Can banks, small and large, find promise in the use of blockchain technology? We’re not convinced, but EdgeVerve Systems’ Peter Loop says scale and speed are needed to spur blockchain service adoption.
For financial institutions, complexity rules most processes — and not by choice. Legacy systems sit on top of legacy systems, and transactions, especially cross-border transactions, are fraught with minefields dotted with regulations — the need to know your customer and keep track of how transactions are being settled in real time.
Late last month, software services giant Infosys said that it had launched, through its EdgeVerve unit, a new framework centered on blockchain services development, with a goal of helping make complex transactions a bit less so and also more transparent.
In a nutshell, blockchain works across digital currencies and decentralized ledgers that permanently track transactions on a global basis.
In an interview with PYMNTS, Peter Loop, associate vice president and principal technology architect with the Finacle/EdgeVerve unit of Infosys, stated that the framework is one that seeks specifically to guide financial institutions as they consider how to build out their own capabilities along with their core banking software.
Scalability comes through cloud-based platforms that would eventually allow FIs to embrace more efficient cross-border transactions that Loop said would be, due to the blockchain technology, “asset-agnostic, across cryptocurrencies, across derivatives,” trade finance, forward contracts and currencies. In essence the ability to transact at a peer-to-peer level, with the absence of centralized oversight, makes transactions faster, more direct and more secure.
Current interest in the framework, said Loop, has come from FIs based in Africa, Australia, India and areas across Asia. The desire, he added, is to foster a global integrated system that can work in real time and without interruption.
Beyond asset classes, and especially of interest to B2B, said Loop, is the ability of blockchain to serve as a way to deliver contracts and documentation, with digitization as a prime mover across supply chains. “We’re in the second inning or the third inning,” said Loop, in reference to blockchain, and he added that the discussion over blockchain may indeed hinge on whether “you are thinking big enough.”
He cited examples of companies that have moved beyond initial stages of business disruption, such as Uber, which moved its mindset beyond just how to get people to move from place to place via car but also delved into how people were (and are) willing to pay for that service. Likewise, blockchain is likely to be viewed less as a technology than as a way to solve business problems.
Positing a timeframe as to when banks may show demonstrations of the framework interacting with their own in-place tech architecture, Loop stated such activity may take between three to six months.