Why Aren’t Banks Doing More with Blockchain?
Over the last 18 months a lot has been written about Blockchain and the benefit to financial services companies in adopting distributed ledger technology (DLT).
It’s all about reputational risk. After all, who can forget Enron? Or the subprime lending scandal? But what solution does Blockchain offer?
– An end to payment scams
– Fraudulent claims disappearing overnight
– Buyer protection through encrypted transactions
– Smoother faster payments
Really? So it’s a complete no brainer right?
Well, if the arguments are compelling, why aren’t more financial services companies currently implementing DLT as part of a digital strategy? Could it be a lack of executive buy-in, cultural inertia or perhaps legacy technology holding them back?
In a recent study, Gartner found that whilst 93% of organizations have initiated some kind of digital transformation project, over 70% fail due to an inability to overcome organizational or technological complexity. However, failure is not an option. It was Jack Welch who once famously said, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
And there are more innovations coming all the time, more opportunities to create a competitive edge if only one were agile enough to take full advantage. Take Ethereum for instance, a public cryptocurrency and a Blockchain platform with smart contract functionality, it will likely dominate the industry in the next few years as companies look to automate highly paper based processes. The applications of this technology are many and varied, from loan applications, account approval and insurance claims processing to name a few.
Important tips for getting started
The challenge often is knowing where to start, which projects to prioritize, having the right stakeholder buy-in and adopting a ‘fail fast and learn quickly’ approach. Over the last few years we have been working closely with several financial services customers to successfully implement their digital transformation plans. Here are some of our learnings which were key to success:
1. Implement several pilots – Backing one project you have a 50:50 chance of failure. Embrace a fintech mentality, keep trying different approaches and accept that failure is part of evolving the project.
2. Gather the right inputs from around the business – Often there is a disconnect between business and IT. Getting a common goal is critical to everyone pulling in the same direction.
3. Trust others to have good ideas too – It’s natural that when you bring others into a project they will want to bring their own value to the team. A sign of an invigorated team is one that feels empowered to change and tweak things as they go.
4. A successful pilot is just the beginning – Look for ways to expand the scope and include other areas where possible to keep building momentum.