10 business trends to watch in 2017 – Blockchain (2/10)

Blockchain is one of the most exciting—and more misunderstood—emerging technologies. It essentially offers a decentralised ledger of all transactions across a network. When a transaction occurs, everyone on the network knows about it. It’s tamper-proof and virtually instantaneous. This has real disruptive implications for the financial industry, which today uses other processes to keep records for asset transfers and more.


In 2017 blockchain will exit the proof of concept (PoC) area and enter maturation phase

 

In 2016, we’ve seen a race for patent applications related to blockchain technologies, as programmers were exploring ways to standardise its protocol. Nearly every major financial institution was experimenting with blockchain. Many firms have started by working with in-house innovation groups to develop PoC projects. Major stock exchanges have launched initiatives to test the technology with nontraditional asset trading. Clearing houses have their own projects, too. We’re also seeing interesting activity in areas like clearing and settlement, trade finance, and mortgages.

In the coming year, many firms hope to move from PoC to production to demonstrate immediate value. But to do this, they’ll have to move beyond debates about how to untangle complex infrastructure. After making some fairly big bets on the technology, firms should think more broadly about how to put it to work. Behind the scenes, there are technical issues being addressed: resolving communications and programming issues, data privacy and security concerns, regulatory concerns and so on. But for financial institutions, many of the most challenging issues aren’t technical at all. Rather, they’ll struggle to address items such as governance, standards, and “off-ramps” to other systems.

One sign that a technology has matured is the emergence of vendors offering packaged solutions. It’s increasingly possible for firms to jumpstart deployment by using “Blockchain-as-a-Service” offerings. These are hosted services that include all aspects of the distributed ledger technology in a third-party cloud environment.

 

 

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