ING’s blockchain innovation team spent 2016 experimenting with blockchain technology and plans to focus on more proofs of concept in 2017, the company noted on its website.
Mariana Gomes de la Villa, ING’s blockchain senior program manager, and her Amsterdam-based blockchain innovation team have taken on the task of determining blockchain applications that add value to ING’s financial institution ecosystem.
2016 was a year of experimentation, Gomes de la Villa said, noting the technology was not created for the financial industry. It has constraints and does not always cover the company’s requirements.
The team worked on 27 proofs of concept in six areas: lending, payments, financial markets, bank treasury, compliance and identity, and trade finance and working capital solutions.
One application applied the technology to the know-your-customer (KYC) process, an often time-consuming and expensive process. ING worked with 10 other banks to demonstrate it can simplify KYC to allow customers to only submit identity documents once instead of every time they open a new account, such as for a new country. This improved cost efficiencies, security and transparency.
In trade finance, processes are mostly labor intensive, open to fraud and paper-based. A proof-of-concept completed in August showed shared ledger technology can cut operating and compliance costs by 10 to 15%, and raise bank revenues by up to 15%.
Last Friday, ING Bootcamp winner Easy TradING Connect, trading house Mercuria and Societe Generale announced the first major oil trade using blockchain technology, a breakthrough in digitizing the oil industry.
Ivar Wiersma, head of innovation at wholesale banking, wants to see more examples this year. Wiersma compared blockchain to the internet, another “foundational” technology that changed the world. The internet began with the start of email in the 1970s but took decades to become the basis of business models.
Blockchain began eight years ago with bitcoin, he said. Developments like smart contracts and digital identity are needed to make blockchain the technology standard for the next generation. Collaboration is required, Wiersma added.
ING worked with partners inside and outside its own organization in 2016, including the R3 consortium, the European Banking Forum, the Dutch central bank, the Dutch Payments Association and Fintech firms. The cooperation included raising awareness of blockchain to the development of proofs of concept.
While the sector seeks ways to set the new standard, “use cases” such as the Easy TradING Connect oil trade demonstrate that the technology works.
Wiersma wants the team to zoom in on five to six use cases in 2017.
ING will introduce more tests and pilots that make clients enthusiastic, he said. Not all will be home runs, but that is okay. He sees them as stepping stones to show what is possible.
Gomes de la Villa said every solution should comply with areas such as privacy and confidentiality, the regulatory and legal framework, and performance and scalability. It will take time before blockchain technology becomes part of daily life at the bank.
The team hosts workshops with business partners, colleagues, and other stakeholders. A workshop was recently held with EU commissioners and the European parliament.
The team shares insights with customers in sectors that can benefit from the technology, such as utility firms, notaries and payment service providers.
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