ANZ rips apart blockchain, catalogues its big list of non-uses

By March 24, 2019 Bitcoin Business
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ANZ rips apart blockchain, catalogues its big list of non-uses

“Pushed by scorned crypto fanatics grasping for some justification of their obsession in the wake of the bitcoin collapse.”

If you’re a distributed ledger or blockchain true believer, take a deep breath. And maybe sit down. This won’t be comfortable. Or boring.

One of Australia’s Big Four banks, ANZ, says it’s run ruler over the supposedly transformative technology and, to put it mildly, it’s neither impressed or convinced of the promise of a revolution in trusted transactions is just around the corner.

“Blockchain has been the darling of the tech world for some time and increasingly so over the medium term, perhaps in part pushed by scorned crypto fanatics grasping for some justification of their obsession in the wake of the bitcoin collapse,” argues Maria Bellmas, ANZ Institutional’s associate director, trade and supply chain product.

“Sold as a solution to all of life’s problems, blockchain offers a ton of legitimate solutions for businesses – but raises just as many questions,” Bellmas continues, before delivering one the most compelling reality checks on tech vendor spin and call outs on solutions desperate for a problem.

The crux of Bellmas’ argument – and the ANZ notes it’s her individual view, even though it made it public – is that while blockchain has real and demonstrable benefits in specific situation many projects or problems “do not necessarily need it and are better off using existing good old databases and technology solutions.”

So, with Blockchain vendor hype at an all time high, especially in the financial services sector, ANZ have let loose a big corporate blockchain debunker that navigates, in plain English and good humour, when a daggy old database might do the job just as well as a distributed ledger.

It’s certainly worth a potted tour.

Call it how you see it …

“The reality is a lot of the problems blockchain projects attempt to fix have already been solved by existing technologies,” Bellmas argues, adding that “in many cases, a regular database can solve for the problem with more reliability and for much less cost than blockchain.”

A regular database? Like the one the DBA reckons does that stuff already? These ANZ types really are party poopers, despite their profession of belief in Agile. Someone’s always gotta take a pin to the balloon.

Take this sublime embodiment of negative thinking.

“Blockchain has only been available in recent times and its scalability is yet to be proven. Some databases offered by leading technology providers have been in the market for years and have a proven record of processing millions of transactions per day without failure,” Bellmas says.

“Companies therefore need to do a thorough exercise to analyse the problem they are trying to fix and assess if blockchain really is the technology that best fits the solution.”

Next she’ll be saying it burns to much power and is computationally inefficient.

When it works …

Of course, ANZ isn’t saying that Blockchain is a complete dud, it’s just that its uses might be more specialised than general. And, when there are specialised needs a special technology can crack that nut.

“Don’t peg us as philistines; blockchain is a technology with a huge number of benefits and it is particularly proving useful in the trade finance space,” says Bellmas.

“ANZ is one of seven banks participating in the eTradeConnect in Hong Kong, an innovative project led by the Hong Kong Monetary Authority which makes use of blockchain technology.”

She adds that ANZ Banking Services Domain Lead, Nigel Dobson has stated that eTradeConnect is “an endorsement not only of the technology but also a broad digitisation strategy within the trade finance world, which is overdue.”

Even so, that’s counterbalanced with this observation.

“The truth is blockchain is not the solution for every project that needs a database. A 2018 study out of China showed despite the plethora of blockchain-related projects entering the market, 92 per cent failed – and did so in an average of just over a year.”

Positive non-use cases

Bellmas also points to the example “of a global project not using blockchain is the recently announced Trade Information Network (TIN), a transformational trade information exchange hub based on open architecture that acts as a trusted registry of purchase order and invoice flows across the end-to-end supply chain."

She argues the TIN, which ANZ has a stake in “tries to solve the lack-of-standardisation problem currently in global trade finance.”

“It has the potential to be the first inclusive global multi-bank, multi-corporate network in trade finance, aiming to achieve a utility much as SWIFT does with payments.”

Not led by the nose

It looks like a matter of horses for courses for ANZ, despite its happy clapping on all things agile.

One thing’s for sure: banks are starting to call the tune to vendors rather than the other way around. That may not be a bad thing either,

Here’s the NIST flowchart ANZ referenced as a course of blockchain decisioning:

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