O Come All Ye Blockchain Faithful

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This has, without doubt, been the year of the ‘blockchain’. Banks have become the ‘faithful’ and in some instances they’ve devoted serious resources to projects aimed at building the future of banking infrastructure.

One of the more interesting themes this year has been the idea that traditional banking infrastructure will be augmented with Blockchains/distributed ledgers. This will create pockets of efficiencies in certain parts of the banking services stack – or so the theory goes.

However, as William Mougayar notes in his Blockchain 2019: Strategic Analysis in Financial Services Slide Deck:

“Blockchain and old constructs, such as clearing houses and private exchange networks (SWIFT, CCP, FIX, DTCC) are like oil and water: they will not mix well because one is based on centrally trusted intermediaries, and the other is based on “no” intermediaries and peer-to-peer trust.”

I think this will be something that the financial services industry will need to come to terms with in 2019 – Blockchain/distributed ledger technology is a step-function shift away from the current banking services stack – it’s not going to neatly bolt onto legacy infrastructure.

Some will cross the Rubicon in 2019. They’ll realise that this structural shift is an opportunity for real change. While others will curse blockchains/distributed ledgers and refocus their attention on legacy database technology.

One way or the other, many banks will face some hard decision in 2019 as to how they actually take blockchain projects live.

See also  Sidechains: So It Begins

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