2018 was an important year for Blockchain, bringing together early commercial adoption fueled by initial enterprise releases, regulatory warmth and new Blockchain ecosystems. We predict 2019 will take those trends forward at speed, and also bring new developments.

The appetite for experimentation that we saw in 2018 is petering out, to be replaced by commercial adoption in 2019.

Enterprises seem to have grasped the implications of Blockchain and will seek to not only save cost but also generate revenue from it. There is particular interest in Blockchain as a single source of truth, tokenization, smart contracts and automation capabilities.

Use cases for Blockchain will assign it one of three roles – a ledger to exchange financial value, an information ledger, or a notary ledger for public services. We expect significant commercial adoption of the information and notary ledgers – for purposes such as digitizing trade documents and land records – but traction in the value ledger will take time since it requires more clarity, including on the regulatory front.

The consortium trend will pick up speed in 2019 with both single-industry and cross-industry alliances emerging to form Blockchain ecosystems. Based on our experience in co-creating India Trade Connect, a Blockchain-based ecosystem of 13 banks and some insurers, service providers and other businesses, we believe the best consortium model is multi-industry (for a broad ecosystem) but geo-specific (for focus and control, and to get it going). It is crucial to recruit a large number of participants to take the ecosystem to a minimum viable size that delivers meaningful value. The rise of ecosystems will be accompanied by increasing co-opetition as different banks pool their complementary strengths for
mutual benefit.

In 2018, banks mainly experimented with Blockchain for payments. Now, there is growing interest in deploying it in trade finance and supply chain finance, and in 2019 we expect that at scale in both retail and corporate banking. This will need the involvement of large, influential entities. An example comes from Australia, where a stock exchange has decided to replace its legacy system with one that is Blockchain-enabled, and will, therefore, drive all capital market participants, from custodians and brokers to dealers and asset managers, to align with a single technology stack and follow standardized processes. In the case of trade/supply chain finance, this responsibility must be taken up by parties who interact at scale.

Blockchain adoption will also spur growth in adjacent technologies such as Cloud, Artificial Intelligence and the Internet of Things. In fact, based on our implementations at several banks, we expect the industry to use Blockchain in combination with other technologies – rather than singly – to
maximize its impact.

In the past few years, banks gradually lost direct contact with customers as other parties, from FinTech firms to giant technology companies, stepped into niches such as lending and payments. In 2019, Blockchain could give disintermediated banks a chance to reclaim their customer relationships by assuming the role of an aggregator in ecosystems they curate along with partner vendors. And that is one more reason for embracing it.

“The old question “Is it in the database?” will be replaced by “Is it on the blockchain?”
– William Mougayar, Author, The Business Blockchain, Investor, Analyst, Blockchain Theorist and Strategist.

Banking Trends 2019

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