For some time now, since bitcoin has brought Blockchain technologies to the front pages of newspapers and blogs, banks have been looking at this new beast trying to figure out what to make of it.
At the beginning, everybody was talking bitcoin, of course. But very quickly, the sulfurous nature of the crypto currency made people afraid of it. Very soon, when I was talking to banks about Blockchain projects and use cases, I would hear them say things like "We have a policy against using bitcoin" or "There's no way we are going to use bitcoin in our projects" and so on. Then there's the fact that banks tend to shy away from permissionless Blockchain because they feel these are too public, that the data exchanged is visible by everybody. Privacy issues are key for banks. As a result, up till now, most banks have been looking to work with permissioned Blockchain and projects such as R3CEV's consortium and its blockchain Corda. The Hyperledger project's fabric is also a great source of interest for most of these organizations.
The tide is starting to turn, it seems, as some of the banks I've been talking to are now openly saying that they are evaluating projects that would live either on the Ethereum network, or even the Bitcoin network. This is a huge change in attitude, and I think it is tremendously interesting as it probably hints at something that is starting to contradict a few points that I have been making up till now, specifically that banks are afraid to use bitcoin, and that they are only, today, looking at use cases where they are porting existing internal processes (say cross-border payments, Forex…) to blockchain, instead of trying to innovate fully by inventing new models and services to offer their customers. Using permissionless Blockchain, in particular those from the Ethereum or bitcoin networks enables all kinds of new interactions with all their end-user customers, and not just their peers in the banking network.
The additional significant element is that most of the permissionless Blockchain networks, like Ethereum or Bitcoin, actually are based on, and can be fully accessed by open source software. This lowers the barrier to entry for banks (and other entities interested in exploring use cases on these networks) and enables seamless creation of proof-of-concepts. As a result, banks are starting to have dedicated teams that explore using permissionless Blockchain to reinvent the way they could interact with their customers. And they can do that without having to pay significant amount of money in license fees for something that, as a proof-of-concept, could well end up being discarded after a few weeks… or end up vastly scaled up into full production after a few months. The only cost for working with open source software is the real value add: people, services, training, support… enabling companies to start small, and scale when and how it makes sense for them.
With permissionless Blockchain, since organizations don't need to fully know each individual actor on a blockchain in advance, they can create new applications that natively address large, possibly undefined, communities, offering services that are aimed at bringing trust, speed, and reliability at very low cost to new populations of users. This lets them focus on their core values (for banks: trust, reliability…) while creating a new world where they still be relevant instead of being replaced by totally distributed, decentralized, disintermediated structures shared among the users themselves.
So, have you also taken the step beyond permissioned Blockchain? What are you looking at in terms of technologies, and what exciting ideas are you going to pursue with it to change your world, to change the world?
