It’s always about the money

Dear people working in financial institutions,

You know that it's always about the money. Trying to squeeze as much as you can out of everything; especially with interest rates being historically low on all sides (because of the recession). So, what you're doing is not changing. You're just trying to do what MBAs do, and look to improve on efficiency. Try to substitute humans with machines, try to get better prices on premises (or remove them altogether and go "online only"), you know, the usual oiling the same cogs in the machine. What JP Morgan is doing, is the future. The time has come to take a look at the things that you don't normally look at. Now that blockchains have become a mainstay in any and every financial conversation, how about seriously looking at its benefits, and considering implementing it. You can improve your current state by just considering it.

What this post is about is not looking at improving your products and services. It's about looking yourself in the mirror. You need to realize that you're out of shape. You've become overweight, and just supporting your weight is costly and problematic. You must analyze your processes and your methods. Everything deserves at least a review. Also, the question is almost always, can a blockchain offer a better solution. Why use blockchains? First of all, they're not proprietary. It's open source stuff that you yourself can use and build whatever you want. Just hire some developers versed in this tech, and you're set (don't forget to make them document everything they make, to make others that join in, happier). There are some sacred things that no bank is willing to even consider. But if the status quo is not periodically challenged, there would be no innovation, ever.

Core services. There's a lot of banks in the world that Oracle has by the balls, and they know that their services are indispensable. The monthly maintenance fees imposed by them are extremely high (rightly so, because they sell something that has been through the test of time, and improved upon until perfection). That doesn't mean that it's irreplaceable. It's not difficult to fathom all your ledgers being based on a blockchain or two. You could even include more functionality to automate your ledgers.

Payment system. This is just a matter of time. An inter-bank payment system based on blockchain tech. Imagine the Fed ACH not existing! The whole blockchain distributed among the banks, everything instantly verifiable, immutable. Most importantly, cheaper. With banks doing almost everything nowadays, it's sometimes easy to forget that a bank is nothing more but two books: Who owes it money, and who it owes money to. Then there's information. Information about the books, and information about the information about the books. E.g. the way an international bank transfer works is, one bank sends a SWIFT (or something else) message to the other bank, about a transfer. The other bank responds, according to the transfer, whether it's an incoming or outgoing transfer. Then everything is agreed, and the books are edited in each individual bank. This is just information. The time when money actually moves from one bank to the next is days later when settling happens through clearing and settlement companies or institutions. So there is a disconnect from the information about the movement and the actual movement of money. By moving on a blockchain system, the money can move with the information. There is no need to complicate matters. All banks would participate in the same books all the time.

To not complicate this post more and make it lengthy, because we don't write this stuff just for SEO (we actually love it), maybe we can generalize the whole point. There are lots of more aspects that you could improve on to push banks into the future. Banks are not going to be anything more than just a single contact point of various interconnected services. The biggest hurdle in every problem is trust. Some fictional characters have become very popular by professing that "everybody lies". This is the main purpose of blockchains. To limit the opportunities where reliance on trust is necessary, which in turn creates an opportunity for automation, which actually means less money spent on paying people. I.e. if property ownership in a country was blockchain based, then there would be no need for any due diligence on the client. A loan could become as simple as opening an e-mail account, or buying a pair of shoes.

Ok, here's one way to start. If you're in a position to recommend and/or implement changes to how your bank or institution actually runs, then think about who do you hate interacting with at work, and think about how to eliminate the interaction with that person (or those people). This way you'll improve your day at work, and at the same time improve your whole workplace. Maybe then you'll enjoy going to work?

What I meant that you can benefit by just considering it, is when you start to seriously consider something, and make it known, then the current service provider is going to start thinking about his position. When European financial institutions started thinking about replacing SWIFT and actually creating a platform of their own, then SWIFT lowered their prices and improved their service. However, when it comes to blockchains, don't think it'll solve anything and everything. Analysis is necessary.