Blockchain Technology – A Matter of Survive or Thrive
by Tanya Knowles, Executive Director of Fractal Solutions, a Division of Strate (Pty) Ltd
There is a frenetic and rather exciting energy amongst many financial service institutions. Boardroom debates and conference agendas are quickly morphing from staid conversations on risk management and regulation to fintech, the internet of things and most noteworthy the potential disruption by blockchain technology. As with all new and exciting innovations, there is something of a dichotomy between the technology visionaries and the Luddites of the industry. However, one thing is certain: those operating in the financial markets cannot maintain their current status quo and need to embrace new thinking which is in line with the exciting changes that lie ahead.
No article on blockchain seems complete without describing it as the distributed ledger technology that underpins bitcoin. Yet industry debates in recent months have matured far beyond this definition to focus on the additional applications of this technology.
At a high level, a blockchain is a single distributed ledger that anyone can view, with the option of no single participant or authority in control. It is collectively kept up to date and transactions are immutably recorded and cryptographically stored. The technology has the potential to provide credibility and trust to the ecosystem with built-in smart logic and high levels of automation.
The problem today is that many organisations seem to be trapped in the hype of analysing the intricacies of the technology, conducting due diligences on thousands of fintech start-ups and generally focusing on how to protect their legacy business. While some of these are necessary evils, there is a lot to be said for taking a step back to look at the principles (See figure 1) behind blockchain technology and how those can be applied to optimise, innovate, challenge and grow one’s business for the benefits of the customer.
Fig 1 – Principles of blockchain