Blockchain in Banking - Will a common standard emerge?
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From its early start as the technology enabling Bitcoin, Blockchain technology has risen to become a “big thing” within the financial industry. While some dismiss it as being a buzzword or technical jargon, others believe it to have the potential for revolutionizing the financial services industry as we know it today. Blockchain is on every bank’s strategic agenda, in terms of being something they have to address somehow . However, few players seem to have a very clear strategy on how to do it and where to start. Maybe because it is difficult to get a grasp on, partly because of the perceived complexity of the technology, and partly because of the wide variety of strategic options it introduces. In this paper, we will try to address the question of where 1 to start in terms of building an understanding of whether or not certain standards within the technology are likely to emerge, and what this means for players in affected markets. We start by addressing value networks within financial services through a hierarchical approach, and will use theories about dominant designs to analyse how different causal mechanisms affect the development of different standards on different levels of the value network hierarchy. Through the report we will argue the following: ● Blockchain has proven its value on several use areas through value providing end user applications, but important features are still missing, restraining the industry from acquiring the full benefit from the technology. ● There are technical limitations that needs to be addressed before blockchain technology fully can challenge current financial industry standards on all levels. ● Blockchain for financial services is still in its early stages. ● Dominant designs have the potential to emerge for blockchain platforms, but will probably differ across use areas, industries, and value network levels. ● Incumbent firms are dedicating vast resources into blockchain technology, and with ongoing initiatives they are likely to land on a common industry standard for traditional financial industry processes. However, regulations and causal mechanisms like economies of scale will incentivise disruption from outside the industry, potentially affecting the established industry standard or introducing a co-existing standard. ● Incumbent firms in the financial service industry should approach blockchain technology differently depending on their relative market size and position.