks foresee benefits for corporations by virtue of the applications running on the blockchain that will ripple down to corporate clients. Consequently, before launching any blockchain-related program, a bank must be very clear and extremely convincing about what is in it for corporate clients.” Elsewhere, Camerinelli has put it in stronger terms, stating: “This hype on the bank side might not correspond to similar interest from corporates. Nor is it clear whether it creates similar business opportunities for either side.”

Elsewhere, Innopay predicts it will take another 3-5 years until it becomes common knowledge that a blockchain transaction is “nothing more or nothing less than an accepted change to a database.” Elaborating on the point, Innopay adds that the nature of transacting on blockchain is counterintuitive in the face of a banking system that is “seldom questioned or re-examined” from corporates.

Overall, the majority of industry comment compiled by The Paypers focuses on the positive potential of blockchain. From claims that it will “change business models, processes, and ecosystems,” to familiar statements about its power to “remove huge costs and add transparency, speed, and security,” the sentiment around blockchain remains overwhelmingly upbeat.

But perhaps in sounding a note of caution about the work that remains to be done in educating those who will one day be moving their money on private blockchains, The Paypers’ report highlights a new stage of maturity in the blockchain debate – an awareness that figuring out exactly how it will work isn’t the same thing as ensuring the people who matter most are convinced of their need for it.

Subscribe to RSS

Leave a reply

Your email address will not be published. Required fields are marked *