Independent Banker - October 2018 - 58

in company earnings calls in the fi rst quarter of 2018 alone.
However, given blockchain's skyrocketing popularity
and widespread use cases, along with the need to simplify
and add effi ciency to the compliance space, forwardlooking
bankers and blockchain experts alike believe
that is likely to change quickly. In the era of increasingly
steep regulatory reporting demands and standards from
regulators-and increasingly tough penalties and fi nes for
banks that do not meet these requirements-community
banks must fi nd new ways to deliver more with less.
Fast-moving environment
Pei-Han Chuang is CEO of Morpheus Labs, which creates
blockchain-based " platforms " as a service for enterprises.
He says banks in general " are carefully balancing their
need to innovate using blockchain technology [with]
the existing regulatory environment. " He believes that
successful blockchain implementations in the financial
industry depend on overcoming some of the technological
downsides, including throughput and latency.
Kathy Strasser, executive vice president and chief
operating offi cer for $1.26 billion-asset River Valley Bank
in Wausau, Wis., says blockchain technology would benefi t
her bank's management of its anti-money laundering
(AML) program. " Today we are accumulating customer
information and creating a record of our customer and
what we know of them, " Strasser explains. " Blockchain
could help by enhancing our systematic capabilities of
gathering the data, tracking the data and alerting us when
it diff ers for our review. The customer fi le would then be
updated with these new behaviors. "
Sam Penfi eld is advisory product manager for SAS, a
software and services provider to the banking industry.
He says he has seen " many blockchain projects going on
within the banking space, with limited implementations in
a production environment. "
Most of these projects, Penfi eld says, are focused on
ledger-type environments, such as payments, transfers and
Remind me: What's " blockchain " ?
T
o paraphrase Linda Richman, the classic Mike
Myers Saturday Night Live character, " A blockchain
is neither a block, nor a chain. Discuss! "
Simply put, a blockchain is a decentralized digital
ledger. Satoshi Nakamoto, the famously unknown
creator of bitcoin, developed blockchain technology
as a technological framework to allow
users of that cryptocurrency
(and, eventually, other online
currencies) to record their
transactions in a decentralized,
guaranteed and unchangeable
format. It's like a spreadsheet
duplicated thousands of times
across a wide network of
computers that is continually
being reconciled but is not
centralized. Hence, no one
enterprise or person can
control it, and it has no single
point of failure or compromise.
58 Q ICBA Independent Banker Q October 2018
In the decade since bitcoin's (and blockchain's)
emergence, companies have been seeking new ways
to use blockchain technology to provide a more
eff icient, secure and simple means of recording and
sharing information. Keith Lim, CEO of Hearti, says that
" transaction histories are becoming more transparent
through the use of blockchain technology. Because
blockchain is a type of distributed ledger, all network
participants share the same documentation as opposed
to individual copies.
" This shared version can only be updated through
consensus, which means everyone must agree on it, "
Lim says. " One benefit of this is that it allows faster
processing and easier submission of compliance
reports to regulators. "
As experts point out, blockchain technology's
benefits include:
Q Enhanced security. Transactions must be agreed
upon before they are recorded. After a transaction is
approved, it is encrypted and linked to the previous
Independent Banker - October 2018

Table of Contents for the Digital Edition of Independent Banker - October 2018
