Busting the Blockchain Hype
Buzzy Blockchain Bosses
Blockchain is already going down the Gartner Hype cycle from its peak in 2016. However, you couldn’t read a newspaper in the last months without stumbling over the words ‘blockchain’, ‘disruption’ and ‘cryptocurrencies’. Probably boosted by the Bitcoin hype since the beginning of last year, we have seen a couple of irrational expectations in the news in the last few months.
In September 2017, the city of Antwerp presented its experiments with blockchain. Former city secretary Roel Verhaert proclaimed that “blockchain would end the bureaucracy”. Mayor De Wever added: ‘Blockchain will become for administrative simplification what the wheel was for mobility’. In October, De Standaard asked itself: “Is Blockchain the answer to every problem?” In November, the company ‘On-Line PLC’ changed its name into ‘On-Line Blockchain PLC’ and saw its share price rise by 394%! An almost bankrupt cigare manufacturer did the same in December and saw its share price rise by 8,000%. Even Kodak, the textbook example of a company missing out on a digital innovation, launched a blockchain solution.
Is the technology triggering the change or is the need for changes generating blockchain?
It recalls headlines from the days when digitalization would solve all issues. We have seen in many cases that an inefficient process was digitized and then remained an inefficient digital process. The same applies to blockchain:
Blockchain should be a boring infrastructure that nobody cares about. People will use the services that are built on blockchain technology. It could be compared to the internet. The vast majority of users doesn’t know the technology that runs the Internet, but uses its applications. The same should apply to blockchain. It will only get mass audience traction if the solutions solve real problems and not as long as the goal is merely to build a solution with blockchain.
Within our banks: a lot of blockchain buzz, but very little vision
Over the years I have met and heard a couple of senior managers in the financial industry that I used to call the 'buzzy'. Their main priority is to look busy tackling the challenges that banks face regarding innovation while using as many buzzwords as possible. They create collaborations with startups or start internal competitions without grasping what Fintech is all about or how they should prepare their organization for the challenges that they are already facing.
Instead of focusing on blockchain, financial institutions should be focusing on:
1. Creating a process minded culture in their organization. Get rid of the silos and focus on real end-to-end processes.
Even if a lot of financial institutions are working on it, most of them are still siloed, hierarchical organizations with the most powerful governance bodies at the top. Innovation in one silo is often no enough to impact the client experience as the benefits can be undone by other silos. A client doesn’t gain anything if one silo managed to reduce its throughput time from 1 day to 2 hours, if the process takes 8 days in total. Innovation needs to be looked at in end-to-end processes which should correspond with customer journeys.
2. Experimenting and trying out new ideas. But kill an idea quickly if it fails. Make sure that your organisation grasps the right lessons learned.
Innovation in our sector goes very quickly. Sometimes an idea or a technology looks very promising. It will be very beneficent for an organization to experiment with promising new ideas. It will turn the focus outside-in, something financial institutions did not do for a long time. It will also allow the financial institution to move to a learning organization. Make sure that bad experiments get killed quickly before too much focus, money and effort are put into it, but make sure that the right lessons learned are grasped and implemented.
3. Collaborating with other financial institutions and new market players.
I disagree with those who claim that financial institutions will disappear due to competition by new market players. They need to change their models and create ecosystems which are different from what we are familiar with. This co-creation with clients, external stakeholders or even ‘frennemies’ will give the organization access to the best talents and ideas and generate insights. It will also allow the co-development of new products and services. By designing shared and standardized services and solutions, processing can become more cost automated and cost effective. This will help financial institutions compete with the new market players.