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Blockchain in corporate banking: still early days

Alenka Grealish, Senior Analyst with Celent’s Banking practice, review of block chain progress in corporate banking, Blockchain In Action In Corporate Banking, shows that there is significant potential for block chain technology in three key areas in corporate banking: cross-border payments, trade finance and syndicated lending. 

The report reviews the Contenders in Blockchain-Based Applications in Corporate Banking:

Grealish explains that, “Blockchain-based technology shows promise not only in addressing today’s banking pain points but also in enabling banks to meet the future needs of their commercial customers. The fourth industrial revolution, characterized by a new era of supply chain management and data collection and analytics driven by technological advancements (e.g., artificial intelligence, robotics, internet of things, and 3D printing), will change the way commercial customers do business with suppliers as well as their customers.”

Main providers

The report provides a detailed review of each of the main providers and their value proposition in each area:

  • Payments
    • Ripple
    • Stellar
    • IBM Blockchain World Wire
    • J.P. Morgan Interbank Information Network
    • Visa B2B Connect
  • Trade finance
    • We.Trade
    • India Trade Connect
    • TradeIX
    • Skuchain
    • Voltron
    • Centrifuge
  • Syndicated lending
    • Finastra.

Path forward for banks

This is a report for banks to help them decide if and how to proceed with block chain and Distributed Ledger Technology. (One of the most important parts this report is the analysis of the merits of the different use cases.) Unfortunately, it is not yet clear cut how banks and providers will monetize their blockchain initiatives, which explains why some banks are hesitant to invest heavily. Banks, however, that want to be leaders in these use cases cannot afford not to try/experiment. Grealish concludes that:

  • First, regarding market value, these profiles demonstrate strong use cases for a distributed ledger, smart contracts, and ultimately digital assets
  • Second, regarding feasibility — the one part technology and five parts other factors — the profiles show that progress being made
  • Third, regarding economic viability — the network effect and profits — it is early days. Current initiatives are small scale compared to their potential. The crux to achieving the network effect is convincing a sufficient number of banks, nonbanks, and end users that it is economically interesting for them to join. Celent expects that there will be consolidation across a couple of the platforms and networks cited herein over the next 6 to 12 months.

CTMfile take: Corporates need to understand what is at stake here, what is happening and what are the relative merits of the many different players. This is an important and useful report and will prove invaluable at key decision points. Get a hold of Grealish’s analysis and data when you need it.

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