Blockchain: The Fuel to Energize Your Financial Services Transformation
Blog: Bizagi Blog
Hailed as the ‘Uber’ of banking, Blockchain is the buzzword of the moment in financial services. The digital ledger technology (DLT) has numerous benefits, including fraud prevention and faster payments on the front end, while saving money and simplifying your organization’s back end functionality.
Here at Bizagi, we have already questioned, ‘Why aren’t banks doing more with Blockchain?’ and now it seems that DLT is firmly on the agenda, with a recent World Economic Forum report predicting that by 2025 10% of GDP will be stored on Blockchains or Blockchain-related technology. Not to mention Bitcoin stealing so many recent headlines – a vast quantity of which is supported by Blockchain as a cryptocurrency wallet. So, if you haven’t already started exploring the possibilities for your business, now is the time.
But digital transformation and the implementation of new technologies are often met with internal barriers. Banks, by nature, are risk-averse cultures, so it can be a challenge for the pioneers who want to spearhead the Blockchain campaign to get the rest of the business on-board.
In our latest report, ‘How to Kick-Start your Digital Transformation’, we highlight ‘Energize’ as the first component in the framework for implementing a step-change in your organization. Here are the four steps you need to take to energize your colleagues, and get them to realize the advantages of Blockchain:
STEP 1 – Get your program up and running
The complexities of transactions within the financial services industry mean that the technological architecture of Blockchain systems need to be as agile as possible. However, legacy architecture makes it hard to integrate DLT, so naturally the process of getting the program up and running requires innovative platforms that support rapid integration with both new and legacy technologies.
Consultancy.uk found that 40% of banks are still finding themselves at the exploration phase when it comes to Blockchain, while 30% are pursuing proof of concepts. Here at Bizagi, we have developed two new connectors that can help to simplify your DLT implementation while pursuing these proof of concepts, supported by a browser-accessible SDK to walk you through the building steps. The first step is always the hardest, but it gets you on the way to seeing the long-term benefits.
STEP 2 – Gain stakeholder buy-in early on
How will Blockchain change banking? Why is Blockchain slow to implement? How much will DLT implementation cost? The list of questions goes on…
Stakeholders are likely to be dubious at the start of your Blockchain implementation, so you will likely be hit with a barrage of questions. As with any FinTech digital transformation, some resistance from the C-Suite is to be expected as they will want proof-points before they make a financial commitment and fully endorse DLT deployment.
But Blockchain has evolved from simply being known as the mysterious technology behind BitCoin to a legitimate platform for developing financial services. This is mostly thanks to its secure design that offers an excellent platform for anti-fraudulent transactions – a digital nirvana that banks have been chasing for decades.
Over the past few years, valid use-cases to demonstrate Blockchain’s potential have emerged, including optimizing international payments and trade finance. Barclays in the UK conducted one of the first Blockchain-based trade finance deals back in September 2016, so the foundations have already been laid: you just need to convince the C-Suite that now is the time to build.
STEP 3 – Instil confidence in Blockchain
It’s not just getting the stakeholders on board that can prove to be a challenge, you need to instil confidence across the organization. Cultural resistance is often the biggest barrier to transformation, but by highlighting the benefits of DLT, you can get more colleagues to back your digital transformation efforts.
You should focus your attention on one area where you can make a quick win. There is no point in deploying Blockchain for the sake of it: look at your long-term business goals and the challenges that accompany them. Blockchain can store any kind of digital information so the possibilities are endless – capital markets and trade finance or even just more secure P2P transactions on a consumer level.
Financial giants are already investing in DLT, which helps to deliver confidence in the software: JP Morgan has already moved beyond the testing phase and is using Blockchain to enable quick and easy loan transfers. Elsewhere in the States, NASDAQ is developing Blockchain-based exchange solutions to reduce costs and improve efficiencies in the securities-trading supply chain, so the use cases are there.
To get all departments on board with your implementation strategy, ascertain what your organization is currently focusing its efforts around. Then you can demonstrate how Blockchain could make this process more secure, and cheaper for everyone in the long run. This can then be fed into your proof of concepts and help to spread a positive message about Fintech throughout the organization.
STEP 4 – Get people talking about the benefits of Blockchain
Once you’ve got your colleagues on board with Blockchain, get them to spread the word before the excitement you’ve generated around the digital transformation loses momentum. Our Global Executive Study found that 73% of large businesses agree that failure to respond quickly to digital transformation will result in commercial failure. But it’s not about fear-mongering. You can demonstrate how Blockchain can solve problems that are high on the banking and finance agenda, including cybersecurity and how to incorporate IoT devices into consumer banking.
It can be tough to see past the initial barriers at the early stages of implementing software that’s as complex as Blockchain; but the more you can get your colleagues to see the advantages, the easier it will be for you to underpin the Blockchain implementation within your organization. If you can energize your organization, then you can move on to empowering them as you build momentum towards a holistic Blockchain approach.
Download your complimentary copy of ‘How to Kick-Start your Digital Transformation’ for information on the next steps you need to take to get Blockchain and other vital technologies deployed in your organization.