Exactly one year ago I delved into the blockchain technology and blogged about the potentially disruptive impact on established financial services institutions like banks and insurers. High-time for conference programmers, self-appointed experts, TED Talks on this technology, and pilot projects. Blockchain was hip and happening. In their August 2016 Hype Cycle for Emerging Technologies, Gartner states: "Blockchain has hit the peak of its hype cycle." Now, on the brink of yet another new year, it's time to bid farewell. If everyone is joining, the party's momentum is here, the peak of inflated expectations around the corner, followed by the Trough of disillusions. Blockchain was targeted to decentralize transaction processing and cut (again) the middle man, in casu chain partners like traditional banks, payment processors, and stock exchanges. What was stuff for math wonder nerds, including a legend of a mythical founder, has become mainstream.
Let's shake hands to the new kid on the blockchain
No day goes by without press releases of large financials embracing blockchain technology. ABN AMRO Bank collaborates with the Technical University of Delft to develop blockchain apps. Fintech company R3 partners with 70+ international financial institutes to further develop the open source project Hyperledger / Corda, a blockchain version fit for financials, managed by the Linux Foundation. Corda is made to scale up to the billions of transactions used within Financial Services, and limit the amount of data in transactions that are published for verification purposes. Among the members are BBVA, Danske Bank, Credit Suisse, ING, Royal Bank of Scotland, Scotiabank, Société Générale, State Street, U.S. Bank and Wells Fargo.
SWIFT has gathered a similar set of international members to work on the Global Payments Innovation, the future cross-border payments initiative, based on blockchain technology. AEGON, Allianz, Munich Re, Swiss Re, and Zurich are developing the Blockchain Insurance Industry Initiative B3i "aiming to explore the potential of distributed ledger technologies to better serve clients through faster, more convenient and secure services. If Blockchain technology proves viable, it could well streamline paperwork and reconciliations for (re-) insurance contracts and accelerate information and money flows, while greatly improving auditability."
Bid farewell....decentralized future
What struck me this week was a picture of a Hyperledger Hackathon at the bank I'm currently engaged. Not only Indian young professionals, open-minded and eager millennials were participating in this event, but the most senior, grey-haired mainframe, and IMS database application maintenance fellow of the IT department too! Yesterday's COBOL hero can join today's blockchain hackathon to face tomorrow's challenges. A true collaborative business experience is crucial. Where blockchain evangelists predicted a decentralized future with trustless currencies like bitcoin, the near future, in my opinion, will show investments in accessible, joint-venture blockchain applications generating significant financial benefits in terms of cost reductions, transparency and shorter processing times. Fare well!