While Bitcoin hogs the headlines, financial services are looking at the blockchain for further transformation.
Blockchain, big data and artificial intelligence – put them together and you have something truly transformative.
A report from IBM found that banks were adopting blockchain faster than anyone expected. Approximately 15% of major banks intended to roll out comprehensive commercial blockchain products by the end of this year. What’s more, in June, seven of Europe’s largest banks announced they were adopting blockchain products for their SME customers.
The technology is a good fit for a post-2008 world, in which cashflow is more controlled, efficiency is more important, and security an absolute priority. Money and time saved by using blockchain technology will be a major win for financial institutions.
Moving into the future
Already, some banks and major corporations are investing in the blockchain, but some of the biggest impacts could come in how it evolves in the future. The rise of big data, increasing adoption of blockchain and improved technology will spark a rapid evolution over the next few years.
Data will go from private ownership to public and shared, which in turn will spark a shift in the balance of power – one away from the organisation which owns the data towards those which can gain the most insight from the information. Data and insights will then become valuable assets.
There is an enormous opportunity for anyone who can produce apps and technology to make sense of that data. AI can drive better analysis and understanding of the information, and this can be laid on top of the open blockchain architecture. The more this develops, the more insights financial institutions will be able to realise. It could lead to a busy and competitive market of blockchain data mining companies delivering insights to individuals and business clients.
There are challenges to be overcome. It will represent a significant overhaul of infrastructure and approach for all parties. Regulators will need to develop a framework with which to govern blockchain.
‘The future of Blockchain in banking’, a report from Business Insider, reveals regulators are working closely with banks to do just that. But doing so is challenging. They will be attempting to design a framework for an environment which does not yet exist.
The opportunities are immense. It can help streamline processes, improve security and reduce the cost of transfers and data storage. It will change the way financial institutions work and think. In a competitive landscape, it can quickly become a key point of differentiation. At the same time, banks will have to work out how to overcome the obstacles and ensure this is a technology which enhances their business.