In just a few short months, the world’s attention will turn to Russia and the 2018 World Cup. This gathering of the globe’s best is a showcase for both team talent and national pride. It’s also an apt analogy for how to win in global payments today.
Every four years, this play-in tournament brings together teams from the Americas, Europe, Africa, Asia and Australia to compete for the title of world champion. For some countries, it’s an honor just to make the tournament. But for most, winning is an absolute must.
To succeed, the preparation begins far in advance of the actual tournament. Countries and teams must build up the infrastructure and tools necessary to field a superior product on the pitch, ranging from youth leagues to stadiums to financial support.
The lesson for the world’s banking system lives in this preparation. The traditional global payments network is no longer sufficient. Banks, companies and individuals around the world are demanding instant, affordable and transparent solutions. Blockchain has emerged to resolve this need.
Using blockchain technology, payment networks can deliver the immediacy, reliability and cost savings that will power the future of global commerce. It has effectively moved from a fringe, experimental technology to one that most companies and providers are actively exploring. However, many banks, financial institutions and payment providers have been slow to adopt and continue to drag their feet out of complacency or a resistance to change.
The results of this will be devastating. Customers will embrace emerging alternatives and bottom lines will suffer. To avoid this fate, providers must get off the sidelines and enter the game. To help, the World Cup offers some lessons that can help guide this preparation.
Powerhouse brands are not guaranteed a spot
This year’s edition of the tournament will be missing a few well-known and traditional participants — the United States, Netherlands, and Italy to name a few. Italy and the Netherlands are particularly shocking as they are veritable World Cup royalty. No one would ever have expected them to miss qualifying. The problem is more than a bad draw or poor showing on the field. It can be traced to a decaying sports infrastructure and over-reliance on older players.
This is an all too common strategy for some of the world’s biggest banking brands. While innovative players like Santander and American Express have been quick to test and experiment with blockchain, others are allowing the competition to establish best practices. The problem is that strategy also gives competitors first-mover strategy in a space that is maturing at light speed.
Blockchain has moved from a nice-to-have to a must-have for payments leaders. As more banks and emerging technology plays emerge, this urgency will only increase and the resulting adoption curve will grow longer. No matter how big your market share today, providers must actively commit to a blockchain strategy now to remain relevant tomorrow.
Ignore emerging entrants at your own peril
For big name countries, losing to smaller nations or newer Cup entrants is often the wakeup call that forces four years of introspection and change. And for powers like Italy and — to a lesser degree — the U.S., it can be a painful lesson of the dangers of subsisting on brand and tradition alone.
Playing from the back of the pack is a non-starter in the world of global payments. Banks and providers that wish to avoid this undesirable status should already be evaluating emerging blockchain partners and competitors. It’s easy to dismiss smaller fintechs or non-traditional competitors, but the power of blockchain can immediately enhance a company’s value proposition and service offering.
Consider those companies already using RippleNet to improve payment flows and those testing xRapid for using XRP in real-time, cross-border payments. What began as local market or remittance corridor transactions has the power to ramp up quickly and expand through partnership.
Take for example the consortium of 61 banks brought together by SBI Holdings and SBI Ripple Asia called the Japan Bank Consortium. After successful testing they’re already entering production on a real-time global settlement network and have enlisted two of South Korea’s largest banks to join the group.
Banks and providers that remain on the sidelines risk being quickly overtaken and relegated there permanently.
Enact a disciplined, vision-driven plan early
For those that do want to engage, a plan of action is critical. Look to the country of Iceland and its population of just 335,000 for an example of how one can translate a vision for success into results on the field.
Iceland is the smallest country ever to qualify for the World Cup. It achieved this unique milestone by grooming a generation of players and enacting a nationwide plan that emphasized youth leagues, improved infrastructure and nontraditional coaching strategies.
Blockchain makes a similar “worst to first” leap possible for smaller banks and fintechs. It can also be used by bigger institutions to hold off emerging competitors or to quickly overcome a late start. But neither is possible without a vision for success and a tactical plan to achieve it.
Company leadership should begin by embracing blockchain and laying out the parameters for adoption. This should include a clear path and accompanying success metrics needed for commercial deployment. Identifying best practices and proven partners like Ripple are also important components of a deliberate blockchain strategy. Finally, communicating the rigor of the plan and the company’s ultimate vision are key to engaging stakeholders and earning their support.
Ultimately, the lesson for financial institutions is the same no matter their World Cup rooting interests: You can no longer afford to not use a blockchain solution. More banks and payment providers are deploying the technology because it’s in the best interests of their customers. The game has changed. Blockchain is modernizing global payments; make sure it also moves your business forward.