Blockchain and Banking: It’s good and getting better

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As my IBM colleagues and I prepare for next month’s Sibos in Geneva, I’m reminded of the saying: “The best is the enemy of the good.” Its roots go back to an Italian proverb, but it was popularized by the French philosopher, Voltaire.

Perhaps nowhere does this saying apply as well as it does to the growing interest and adoption of blockchain technology in the global banking industry.

I’m as sure as I can be that blockchain represents an important new technology. So is IBM urging its immediate adoption? Well, it’s not perfect yet. But it’s good, and it’s going to get better. Fast.

I see blockchain as an emerging new platform with a strong affinity for managing payments, risk and security – to name just a few of the many processes that blockchain will improve – and can be important performance differentiators.

Currently, payments are time sensitive, require settlement and reconciliation time and are process-delay prone. They carry risks associated with ambiguity, errors and veracity. And they’re prone to tampering and other forms of fraud.

Blockchain offers the promise of real-time payments that are verifiable auditable and cryptographically secure, fundamentally changing the banking landscape.

And for an industry looking to reduce costs in a strategic way, blockchain can eliminate intermediaries and scale. It has been predicted that this ledger technology may reduce banks’ infrastructure costs attributable to cross-border payments, securities trading and regulatory compliance by $15-20 billion per year by the year 2022.

So when should you start? And how?

According to a “Blockchain in Banking” study by the IBM Institute for Business Value, first movers are setting a fast pace. While just a handful of banks are operating on the blockchain today, by 2017, 15 percent of banks in the study expect to have blockchains in production. The study will be released at Sibos in Geneva on September 27.

So I suggest getting engaged as soon as possible. You want to be part of the discussion as blockchain standards are set for the banking industry. Choose discrete projects where the attributes of blockchain can drive rapid benefits both for you and your clients.

As I said, this payment platform is not perfect. In the coming months, scalability will improve, standards will be created, and security will harden. There is a vibrant, growing ecosystem engaged in building new applications on the blockchain. Venture capitalists are backing blockchain with their investment dollars.

And your clients will be asking about what you’re doing with blockchain. It represents a powerful opportunity to show them that you’re operating at the forefront of innovation, something that hasn’t been as much of a hallmark for many banks over the past decade.

I’ll be part of an IBM team at Sibos looking forward to discussing with you the new study, the latest blockchain news and innovations, or any other aspect of banking and technology. To learn more about IBM activities at Sibos, visit

VP Global Payments Industry and VP of Blockchain for Business at IBM

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