Blockchain: The Race to Production Begins
In the past year the banking industry has been buzzing with the benefits that blockchain technology offers and progressive banks took a step further to implement blockchain pilots to test out these benefits. 2017 is going to be the year when blockchain will move out of its pilot phase, and into production. This is going to be the year when blockchain will be mainstream, and the giants of the financial services industry have already indicated that blockchain is here to stay.
The Infosys Finacle - Efma report mentioned that 21% of the banks perceive blockchain/distributed ledger will have an impact on emerging retail banking business models; and there is enough evidence to support this perception. Financial services institutions have identified areas in which private blockchain could be a game changer, for e.g. remittances, trade finance, cross-border payments, contract and document management, treasury functions etc. Use cases in these areas are already in the works for most progressive banks in the form of pilot projects. Banks are either choosing to be a part of a larger consortium (R3, Ripple etc.), or forming a partnership with another bank (ICICI Bank and Emirates ENBD) to explore the possibilities offered by blockchain and pilot project implementations. Blockchain technology also has the capability to serve as a driver in reduction of infrastructure costs that banks incur from compliance, cross-border payments, and securities trading.
It is not only financial service institutions that are looking to blockchain for operation efficiency and inter-organizational collaboration. Regulators are beginning to see the advantages that blockchain technology offers, and they are wholeheartedly getting behind it. Regulatory bodies in Dubai, India, and Singapore have given their seal of approval to blockchain and are providing support for either pilot projects or research studies with blockchain. Progressive financial institutions are already investing big on blockchain, and they are moving beyond proof-of-concept pilot projects to production. 2017 is going to see blockchain as the answer for various real-life issues in the banking sector, albeit on a smaller scale.