Independent Banker - June 2017 - 76

Nuts & Bolts
early, community banks should be
exploring blockchain.
" First and foremost, get a good
understanding of the technology,
spend the time with the different
areas in the banks and look at potential
use cases, develop that road map
and pick one or two priority use cases
to experiment with, " says Meszaros.
" Do a deeper dive into that use
case [and] understand the potential
impacts to the organization, whether
it be the operational impacts, regulatory
impacts, etc. " From there, build
a prototype and turn that into a
proof-of-concept with which you can
solicit feedback. Other areas where
DLT could have an impact include
payment processing, mortgages and
mortgage servicing, capital markets
and insurance.
Compliance questions
Meanwhile, be aware that much of
the national regulation surrounding
DLT has yet to be established. " How
can you achieve compliance with the
myriad of regulations within distributed
ledgers? " asks Whaley. " That's
the million-bitcoin question. " For
" It's important for
any individual bank
that they start to look
at this technology. "
-RICH MESZAROS,
ACCENTURE MOBILITY
example, how would an immutable
distributed ledger handle the right
of rescission, or the right a customer
has to claim that a payment was
unauthorized?
On the other hand, waiting until
all these questions are settled isn't
feasible in this competitive landscape,
especially one in which the
open-source software will be eating
into all the incumbents' market share.
Plus, blockchain can do much more
than just streamline existing products
and services. It could also enable
offerings simply not possible today.
Meszaros, who is part of Accenture's
Internet of Things practice,
says, " One reason we're keenly interested
in blockchain is we look at the
capabilities of these smart devices
and asking, how will blockchain be
a component of how these devices
share data and conduct transactions?
That's an emerging area of payments:
these low-value, high-frequency
transactions. " Indeed, Gartner
Research predicts that, by 2030, 30
percent of the global customer base
will be devices or things transacting
over blockchains. Now that sounds
like a business opportunity.
Laura Shin is a technology writer in
California.
Remind me: What's
a blockchain again?
The word " blockchain " comes from the structure of
bitcoin's distributed ledger. Transactions are grouped
into blocks that are added to the ledger roughly every
10 minutes. Cryptography gives that group of transactions
a unique identifi er called a " hash " that would
be completely diff erent if an iota of the data were
changed. It is easy to check if a set of data will result
in the same hash but impossible to take a hash and
reverse-engineer the transaction data. Because the
hash of each block is then included as a data point in
the next block, the blocks become inextricably linked,
creating a chain of blocks-or blockchain. " Distributed
ledger " or DLT is often the more popular nomenclature,
particularly in enterprise settings, because many versions
of the technology are not structured precisely
like a blockchain.
76 ICBA IndependentBanker June 2017
Independent Banker - June 2017

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