Banks and financial institutions are struggling to bring blockchain and DLT applications into profitable production. In a market where proof-of-concept (POC) is actually the business model for many firms, we need to be honest about the state of our industry.
There are a variety of reasons blockchain projects within financial institutions fail, some of which boil down to naivety when it comes to live deployment including a lack of understanding of secure deployment procedures for banks. There is a clear disconnect between the high levels of IT security that banks expect vs the innovation-first approach taken by some blockchain frameworks, which fail to take into account deployability into and interoperability with existing systems.
To get code inside a bank’s secure perimeter requires a meticulous deployment approach. Don’t expect that your code can just pull components from the internet. Nothing gets into a bank’s systems without every line of
code being screened, checked and approved.
What’s more, low speed, limited scalability and a lack of a strategy for Integration with existing systems, are often to blame. To go from POC to a live system, banks need to plan for high volume and massive scale. They need to work within the array of systems that banks currently deploy. These include links to SWIFT, hardware security modules, enterprise identity systems and many more.
Other reasons why financial institutions struggle to bring DLT projects into profitable production include the use of exotic and unsupported coding languages, a fixation on a particular technology instead of a business goal and lack of analysis of benefits to the end customer.
The 10 reasons why blockchains are not working are described below in further detail and include:
- Lack of understanding of secure deployment procedures
- Low speed and scalability of chosen ledger
- Difficulty of integration with existing systems
- Exotic or unsupported coding…
