Blockchain is a game changing technology to maintain record of all the transactions and processes in decentralised manner by banks, says Praveen Jayachandran, Research Scientist, IBM Research in an exclusive interview with Elets News Network (ENN).
How do you define Blockchain technology?
How it is going to help or already helping the banking sector? Blockchain is a new technology. It’s a game changing technology that tries to bring in an ecosystem of participants together and maintain data and processes in decentralised manner. It helps maintaining distribute ledger of transactions that are immutable or final. No one can change the transactions unilaterally. Everyone has to go through what we call a process of consensus to agree that the transaction is valid and gets added to the code of transactions. That really helps many institutes including the financial industry. So, we have web applications in banking, finance, insurance, logistics means there are multiple use cases of Blockchain.
What response has this technology received in India?
It’s very early stage of technology, prototypes are started getting build. So, there is a lot of promise and lot of hype as well. The reality is yet to be realised. But there are a lot of interests and lots of news articles. Banks and CTOs are also talking about it.
Which areas in particular are going to be influenced by Blockchain Technology?
Among many prominent use cases of the technology, one is trade financing where Blockchain will be useful. So that will significantly reduce the complexity of the procession world, improve automation and optimisation of the processes. Hopefully, it will also reduce the cost of financing and that way it will probably open up the financing options to the untapped small and medium enterprises in India. So, that’s the hope there. The other area which we are seeing a lot of interest is around supply chain financing. It is like invoice discounting and processes around that. There is a lot of benefit in having those such type of processes mapped onto Blockchain because that will eliminate the need for any reconciliation of data across multiple entities such as banks, large manufacturers and their suppliers. It eliminates some of these redundant data being stored and disputes that arise. A single record related to the information of all the transactions will help in telling about the errors in the processes.
Are there any challenges in implementing this technology in India?
In general, yes. But, in India specifically, we are unsure at this point. Generally, there are obviously challenges in early stages of a technology. There are definitely a lot of unknowns regards to the technology itself and how it can be adopted? There is business challenge in the sense that fundamentally, you try to get an ecosystem of participants together. So, from a business standpoint, it needs multiple parties to cooperate and that always takes time. It’s a new paradigm, so adoption needs to come from all the sections.