South African Bank Gets Serious About Blockchain
Some good news in the world of blockchain coming straight from the southern hemisphere. South African bank, Standard Bank will be launching numbers of events to explore the benefits and risks of emerging technology solutions in the world of financial services.
“You could say that blockchain, and its sibling Bitcoin have become the new “IT” words. Decentralization is an opportunity and a threat, so it’s no surprise that we feel a mixture of axiety and curiosity about the new technology”, says Naomi Snyman.
“If harnessed correctly, powerful technologies like blockchain can unleash new avenues for growth and revolutionise the way Africans bank,”
Snyman is the Blockchain Lead of Standard Bank. She heads up blockchain use cases and thought leadership from a facilitation and co-ordination point of view for Standard Bank Group. She is also a member of South African Financial Blockchain Consortium, which includes Standard Bank along with other South African financial institutions. She also represents the bank on the international R3 Consortium, which creates and drives blockchain projects across members banks around the world.
Below are some of her thoughts about blockchain within the sector.
On banks being scared of, or reluctant to, engage with emerging technologies.
“We need to debunk that myth as we harness emerging technologies like blockchain to drive change and improve efficiencies. More importantly, we are unlocking the power of collaboration by partnering with entrepreneurs and individuals on their future journeys,” she said.
She compares Blockchain to the Internet.
“If we think about how the Internet started; we didn’t understand why we needed it or how it even works. But it has completely revolutionized our lives. The same counts for Blockchain.”
Blockchain originated from the desire to make a decentralized virtual currency that provides secure global transaction swiftly without any third-party between that transaction. Its intent was to completely disrupt the way transactions are done. It is really important to make the distinction between blockchain and cryptocurrencies.
We’ve got to think bigger, blockchain will provide wider benefits than just cryptocurrencies.
“In this world, you have to make peace with the fact that you will be disintermediated, your way of making money now and operating will be disrupted, because we are in a space where everything is being decentralised. Blockchain basically is a piece of technology that allows users to interact directly with one another through nodes instead of through a central party. Creating new networks and platforms are definitely the biggest benefits of this technology. The spirit of Blockchain is collaboration,” Snyman said.
That does not mean cryptocurrencies will not have a role to play.
“For instance, the initial coin offering frenzy may appear to be over, but we need to understand how this can enable new forms of value transfer and payment mechanisms,” said Snyman.
The bank has partnered with Blockstarters. They launched the first event on October 11, where they talked about cryptocurrencies, their impact and how they can enable the payments landscape of the future.
Entering new markets is daunting enough, but a lack of insight, support and a diverse network can often see good ideas and products failing to get off the ground. “We are therefore creating a powerful learning platform that will help businesses and entrepreneurs with great ideas to navigate the complex marketplace. This includes creating market access opportunities but most importantly, building the awareness and knowledge to reduce risk and achieve success,” said Snyman.
“The role of regulation is often not well understood when you talk about cryptocurrencies and blockchain, but our central bank has realised it has a crucial role to play as the industry begins harnessing the benefits of a decentralized ledger. A future that may include borderless currencies and cross-border virtual money flows in Africa will need them as a key player,” said Snyman.
“While decentralization is seen as the ultimate vision, this needs to be tempered by the fact that payments, digital identity or digitisation of assets will need central bank approval and so the ideal model will be based on multi-party collaboration,.”
Standard Bank said it supports both open and permission-based blockchains. Permission-based blockchains add an extra control layer and only specified parties, such as a bank and approved clients, can transact and validate the network.
“There is potential for both of these models as while an open system will drive growth and expand the eco-system, private permission-based blockchain will play a big role as confidentiality of customer data and transactions remains paramount,” said Snyman.
Blockchain forms part of Standard Bank’s broader digitisation strategy, which goes further than just looking at payments to include trade finance, digital identity and global markets, the bank said.
“It ties into our vision to drive Africa’s growth, which will increasingly come from new small businesses, cross-border trade and finding new business use cases to revolutionise business models,” said Snyman.
Standard Bank noted that South Africa’s central bank has taken a proactive stance on cryptocurrencies by creating a private crypto-currency unit.
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