Independent Research on Blockchain States Machine Learning First!

by Tim Sloane 0

This article in American Banker entitled “Bank execs now bullish on public blockchains, survey finds” continues the hype around blockchain:

“Public blockchains, historically seen as a nonstarter for banks, are winning fans in the financial industry.

This sentiment is among the at-times surprising findings of a new study from Cognizant, a technology consulting firm. Over the past two years, banks have come to accept blockchain technology as a useful—and potentially transformative—innovation. Even so, most have tended to dismiss digital currencies and the public, open-source blockchains to which they belong in favor of private ledger systems.

But Cognizant’s study reveals that attitudes may be shifting. Eighty-six percent of survey respondents said they believe that public blockchains will gain greater prominence over the next five years, whereas only 80% said they believe the same about private blockchains.”

It is interesting to note that American Banker ran this ad in the middle of the article:

“[Bankers from JPMorgan Chase, Citi, and other institutions will discuss their distributed ledger projects at American Banker’s Blockchains + Digital Currencies conference in New York next week. Register here.]”

The study was conducted by Cognizant, a business and technology services company that specializes in digital transformation, which has a group dedicated to blockchain technology. It is interesting to note that Cognizant’s very first paragraph in the full survey results, available here on the Cognizant web site, describes the research results this way:

“Even as blockchain is poised to disrupt the financial services industry, from operations to business models, most organizations face substantial uncertainty about how the blockchain ecosystem will develop and the changes it will unleash. While some early adopters are pushing ahead rapidly, most firms remain content with learning about the technology and testing proofs of concept internally until the future direction comes into focus.

This statement is far more cautious than the headline American Banker ran which stated “Bank execs now bullish on public blockchains, survey finds.”

Mercator recognizes there are good solutions being built on blockchain, however we also believe that these solutions need to evolve from technology platforms into true business ecosystems. A significant amount of work, and time, will be required to accomplish this. Contractual issues need to be resolved, other institutions need to be committed to using the blockchain, and the solution must meet all of the regulations associated with this regulated market. Because this ecosystem will take time to develop, smaller banks can wait and observe the development of the ecosystem, there is no need to jump in early. Instead, Mercator recommends that financial institutions with technology investment dollars spend those dollars on machine learning, which can drive down operational costs and increase revenue today.

Overview by Tim Sloane, VP, Payments Innovation Advisory Service at Mercator Advisory Group

Read the full story here