Banks are turning to open source for blockchain, says Google engineer
Banks have historically developed all software in-house and maintained a fierce secrecy around their code, but more recently they've embraced open-source. They're likely to use open source for one of the most hotly tipped technologies out there - blockchain.
A Google executive speaking at the Finovate Fall conference in New York noted that J.P. Morgan is putting a huge focus on Quorum, an enterprise version of Ethereum open-source blockchain.
“I see a lot of excitement from banks about blockchain, more so that than cryptocurrency,” said Helen Altshuler, a senior engineering leader and technical manager at Google, a board adviser at SafeChain, which is focused on applying blockchain to the title insurance ecosystem, and formerly an executive director and the head of technology for Intelligent Solutions Group at J.P. Morgan Chase. “I don’t know a company that doesn’t have someone doing blockchain strategy, testing or implementation.
“They are using blockchain for automation and instant reconciliation,” she says. “Banks want to be major players in the disintermediated framework of distributed ledger technology – banks want to find a way to play [in the blockchain ecosystem].
That said, Altshuler noted that Bitcoin has proven the efficiency of the network and using the nodes (computers connected to the Bitcoin network using a client that performs the task of validating and relaying transactions), so now financial services firms are looking for the applications of the blockchain technology behind it.
“Cross-border is today – we know that can happen and understand how that works,” Altshuler said. “The ability to create a globally consistent and instantaneous way to send or transfer information is generating a lot of excitement around an environment of real-time access to [blockchain] and the various players operating under self-regulated autonomy.
“One use case is loan syndication – can we get settlement to instant or at least T-plus-one?” she said. “Also, smart contracts – financial services firms are leading the way on [using blockchain for] settlement, and KYC is an interesting use case as well.
The biggest use cases for blockchain are the products and open-source protocols that distributed ledger technology enables.
“We want a bigger, wider development community working on these products, where the data is safe and secure when being transmitted across regions and jurisdictions without having to do anything up front,” Altshuler said. “It’s more secure, faster and cheaper for you as a consumer, and blockchain allows me to develop products faster.
What the blockchain means for financial services
While some financial services firms are still just dipping a toe in testing blockchain, others have made in-roads.
“Banks, as you know, take some time to move, but they’ve reached an inflection point in the last 18 months – banks are starting to click when it comes to blockchain,” said Finovate panelist Asheesh Birla, a vice president of product at Ripple, which operates a blockchain network connecting banks, payment providers, digital asset exchanges and corporations. “Asian banks in particular want a global footprint and are growing quickly.
“Some traditional banks are stuck using infrastructure from the ’60s, which is not going to work,” he said. “I’m from Silicon Valley, and I thought I’d have to wait forever [for mass adoption of blockchain], but banks are moving in weeks, and they’re understanding what blockchain can mean to them."
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