Relying on outdated technology poses incalculable risk. Image: Shutterstock
In a recent report from financial news outlet Finextra and software developer EPAM, bankers and fintech experts are beginning to see the turn from blockchain hype to its actual use in financial services. Titled, “From Hype to Reality: Developing a Pragmatic Approach to Blockchain in Financial Services,” Finextra offers good advice for these trying times: keep calm and carry on. Though the hype is thick, the truth is that the best use cases for blockchain are already in production.
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Separating what blockchain is suited to do from what the hype has positioned expectations for is a job in itself. As Ripple’s Head of Regulatory Relations Ryan Zagone said recently, “It felt like blockchain would fix every financial problem and cure Zika along the way. We’re in a hype cycle.” However, as Finextra points out, the hype cycle is calming down as bankers and financial institutions come to recognize that blockchain is best applied to use cases such as cross-border payments, where the risk of relying on outdated technology outweighs hesitance to try a new solution.
The report goes on to explain that while broad adoption may not be immediate, blockchain-based payment solutions are the furthest along, and early results indicate that in the medium and long term this technology could remake the foundation of our financial system.
Calling out Ripple as a leader in applying blockchain and distributed financial technology to the basic failures of the cross-border payments system, Finextra quotes Marcus Treacher, Global Head of Strategic Accounts at Ripple.
“Blockchain technology enables a payment that goes across borders to be connected in the same way that payments are connected today that move around within a country – and that’s a really big shift in how technology enables payments to happen around the world. What it means is that a lot of the chasing, the reconciliation work, and the lack of clarity that exists today and has existed for years around cross-border payments, is removed by this technology – that’s where the power really resides. The distributed ledger technology world makes that possible, enabling banks to run at the pace the PSD2 changes are demanding they run at.”
Citing Ripple’s traction with global banks, including UBS, Santander, CIBC, UniCredit, ReiseBank, ATB Financial and National Bank of Abu Dhabi, the report points out that far from being just hype, Ripple’s solution is already cutting the time and internal costs for cross-border payments for banks, while enabling the increasingly crucial use case of high-volume, low-value global transactions.
In examining the barriers for this technology, the report cites the length of time it will take existing systems to evolve, coupled with fear and uncertainty among the second wave of adopters. Despite all this, the report ends on an encouraging note: leave the hype behind and seize the moment to maximize this opportunity. Like all other game-changing technological shifts, it will not come a second time.
Download the full report here.