Before AI implementation became a common discussion thread in the financial technology space, blockchain technology was the hot topic in fintech. Riding the wave of the interest in cryptocurrencies, technologist touted the potential that systems built on the blockchain had to revolutionize financial institutions.
Blockchain was in everyone’s mind in financial services industry. They wondered how they could leverage this new technology into their operations. Could the distributed ledger technology that allowed for the creation of bitcoin be integrated into existing financial systems?
The hype has since died down a bit – attention moving on to AI as the latest technology, and one more immediately actionable by institutions. However, one key legacy of blockchain that is often overlooked is that it drew attention to the overall state of fintech infrastructure.
The effort to apply blockchain technology to existing financial systems were particularly valuable because it the industry now realizes that the system is riddled with outdated infrastructure built in an era with significantly lower computing capacity. Blockchain or not this old infrastructure need to be rebuilt and doing so can instigate major changes in financial processes. By improving upon, and potentially bypassing, the costly infrastructure in the incumbent systems and reduce transaction costs by a significant margin.
Whether the blockchain is going to be a part of this shift however is going to be a different story, as the outlook around blockchain has become less clear. The lukewarm reception of bitcoin by some in the industry, many calling it a fad, didn’t help the reputation of blockchain, and at this stage there is a bevy of other, more easily comprehensible technology solutions, such as AI-focused solutions, that may be more appropriate.
The conversation around blockchain is not over – but the industry is moving forward whether it’s with blockchain or not.
You can read more in the latest report from NRI Executive Fellow Shin Kusunoki.