Banks – once chosen to facilitate trust – are now challenged to offer value and find new ways to stay relevant as they are facing an ‘immutable ledger’.
In this brand new Global Blockchain Initiative Report our Singapore Chapter Lead Pazette Olfindo analyses the implications of Blockchain technology in Singapore’s private banking sector and outlines strategies on how banks can find new business models and exploit opportunities in the blockchain revolution.
Pazette argues that “while current blockchain business models still exhibit significant limitations on scalability and governance, what is not in doubt is that as the technology advances, the need for intermediaries will decline”
From its early history, the banking industry acted as an intermediary to conduct financial transactions. However, initiatives attempting to disrupt the traditional economic and banking models are progressing fast, with their essence being Bitcoin and its underlying network, blockchain. Blockchain is simply an ordered, decentralized, immutable ledger that allows recording of transactions in a (possibly public) network. Blockchain relies on a peer-to-peer communication network and eliminates the need for third parties.
While current blockchain business models still exhibit significant limitations on scalability and governance, what is not in doubt is that as the technology advances, the need for intermediaries will decline. Banks, currently paid to facilitate trust, will increasingly have to prove their value if they do not want to be replaced by an immutable ledger.
The subject of money and investment is a very personal issue to customers, so while they often want banking services to be modern and responsive, they also want to be assured that their investments and information are safe. This trust that customers still have in their bank to protect their assets and data is a substantial competitive advantage in an increasingly digital and information-driven economy. Against the growing landscape of Fintechs, the challenge for the banks is how to use this edge to create win-win propositions that benefit both shareholders and customers while never undermining the trust that placed them in this privileged position.
This thesis aims to study the possible impacts of blockchain in the private banking industry in Singapore. The paper considers the following questions: what does it take for a bank to succeed in this new technological age? How can banks preserve this need for trust and transform it into a workable business model?
The paper also proposes tactical and strategic blockchain implementation paths for a local private bank. Some technological challenges – both from this still-evolving blockchain platform and the existing legacy systems – need to be solved for an efficient implementation in the banking sector.
Keywords: blockchain; implication; private banking industry; wealth management; financial industry; Singapore
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About the Author
Pazette Olfindo, based out of Singapore, is a Senior Vice President at a local private bank, Founding Member of the Global Blockchain Initiative and the Local Hub Lead for Singapore.
She has over two decades of extensive experience in Information Technology, specifically in the banking industry. Pazette has demonstrated expertise in re-engineering and digital transformation of banking processes, from front-end to backend. Her work contributed to significant cost savings and enhanced efficiency in organizations by implementing strategic initiatives to automate and improve investment transactions and backend processes.
Pazette holds a Master’s degree in Blockchain Technologies, is an IIL® Certified Business Analyst & a proven top trainer.