By Simon Raymer, Chief Information Officer, Fraedom
While blockchain remains an emerging technology, it has huge potential to radically change the financial services sector, and transform the way transactions are carried out. Currently, blockchain is heralded as enabling new technology entrants to challenge established financial institutions and the services they offer.
It often thrives in a decentralised marketplace without the restrictions and barriers of usage or entry that would have been present if it was centrally-owned and managed by an established financial institution. So, from one perspective, established financial services businesses face a large line up of new start-ups taking aim at their customer base.
On the other hand, established businesses who embrace blockchain and/or cybercurrencies also have opportunities to drive innovation themselves in these areas and keep one step ahead of the ‘new kids on the block.’
Yet, taking advantage of the opportunities that present themselves here is not easy. Blockchain is highly complex. It is challenging for financial services organisations to source the skills they need just to understand it, let alone go beyond that and effectively harness it for their own advantage.
It requires an understanding of cybersecurity and cryptography for example. Core traditional development skills are constantly in demand – particularly in areas like object oriented programming. Sourcing these staff and then training them up in the new programming languages required to take advantage of blockchain can be a challenge in itself, but programmers with the basic foundation level of knowledge required are available and can be further trained up.
What businesses looking to take advantage of emerging technologies often do lack badly is what we call ‘the technology entrepreneur’. It is one thing understanding the technology itself, quite another appreciating how to make active use of it to drive business benefit.
This raises some interesting questions. In the case of blockchain what, for example are the technical solutions that this can enable? Moreover, how can blockchain be actively used to solve a real world commercial or business problem?
To do that, established financial services companies need technical expertise, of course. They need to be able to draw on the skills of expert programmers. But, critically, they also need the technology entrepreneur: the person who can dream up and engineer a commercial solution. And that’s where financial services organisations often struggle today. It’s all well and good being able to code and programme, but these businesses also need to be able to focus on a commercial outcome, a real-world problem that they need to solve.
There are very few people around who possess all this capability: that both understand blockchain and appreciate what it is for – and yet who also understand the commercial environment enough to use the tool to successfully solve a real-world problem.
This kind of technology entrepreneur is in short supply. The type of person who can educate the business about blockchain and lead a technical team to deploy a real-world pilot based on blockchain to solve a specific commercial problem is in short supply indeed.
Blockchain is a smart technical enabler but if you don’t have a smart solution that you are trying to achieve, you are not going to get a positive commercial outcome. In fact, for all the commercial promise that blockchain offers, if it used in the wrong scenario, it can also be an expensive mistake. So, businesses need those people who can come in that understand that technology; can talk intelligently about it, and identify the correct problems it can solve.
That’s key but that’s also where we see a role for third party technology providers with knowledge and understanding of how new technologies like blockchain can be best taken advantage of to challenge and disrupt the market in the right way.
Traditional financial services providers need to tap into the experience and expertise of their peer group, the key providers in the marketplace, and the industry who can help them to navigate these new technologies successfully and a lot quicker with less cost, than if they try to do it alone.
It’s important the financial services organisations keep up-to-date with the latest technological trends. They need to have the courage to experiment and embrace the entrepreneurial spirit but they also need to be open to tapping into the experience and expertise of others. That’s especially true when it comes to blockchain. This is an area that established players simply cannot afford to ignore but the technology entrepreneur remains in short supply and technology providers can be key in helping plug the gap.