Blockchain blossoming: A technology you see once in a lifetime
Blockchain technology promises to make the completion of business transactions in all sorts of areas much faster, cheaper and more trustworthy – from supply chain management to trade finance and letters of credit to corporate loans.
“This is one of those technologies you see once in a lifetime,” says Iqbal Alikhan, strategy and business development executive of global payments and blockchains at IBM. “It transcends industry boundaries, essentially reducing the friction between and within industries that lead to leakages from the value chain.”
Already, Alikhan says, blockchain is attracting attention at the highest levels.“There are over 90 central banks currently looking at this technology.”
At the conference, Alikhan will take part in a panel discussion on “Embracing Blockchain – Turning Experiments into Real Applications in Banking”, where he will be focusing on the uses of this digital technology rather than on the nuts and bolts of how it works. “I’m a banker by profession and the angle I bring to the table is my understanding of the intersection between business and technology,” he explains.
Blockchain works across business networks from supplier to consumer, using a shared digital ledger that is fully visible from end-to-end and can’t be tampered with. The process promises to remove the need for third parties and intermediaries.
The exchange of payments and transactions which, currently, can take days, should be completed almost instantaneously with blockchain. Similarly, supply chains can be managed in real time. Smart contracts, setting out business rules and logic, can also be embedded in the blockchain.
Many people may have first heard of this technology through its use with the bitcoin digital currency, but Alikhan explains that bitcoin’s “permissionless” platform – where parties within the blockchain do not know who the other parties are – runs counter to IBM’s interest in the technology.
“We’re looking at solving business problems across industries and believe that the way blockchains can be used in ‘permissioned’ platforms is the most valuable solution that blockchain provides,” he explains.
Among the organisations working with IBM Blockchain are the London Stock Exchange Group, which is exploring how blockchain can help manage risk and increase transparency in global financial markets; Kouvola Innovation, which seeks to reduce friction and improve trust in logistics value chains; and Everledger, which is using blockchain to track diamonds and other valuable assets.
Alikhan says the technology is not something to be feared by those currently working in the banking industry, but something to be embraced. He believes it will open up new business models for banks and cites, as one example, the new opportunities it will create for multinational banks in emerging markets through the visibility it provides down the value chain.
“We’ve worked with a number of financial institutions to set up some POCs [proof of concepts] and what they’re finding is the benefits blockchain offers in lowering risks, providing higher efficiencies and digitising documentation far outweigh the challenges of adopting a new technology.”