‘Blockchain helps firms create new business models’

Financial institutions and banks globally are already either working or are trying to work on Blockchain, a decentralised and distributed digital ledger that is used to record transactions across many computer database so that the record cannot be altered. Technology leader IBM, which bets big on technology, has started working with several big and small banks and corporates to help them in adopting this technology, which is the future of financial transactions and payments.

In an interview with BusinessLine , Jitan Chandanani - Blockchain Leader, Global Business Services, IBM India / South Asia, talks about how the company’s strategy for Indian companies, especially banks and its growing importance.

Why is Blockchain so important? At what stage is India when it comes to adoption of Blockchain for day-to-day operations?

2016 has been the year of first projects and proof of concepts. 2017 will be the year when Blockchain goes into production by early adopters. In a recent IBV study conducted by IBM that looked at what banks are planning for Blockchain – 65 per cent said they want to go to production in 2017. By 2020, we anticipate broad adoption of Blockchain for business

Besides, the Indian market is extremely curious to learn and understand the application of Blockchain technology. Within the AP region, India dominates the conversations at 44 per cent while Australia is at 26 per cent and Singapore at 8 per cent.

What are some future trends?

In the BFSI sector, for example, we see Supply Chain Finance having a significant impact. The solutions will present a new business model whereby financiers will be able to extend credit to Tier-2 and Tier-3 suppliers, using Blockchain.

Historically, the Tier-2 and -3 suppliers have always had challenges obtaining credit and managing working capital. These improvements will result in more production cycles.

Trade finance is also gaining traction since it involves not just two companies but also the ports, logistics, shipping companies and so on.

Which are the sectors that you are working with and need to adopt Blockchain technology immediately?

We foresee an immediate impact across key sectors like BFSI, public and telecom followed by healthcare and retail. The other sectors will take some time. In fact, much of the early adoption in India has been in the BFSI sector. Additionally, with the advent of digitalisation concepts, organisations and governments are also realising that current infrastructure and solutions will not be able to meet the transparency criteria and the improved service demands of the Indian customer.

What impact has Blockchain had on businesses so far?

Blockchain has the potential to do for transactions what the internet did for information. It helps solve existing problems and creates new business models and opportunities that did not exist before.

Blockchain has had a two-phase impact on businesses. Firstly, it runs in a single infrastructure with everyone seeing the same verifiable step and in turn makes the workflow move faster. Secondly, certain steps (especially verifications) can be automated and even omitted.

With Blockchain, organisations have been able to significantly increase their efficiency levels by reducing operational risks related to manual, non-connected, error prone and opaque processes.

Today, many companies are unable to track goods and are unaware of frauds, currency fluctuations etc. Trusted transactions on Blockchain give them better visibility and thereby reduce risks and litigations.

Is there a challenge while convincing companies to work on Blockchain? How is IBM solving that problem?

IBM works with clients to identify a business challenge or process that can be resolved or improved with Blockchain technology. Through joint workshops IBM and clients work together to identify a specific use cases where there is a real pain point that requires a resolution.

Since the adoption is not mandated by a regulator or influenced by market processes, the conviction of the client depends on the inherent nature and culture of a sector and its related organisations.

What kind of revenue growth is IBM eyeing from its Blockchain technology?

Blockchain is a strategic imperative for IBM and the goal is to enable adoption across industries in the country.

Who are your competitors in Blockchain technology?

Other technology firms focussing on Blockchain or have built matured practices include Microsoft, Accenture, Deloitte, KPMG, Infosys.

It is learnt that for IBM Blockchain kick-started from its R&D centre in Bengaluru. Can you elaborate?

Scientists from our research lab in India were part of a core team of scientists that did the early ground work on Blockchain for enterprises and business networks. This team brought this to the attention of IBM’s top executives at an annual gathering couple of years back and from thereon, continues to be a key global centre of excellence in this space within the company.