More ingredients for your Tech Spaghetti Mix… or Maybe Not
With Blockchain technology expected to impact the financial services industry (FSI) in a huge way, Software AG, a digital enterprise solutions provider is listening to their FSI customers and enabling an access layer for them to plug into Software AG’s digital business platform.
Software AG’s Asia director of Technology and Solutions Jigar Bhansali said, “If there is an application that the customer wants to leverage built upon Blockchain technology, we enable that… we ensure that the front end channels and core apps and APIs will support it.”
Working in a co-innovation model, there is an engagement process between Software AG and their customers. Software AG’s VP of Global Industry Solutions, Sven Roeleven said, “That’s how we think we can move fastest.” He also adds that this co-innovation method is in place with fintech companies around the globe.
What exactly is Blockchain?
It is definitely one of the bigger topics when companies talk about digitalisation.
Roeleven observed, “In areas like remittance payments and ensuring flow of currency in unstable fiscal environments; cross-border transactions which may be costly… that’s where you typically can benefit from Blockchain technology.”
Many companies view it as an enabler to overcome middle parties and enable faster networks.
“It creates a trusted environment because third-party interfaces are avoided. So, it’s faster, lower cost with less risk of error,” explained Roeleven.
So, remittance and payments are the low-hanging fruit areas that fintechs and banks typically want to attack with Blockchain technology. Not that, there isn’t any applications for it in other fields like healthcare that has a huge ecosystem for digitisation surrounding it – from a supply chain perspective, Blockchain can track drugs and authenticate ‘transactions’ more conveniently, for example – but Blockchain is likely to take off fastest in the FSI industry.
This is due to FSI needing higher standards of compliance, security, efficiency and transparency.
Roeleven said, “Which industry can benefit the most from Blockchain? I think FSI needs to gain a lot of trust at this moment. And for sure, other industries will follow.”
Jigar noted that in Malaysia, banks like Maybank and CIMB have started working on Blockchain technologies. “They can benefit from lower total cost of ownership, but their customers will benefit too, from less cost.
“We have a big footprint in FSI and have customers already working with our database platform. That’s great because the ooerationalising of Blockchain becomes easier.”
Roeleven explained, “It’s not just about Blockchain but integration with enterprise apps. It will have impact upon business processes in terms of less authentication steps, data governance and more… all these components are already in our digital business platform, so our customers can benefit first, because they have that foundation.”
Slow take up?
Despite all the talk about Blockchain, there are hurdles to cross.
For one, besides remittance and payments, it’s other applications and in other industries are not firmed up, yet.
Roeleven observed, “Take a look at all the large banks, a lot of them haven’t started a Blockchain initiative.
“Companies that are discovering it, are not even thinking of operationalising it. They are still ‘Do we need it or not?’ phase.”
At some point in time, it will still boil down to regulatory impact, although Roeleven doesn’t think regulators anywhere at this moment, have spoken out about how they want to do it.
“Applications have yet to firm up first. So, regulations and requirements will come up later.
There is also the matter of companies doing their own development on Blockchain. “We still need to agree on one single standard for Blockchain in finance. It would help if there are entities across countries or for banking that would create a set of standards that would be widely supported,” said Roeleven.
Even then, it would take some time before this happens.
Roeleven said, “We realise we are at the dawn of a lot of Blockchain activity. We realise there will be additional requirements from customers, to work on.”
In readiness for this, Software AG has developed a connector in co-innovation with their customers, that would integrate with other systems on their digital business platform.
He concluded, “We do not believe that banks can start working on Blockchain and then just buy-off-the-shelf apps (to integrate). It becomes one big spaghetti.”