Outthinking the future: Blockchain and FinTech partner networks
Outthinking the future: Partnerships to boost your business in FinTech
What is the future of blockchain technology?
With the narrative for about two to three years has been “we like the technology but not the currency”, and I think the mainstream has been very dismissive of the open source world. When Bitcoin came along, I think the mainstream reaction in financial services was “we’d really prefer if this internet funny money went away because we think it’s largely being used by the criminal elements”, and actually in so doing, we missed the real revolution.
We missed the fact that innovation always comes from the fringes, innovation always comes from the edges. And I think then, when we started looking at the technology, people charged in five, ten, fifteen different directions; so, where we find ourselves now, I’d say after, 2014 was when blockchain really burst on to the scene in financial services, in 2017 we sit here and find ourselves in a much more fragmented world. There are over 300 projects I’ve seen, there are probably thousands of blockchain projects that somebody could in fact choose from. So, what you’ve really got to think about is, rather than looking at the tool and saying how does this, how can I use this tool, go back to the problem, go back to the need, and then work your way to the tool.
It’s like I have some food, I don’t decide that I’m going to use a fork until, before I’ve seen the food, I use a fork if it’s a salad, and I use a spoon if its soup. The fork with soup wouldn’t work very well and the spoon with salad wouldn’t work very well. But that’s what we’re doing. We’re saying I’ve got a fork and I’m now going to try and find things to fix it with.
And I think that approach needs to be turned inside out. We need to look at what is your actual problem, and could you be solving this better with cloud technologies, with mobile technologies, and if you can then do that, and if the problem still requires DLT because you need, you need the, the unique nature of what DLT offers, then great, but we’ve got to remember that DLT is in fact as family of technologies, it’s not one thing.
It’s like a class. If, if I want to get to New York in five hours, I might not take a car, but I might take a vehicle. That’s what I mean by DLT. DLT is like the class. Its vehicles, vehicles are a count of DLT, and a blockchain is like a car, it’s one type of DLT. But there are many other types, so I think we need to find the partners that understand that complexity, that can support that with other technologies, because it’s not a silver bullet, and once you’ve done that you can really start to solve problems like middle and back-office costs.
The fundamentally problem in banking, in my opinion, is that I have bank number one and bank number two, and bank number one reports to the central bank and says this is how many transactions I’ve done and bank number two reports to the central bank and says this is how many transactions I’ve done, and these two records don’t match. So, the central bank, or the regulator, is like a man with two clocks, he can’t tell the time.
What DLT, in theory does, is allows all of us to come to agreement or consensus about the state of our databases, and that is really powerful. Think about where do you need that, where can that be applied and how can that be applied, and you can really make a difference in business.
What kind of expertise should FinTech organisations look for?
The Venn diagram of people who really have expertise in finance, really have expertise in the traditional technology of finance, and really have expertise in the start-up world, is very, very small.
And finding those partners becomes critical; and the way you do that is by building a network, and the way you do that is by starting to do things. And we’ve seen financial services take a number of different approaches to do that; one of their approaches has been to have labs, another approach has been to have a VC fund, others have simply just taken companies and directly bought from them and partnered with them.
And I think all of those are right. But leverage your partner network, leverage your incumbent suppliers, and leverage their expertise as well, and the fact they’re already passed your procurement department, and you can do, I think, amazing things.
What recommendations do you have for ambitious FinTech organisations?
Integration is a hard, hard piece of work and it’s complex, especially in financial services; whenever you start going deep into countries, kind of core networks, it’s local clearing for instance, or its some of the standards that are all international and different.
There are partners out there that have traditional expertise in being the integrator, IBM is one such example, and there are many others, where that integration piece between the new idea and the old world of technology needs that piece in the middle. And finding the partner that can support that can be really, really helpful.
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