30
vritti
September 2017
But Banking is a very sensitive industry (unlike
Taxi or Hotel Industry). Regulators and govern
-ments use the Banks to control and manage
their economies. So regulators will create lot
of roadblocks to let Fintech's to use Blockchain
to replace banks completely. It is no wonder
that around nine years after its invention,
Blockchain technology has not yet managed
to take off as a successful commercial
application other than as Bitcoins.
Banks are finally showing some action in
adopting this technology. The most likely use
cases for Blockchain are funds transfer, digital
identity and payments infrastructure. In late
2016, ICICI Bank and Emirates NBD already
had a transaction on the Blockchain application
that enabled an ICICI Bank branch in
Mumbai to remit funds to an Emirates NBD
branch in Dubai in real time. Currently,
international remittances take a few hours to
upto two days. It is also envisaged to reduce
the cost of remittance for customers as well
as banks. Replacing SWIFT (I always
wondered why such name for such a slow
system) can be one on the biggest
applications of Blockchain. In another case,
a Bank in the middle east is using QR codes
printed on the cheques to be authenticated
via the blockchain and thus prevent fraud.
But not all good technologies get adopted by
the mainstream. Taking example of QWERTY
keyboards, which are used worldwide because
they are believed to provide the fastest
possible typing but there exist faster typing
Trending Now
keyboards, the most prominent being the
DVORAK keyboard. When DVORAK keyboard
was invented in 1936, experiment at that
time showed that it is faster and less error
prone than QWERTY .But as we know that
people are generally resistant to change,
particularly when it requires significant efforts
which is the reason that when Dvorak entered
the market, people were so used to QWERTY
that it would have been difficult for people to
change. So we can say that best technology
is not always the most adopted one.
Though Blockchain enables us to earn a
better interest rate on our money by directly
lending money to a third party bypassing
Banks, but the question which stands before
us is - will the masses take this risk just
because technology allows it? Banks need
to exploit the basic inertia and trust of their
clients and quickly adopt Blockchain to provide
instant and low cost services. They need to
realize the inherent capability of Blockchain
and seriously evaluate how to remodel the
current processes. When Karl Benz combined
his hobby of designing carriages with his profe-
ssion of manufacturing internal combustion
engines and produced mobile carriage - called
automobile, the engine superseded the
horse, it did not make horse faster. So before
the Fintech's get their act together and put
immense pressure on the Regulators to open
up more of the services in the banking domain
to non-Banks, Banks need to leverage
Blockchain and treat it as a boon.
About the author: Kamaljeet Rastogi heads the Business Development of Mobile Financial
Solutions at Mahindra Comviva. He has over 20 years of experience in the digital payments space.
Prior to his current stint, he worked with Reliance Jio Infocomm, FINO Paytech, aurionPro Solutions,
ABN Amro Bank and Citibank.