By Rob Coole, Vice President, Cloud Technologies at IPC
2020 was a year unlike any before, with the COVID-19 pandemic providing unprecedented circumstances and situations that impacted all aspects of our day-to-day lives. This included working from home, nationwide lockdowns, and the need to adhere to social distancing measures where possible. Amid the unprecedented events affecting our lives and our economies in 2020, blockchain was seen to be entering its coming-of-age year.
Although 2020 may have gotten off to a slow start, by the end of the year we were able to see blockchain’s true potential. In order to observe blockchain’s importance to the financial sector, it is necessary to take a look at whether blockchain has been implemented and used in real-life situations, whether that be in the form of new infrastructure projects or blockchain start-ups. And sure enough, despite the numerous challenges presented throughout the course of 2020, we have entered a new era for blockchain.
It must be noted that although the uptake of blockchain has been slow, this isn’t abnormal. With blockchain’s value lying in highly complex, regulated markets such as the financial services industry, it would be unfair to compare blockchain’s adoption to the rise of AI, Cloud, and the Internet of Things. This is because blockchain is better suited to collaborative, complex, multi-party, and critical application use-cases.
The new generation of Blockchain
We are seeing a surge in optimism of blockchain in the financial industry with Gartner, one of the world’s leading information technology research and advisory companies, predicting that blockchain will be fully scalable by 2023. For example, when looking at the enterprise space, customers are beginning to understand the practical purposes of blockchain’s deployment, thus resulting in more investment in blockchain, in terms of both money and time. At IPC, we also have a positive view of blockchain’s future, particularly in the enterprise field.
New generation blockchain companies are starting to lead the way in illustrating how the technology can be utilised in an intelligent manner, so that it can be used appropriately in today’s world. An example of this can be seen with R3, an enterprise software company. The organisation is currently working with an ecosystem that contains over 200 financial bodies, including institutions, trade associations, regulators, professional services, and technology companies to develop Corda – a blockchain platform that enables next-gen transparency, security and efficiency in business. Corda has been designed specifically for businesses to enable them to deliver two interoperable and fully compatible distributions of the platform which is capable of addressing issues such as data privacy and transactional certainty, as well as scalability limitations.
How partnerships can add value
By prioritising integration to stay ahead of the blockchain curve, both application service providers and subscribers must partner with respective service and product providers at an operational level. Real value is provided with the integration and support from the hyper-scale platform community such as Microsoft Azure and AWS. This, in conjunction with IPC’s API first strategy, creates end-to-end solutions that help to solve issues that businesses face. The importance here is APIs, with an API partner integration approach giving institutions the ability to easily access data and provide key insights, as well as inspiring innovation for the company/market need.
Service providers like IPC can play a crucial role in this situation by supporting operationalisation in the systems-oriented context. These service providers are a natural connector, providing connectivity to key market participants. For example, IPC is able to access all trading methods and asset classes, including over 4,500 buy-side, 2,000 sell-side and more than 75 exchanges.
The new model
The ongoing COVID-19 pandemic continues to have a major impact on almost every aspect of our lives. While it is easily apparent to see the damage and destruction that this pandemic has caused from an economic, health and societal perspective, blockchain may be able to help the global economy to make a resurgence. In fact, the World Economic Forum listed blockchain as one of the technologies that ‘will benefit all countries currently impacted by COVID-19’. This is due to blockchain providing an efficient approach that is capable of reducing trade costs on a global scale.
Blockchain, being non-partisan and open to all, allows users to act quickly at a lower cost with low barriers for innovation – all of which are key components when it comes to supporting the economy during a period of economic downturn. Although blockchain adoption was slow in its early stages, 2020 appears to have been the year that blockchain came into its own and we expect to see further implementation of the technology in 2021.