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Are financial firms compelled to deploy Blockchain technologies ? Really?

@Alex,

"The more direct control that a customer has to understand and handle its financial position, greater the confidence he will have in the bank holding its assets."

(From "The Bank of the Future" whitepaper.)

"What changes must happen...?"

The banks have to handle financial processes 'corporately' rather than dealing by 'Business Units' - segregating the business issues, from those of the technology.

Carlo, I think it should be made a splitting in the term 'payment': Transfers and Payments.

In several documents explaining the 'BlockChain' is cited as an example the block 'Joe pays $ 100 to Jane'.

In fact, this event is a 'transfer'.

Now, if I pay a purchase at Amazon, the amount paid shall be composed of the price of the goods + shipping + local taxes, etc.
This is very different from 'Joe pays Jane'.
The Blockchain will maintain a 'block' for each item in the DLT?

What do you think?

My opinion is that "The challenge drives the innovation".

In the seventies and early 80's, we 'had to' to innovate everyday to survive.

Just a sample:

To develop a money market input program, we had 32k memory for the program AND the data on the terminal.

Imagine finding a valid date, equivalent of today's date + 180 days, where the number of the program statement, counted memory!

We innovated by developing ONE statementent which transformed a date in a seven digit number and another statement that transformed back a seven digit number in a date.

We solved the problem with just 3 statements:

One to transform the date in the number;
other to add the number of days to the number;
and the third to transform back that number to a date!

Perhaps this is why the old 'core system' still dominate the backoffices ...

P.S. The language was Business Basic and if somebody is curious I can show the two statements.

Subject very well drawn up!

Something can be frictionless (unachievable) or with friction.

In 'with friction' state, it will have a low or high coefficient of friction.

And, in CX, the lower the friction coefficient, better CX.

One of my Banks - Caixa Econômica Federal - provides, on my desktop, the following ceremony to reach my banking activity:

1. Click on the link to the site . Displays the entry page.

2. Click on the "My account access" button. A new screen appears.

3. UserName: type the user name previously recorded, without spaces, minimum 6 maximum 32 characters, letters and numbers, no special characters.

4. Click on a radio button to inform if I am a person, company or government.

5. Click on the button "go ahead". A new screen appears.

6. "THE INITIALS OF YOUR NAME ARE: xxx
Dear Customer, click on the letters above if they are in accordance with the initials of your name. Otherwise, for your safety, click Back and restart your identification."

7. Click on the initials. A new screen with a virtual keypad with only letters, numbers  and caps key appears.
"TO ACCESS 'a caixa' INTERNET BANKING, INFORM THE INTERNET PASSWORD.
Use the keypad next to enter the Internet password."

8. Various clicks on the keypad, according to your password, previously recorded.

9. Click on the "Confirm" button. A new screen with a huge horizontal menu of service buttons appears. Arrows to scroll right and left are available on the screen.
Finally I've reached my "Banking Business"!

= = = = = =

Now here, a pit stop for thinking:

Let's note that, up to here, the friction is NOT due to the banking business.

The 'entry' ceremony is a kind of 'Foundational Service' which may be used in other businesses, not only for banks.

The BOA - Business Oriented Architecture, clearly deals with that.

Business applications should not concern themselves with foundational services such as security, logging, history, accounting, audit capability, etc.

The business applications/services should only focus on business processes, allowing construct solutions with less frictions! (At least, separate the frictions!)

The foundational services, are provided by the BOA infrastructure and can be reused for many businesses.

Thats it!

I agree with Ketharaman.

And Adam, you yourself mentioned in the last paragraph of your article: 'the holistic perspective is required', that means the 'whole corporation perspective'.

An enterprise wide perspective, a.k.a. a Corporate Architecture.

And then 'frictionless WILL ALWAYS serves the needs of the customer'.

@Niraj Vaidya,

Fully agree with your thoughts.

The key is 'an ARCHITECTURE for the constantly moving ship: Technology AND Business.'

@Graham Seel,

Peter F Drucker once said: "strategy is doing the right things, tactics is doing things right."

Nowadays, where technological evolution is exponential, a "10 year game plan" is unacceptable.

A 'Business Architecture' - Overall Strategy - independent of technology, 'is essential.'
So new technologies will help business rather than hinder it.

I strongly believe that, with the Enterprise Architecture - "The Bank of the Future" - a time frame of two to five years, depending on the actual back office entanglement, is reasonable.

And then, yes, new tactical projects (urgent regulatory projects) are carried out in the context of the Overall Strategy.
The old tactical procedures are phased in on the Overall Strategy until they are extinguished...

@Graham Seel,

As Sanjeev Ahuja said: Excellent article!

The complete, whole, thorough, obstacle is mentioned in the 'big challenge Nr. 1' of your article.
All others are 'consequences'.

The obstacle lies in the architecture taken by the banking proceedings, inherited from the start!

It has long since I hit the button that the banking business processing must be performed corporately, rather than by line-of-business.

The corporately banking business processing , dramatically reduces the huge redundancy of data and tasks generated by processing by lines-of-business.

Corporately performing process, will deal with a single source of knowledge, updated by a single state machine.

To illustrate, please check Jiang's drama, with Deutsche Bank (like him, many other bank's CxOs):

Zhiwei Jiang, global head of accounting and finance IT at Deutsche Bank, was keen to highlight the challenges faced by a traditional banking IT system, in February 2013:

“At the end of the day we still have a huge installation of IBM mainframes and hundreds of millions of pounds of investment with Oracle.
What do we do with that?
We have 46 data warehouses, which all have terabytes and petabytes of storage, where there is 90% overlap of data.
What do we do with that?” he said.

46 data warehouses with all the peripheral paraphernalia involved, replaced by a single source of knowledge, updated by a single state machine.
That yes, is a change!

So, the obstacle lies in the Processes Architecture and in the Master Data Management, corporately.

The "Bank of the Future" Architecture, constructed over the BOA - Business Oriented Architecture, provides all these needed improvements in the banking business, reducing the Operationa Expenses tenfold (at least) - not 10%!

This is a hot topic and I am open to exchange ideas on this matter.

joao.bohner@gmail.com