Blockchain technology promised the financial industry over the past few years to displace much of the sector’s infrastructure, cutting out middlemen (clearing houses, custodians, …), reducing cost (for payments processing) and speeding transactions.
After several prototyping, trial and errors, we start seeing large financial institutions shelving these projects for lack of acceptance by the industry. As one major financial institution technologist puts it “because banks and other potential users believed the same results could be achieved more cheaply using current technology”
Companies are pulling back for various reasons: invasive technology, costly to develop and industry readiness not yet here. Blockchain, a fantastic technology, is still in its very early days.
Among the large Institutions, that made a big hype about Blockchain revolutionizing the market and then stopped their projects are:
DTCC stopped the project on Blockchain for the clearing and settlement of Repo transactions. One of DTCC executive remark was interesting “Basically, it became a solution in search of a problem” (read publication (Blockchain & Smart Contracts: let us focus on the real problems)
SIX Securities Services also stopped the project on the prototype.
BNP Paribas Security Services stopped the project with SmartAngels to build a smart platform for private small businesses to manage their securities.
Let us not underestimate such actions by these companies. This should teach us something:
Financial institutions, consultants and software companies went into a frenzy hype to set unrealistic expectations for Capital Markets regarding the Blockchain technology:
We all agree that this is an excellent technology to bet on in the FUTURE. So, we ask to stop the hype and setting unreasonable expectations but focus on long term strategy where the product is not a prototype but real cost saving and money generating.
There are many technologists that want just to make this happening without the big marketing pressure around.