As one of leading players in Blockchain for banking, The Royal Bank of Scotland (RBS) has been diligently exploring a number of projects testing use cases for DLT, including research into blockchain based clearing systems and innovations in international payments/foreign exchange.
Blockchain Live speaker and Head of Innovation Engineering at RBS, Richard Crook, caught us up on his journey with blockchain in banking technology. Richard first encountered in November 2014, at a hackathon. Inspired by blockchain projects, Richard told us that for RBS, they understood that there was ‘only so much fun you can have on your own with a blockchain’ and so they set off in search for partner, eventually finding Ripple, an enterprise blockchain solution for global payments. Richard also spearheaded RBS’s enrolment with R3, the global blockchain bank consortium designed to bring peers and competitors together to deliver a next generation market infrastructure.
Banking innovation is everywhere and Richard assured us that it’s not just Blockchain that RBS is exploring to improve services and discover new markets, in fact Richard is also exploring AI, machine learning, quantum, then leading into IOT, Cloud and API. While API and Cloud technology is not strictly emerging, there is certainly room for disruption for financial services. Richard informed that by employing APIs, banks are able to step outside of their traditional business models and explore innovation at a faster pace. It is from these advances, that the possibility of Blockchain essentially came about because of the development of other technologies.
Blockchain’s potential for global finance is well known, what we wanted to understand however was just how exactly blockchain could be a force for rejuvenation within traditional financial services. With inside knowledge and experience, Richard was better placed than most to tell us. As Richard saw it, transformative differences were already being realised, for instance, we were told that the bitcoin experiment had already provided new mediums of resettlement which is actively and confidently being used by thousands of customers globally.
We were told that over the last 20 years banks have focused on creating single sources of truth inside their own houses and according to Richard ‘they will spend the next 20 years trying to create single sources of truth between banks’. It can be seen that banks are now more concerned than ever about companies investing in DLT, as they can see it disrupting the market in which they operate and indeed market structure in general. As a consequence, regulators will discover that they have a new tool with which to regulate, pushing regulated entities to come to an agreement before the data is sent to the regulator.
With this change and uncertainty comes also the chance for innovation. In terms of identity and consequently KYC compliance as well as relationships with regulators, blockchain offers opportunities for improved harmonisation. The tokenisation of identity and use of blockchain to share identity between governments to banks could lessen the administrative burden, moreover for nations without trusted centralised administrations for identity, a decentralised systems may give cause to explore new markets. Richard was quick to add however that issues with proving people’s identity via their passport is ‘not a problem that’s going to be solved with Blockchain where we share untrusted scans of digitalised documents between banks and somehow the document becomes more trusted’. So instead we should appreciate that some areas deal more effectively with documents and as such we be cautious of digitalising everything.
Richard and the team wrapped up the conversation with a discussion on the barriers for blockchain adoption. For the Banking industry, Richard believes that it is difficult to align internal stakeholders on the same use case with the same technology at the same time, concluding that we should be wary of any digital currency where the majority is owned by a few! That being said, Richard is optimistic about what we are learning from the public Blockchain experiments in this fast moving and emerging market.
Find out ore about innovation at RBS as well as wider potential of blockchain within the finance sector at Blockchain Live, where Richard will take part in the Blockchain in Finance Panel Discussion as part of our the Enterprise Stage.
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