Blockchain adoption is a psychological challenge, not technical

What I’ve learned from past two years of Blockchain noise and all the commotion around it is that it is not a technical challenge. It is a social challenge and hence the answer may not lie in the technical realms but more have to be found in the psychological side of the question. So the question is not whether Blockchain really works or can work for financial services & other data intensive sectors, but real question is do we want to accept something as a solution without fully understanding it.

Understanding is the operative word here. I am not talking about understanding as the technicalities of the solution or the code, but the trust factor associated with it. People many times feel Banks are the incumbents of the financial services and they hoard the data and block any attempts for that data to be shared as this will undermine their business model. But we don’t see the real challenge of why banks seem to be unsure of their Blockchain or cryptocurrency strategies.

Banks don’t store just money. They are the keepers of trust. Trust that translates to the confidence that the depositor’s money is safe and no harm will come to it and that money can be made available at any time depositor wants, hence the liquidation flexibility and safety of money is what makes up for the word “Bank”.

The word Bank is so much in folklore that it is no longer a word for a financial institution, it is a word synonymous to Rely upon something. You may use it casually when you say “I am banking on you to come through in this”, or it is even used as a defining word for the slight lifting the road around high speed curves to adjust vehicle’s centre of gravity so a turn can be made safely even on high speeds.

Then why suddenly Banks are the seen as the bad guys and incumbent evil that has to be put down and in order to do that we support half-baked solutions and join the crowd of Bank bashing, to put angry comments on social media, and hate anything related to Banks. It is not because of the Retail and consumer side of banking. It has more to do with the news of Big Investment banks playing with peoples' money and getting greedy over it. CEOs taking big fat pay-cheques even if Banks they run bleed money in losses. We need to see the two sides of financial services as different. Investment banks are different from Retail Banks and general public confuse them when they see common word Bank associated with both. Retail banks are still very conservative in spending money on risky projects or investments, are really safe for people to trust their money with.

In my 37 years of life, I’ve seen banking coming of age, or shall I say evolving with us as a society and transforming into something that still holds the trust yet are more nimble and ready to change and experiment as earlier.

I saw India in 80s and 90s, a struggling economy in 80s that opened up in 90s and saw a lot of new things happening and coming to the country which were not there earlier. From 8 Months to 5 year wait time to buy a Bajaj Scooter to stepping in the Maruti showroom and expecting the car at home in 2 weeks, with your choice of accessories and colour. From waiting in the queue of a Bank to withdraw cash from a teller to ATMs to cashless economy with Paytm as the biggest player.

As a generation we have become more demanding. We see technology taking giant strides and making everyday life chores even simpler and faster then why banking should be boring and a drag. Our expectation for banks to be able to provide us new solutions quickly is there, with a simple assumption, that security & safety of their cash won’t be compromised. That’s a given, and this condition can’t be compromised.

Like a true agile economy and human behaviour we expect our facilities to be able to give whatever was offered earlier and more. Then why Blockchain seems to be a big challenge for Banks to adopt when rest all solutions came easy to them and adoption rates were quicker and faster.

The simple answer is because Blockchain as a concept is quite radical and breaks quite a few norms on which the current banking policies and safety measures were built. The trust that Banks hold and customer had a face (Relationship manager) or a name to relate to when they were depositing the money and had a sense of trust and comfort of the Brand equity of the bank is no longer a factor in this new world order.

Are we really ready for it as a society for it? People may say yes but when it comes to the case of their money at risk, the answer is not so much a confident “YES”. Blockchain no doubt will be adopted in a big way, but it has to surpass this psychological test first.