Helen Thompson is a writer for the SWIFT Institute, a forum for knowledge-led debate established by the SWIFT financial telecommunications network.
In this article, Thompson examines how financial services firms might benefit from blockchain technology and some pitfalls they need to avoid as they move towards adoption. Much has been made of the blockchain, the name given to the underlying technology of the digital currency bitcoin, but these systems are not as novel as some believe. Having built a shared distributed ledger system 20 years ago, professor Michael Mainelli , co-founder and chairman of the commercial think-tank Z/Yen and emeritus professor of commerce at Gresham College, London, can attest that this technology is most definitely not new.
Yet banks, discovering the existence of blockchain through bitcoin, have only recently started to realise the possibilities such technology can provide.
Mainelli contends that two concurrent developments have been occurring.
Firstly, people have been coming to the realisation that there could be a multitude of ledgers responsible for a multitude of purposes, potentially in the several billions, due to the expected growth of the Internet of Things.
Secondly, companies in the financial services industry have begun to grasp the fact that these systems are relatively easy to build, meaning that banks could construct a shared distributed ledger themselves thereby doing away with the role of a trusted third party.
"Banks are on the cusp of change, but sadly what is driving them into this space is fear," Mainelli pointed out.
Leda Glyptis, newly appointed director at business and technology marketing and consulting company Sapient, based in London, agreed.“In the past year we have seen the industry move from panic and disbelief to realisation that the technology is real and very powerful,” she said.Adjustments, however, need to be made to the original bitcoin code in order to make […]
