Blockchain technology will change the way society shares information.
The good news is that introducing blockchain or distributed ledger technology need not be a major disruptive event. While some innovations do, in fact, require major overhauls of existing legacy systems, this is not a requirement to adopt blockchain technology. Enterprises are currently benefiting from the technology through a strategic, yet effective approach: single business line win, then scale to company-wide adoption.
Terrifying and Necessary Progress
Progress, as it relates to enterprise transformation, is often messy and frightening. It was Albert Einstein who said, “technological progress is like an axe in the hands of a pathological criminal”. A recent survey from Accenture showed that four-fifths of operation leaders at North American banks believe that their institutions won’t survive if they don’t update their technology to drive better innovation. Another survey by Protiviti found that executives voted the top risk of 2018 as the “rapid speed of disruptive innovations and new technologies”. All of this is chilling, but there is no need to panic. Despite the speed of innovation that can be disconcerting to executives – the benefits of blockchain cannot be ignored. Nor do they need to be feared.
This Won’t Hurt a Bit
The amazing benefits of distributed ledgers results from certainty that the data shared across a network is reliable, but before it can be shared that data must be extracted. If the existing legacy system can provide data via Application Programming Interfaces, or “APIs”, the data can be transferred to the blockchain and securely distributed. This means that the distributed ledger is not a replacement of an existing legacy system but instead can be a means of sharing and validating data that continues to reside in the underlying legacy system. To begin blockchain adoption there is no need to suffer through a messy restructuring of a company’s existing systems. Think of blockchain as an overlay that enhances security and private data exchanges, all while enabling cost and time efficiencies.
A Journey of a Thousand Miles Begins with One Blockchain
The adoption of blockchain technology can happen in manageable steps. As an alternative to uprooting entire corporate systems, the new technology can, if managed correctly, be launched in stages making the process much less risky. A large institution may have hundreds of various systems interacting and employ hundreds of vendors in the process. While some early blockchain adopters have undertaken enormous projects involving dozens of stakeholders and spending millions along the way, that is not the only path. Distributed ledgers can be used and introduced in segments of a single line of business by creating the overlay that is fed by APIs from legacy systems. This measured approach can even be run in parallel for some period as an additional safeguard.
You Won’t Even be Able to Tell
Blockchain interfaces look just like any other database interface. Despite all the excitement surrounding this new technology – new users are often surprised by the familiar user interface look and feel. The true magic of blockchain is what happens behind the scenes. Data is stored securely and privacy is ensured through granular permissioning levels. Just as we all use Uber today with seamless payment processing, large corporations will soon have the same experience with their intercompany loans, FX transactions and netting.
Spoiler Alert! The Fundamental Blockchain Technology Wins
As is often the case, after the fireworks and excitement surrounding a new technological breakthrough comes the slow, but productive work, of adoption. Email and spreadsheets were interesting developments – but after a year or two of use, they quickly became commonplace. Blockchain adoption may seem exotic but it is already being adopted in quiet ways and in unexpected applications. In just a few years we will look back and wonder, like spreadsheets and email, how we ever got anything done without it.
Written by Adjoint's Richard Magrann-Wells.
Join Richard next week at InsureTech Connect 2018, October 2-3 in Las Vegas, NV.