Since blockchain first implementation in 2009, we have seen Bitcoin adoption spread across different countries and become a serious competitor to traditional financial transactions methods, creating new business opportunities for both corporations and governments.
Commonwealth Bank used blockchain as a world first global transaction, in collaboration with Wells Fargo(American international banking and financial services holding company headquartered in San Francisco).
Although it is still a relatively new technology and inevitably raises early adoption concerns, financial services organizations’ are investigating the potential of blockchain technology to various facets of their business.
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Here are five steps an organization should consider when investigating the potential of blockchain:
BUILD A TEAM TO UNDERSTAND THE APPLICATIONS AND IMPLICATIONS OF BLOCKCHAIN
Getting banks and insurance providers to share blockchain’s potential within their organisation can uncover new approaches, use cases, and ways to transform the way they do business and work internally. Therefore, the first step begins with identifying and involving core financial intermediaries and seeding them within the business so they can evaluate each project to assess the relevance of blockchain and other innovative technologies.
UNDERSTAND THE IMPACT OF BLOCKCHAIN ON PROCESSES AND INVESTMENTS
When building awareness of blockchain within a financial services institution, it is important to acknowledge the opportunities, but also potential risks and limitations of this innovative technology. It is essential to take a holistic approach and consider possible impacts to business processes and stakeholders.
For example, learning about how smart contracts (based on blockchain technology) can open the door to digital asset transfers and eliminating potential for inconsistency between systems by reducing ‘handoffs’ between various systems of record. As well as improving business processes, blockchain has the potential to significantly reduce IT investments.
EXPLORE BLOCKCHAIN’S POTENTIAL INTERNALLY
Exploring the potential for blockchain technology primarily means searching for ways to incorporate blockchain into the enterprise, including the business and technology process changes needed to realize value from each use of blockchain. Financial services organizations’ don’t need to wait for interoperability with the outside world to reap blockchain rewards such as streamlining costly internal processes.
FIND A PAIN POINT AND WORK IT
A good way to build awareness and interest around blockchain is to identify a problem that provides hands-on experience with the technology. This “hedge” investment can be a lever for spreading the word about blockchain to a broader audience internally, without spending millions of dollars.
Perform a small proof of concept (PoC) using available solution accelerators and establish a point of view on particular business process areas that blockchain could improve. PoCs provide necessary hands-on experience to business and technology teams, providing new ideas for how business processes can be improved using blockchain.
A PoC provides a relatively safe internal setting to succeed or fail fast and reap quick learning benefits. The lessons from an internal PoC should allow your teams to identify precise business requirements before expanding the reach of this technology to other business areas.
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CONSIDER WORKING WITH PARTNERS OR A CONSORTIUM
For organization’s already part of a consortium, or for those considering one, expectations should be defined very carefully. Typically, active participation in a consortium will deliver significantly more value than simply adding an organization’s brand to a list of names. To help teams prepare for the future, broader partner discussions are helpful, particularly as integration first begins.