Blockchain Operating System Architecture for Open Banking Services
Defining the role Blockchain will play in enabling Digital Banking innovations.
Introducing the role Blockchain will play in Open Banking, Tech Funnel says:
“Blockchain technology changes this by allowing a sense of trust between stakeholders in the trust establishment. It does this by producing an immutable ledger of transactions, all of which is shared with trusted stakeholders. When consumers feel trust with their third-party payment service provider, they experience better customer satisfaction.”
Ostia describes how the core record integrity features of the Blockchain are particularly relevant to the banking sector’s PSD2 requirements, and provides a simple example of this applied to making a payment using the Open Banking Implementation Entity (OBIE) defined payments Application Program Interface (API).
Writing for Finextra Vishwanath Thanalapatti describes the concept of the ‘Open Bank Blockchain’, an approach where the Blockchain facilitates a banking aggregator marketplace, with the various roles they plan akin to permissioned nodes in blockchain terminology.
Digital Wallets and Blockchain Operating Systems
Digital Wallets is a key field of intersection, as Mobile Banking continues to be a dominant customer channel.
In 2016 TechCrunch wrote your wallet will become the next platform, giving rise to ecosystems that enable new partner-based business models, such as Paypal partnering with Amex for peer to peer payments. Core Blockchain technology innovations will accelerate the exciting functionality that is possible, such as the advent of ‘Blockchain Operating Systems‘.
For example as Adrian Bridgwater writes on Forbes, Nynja combines Cloud-based processing with a mobile virtual Operating System that has a communications and secure payments layer, and a multi-currency wallet. Brahma OS creates a decentralized operating system, which is essentially an operating system scattered across a network of nodes, describing that they offer a New Generation of Decentralized Wallet.
The super sweet spot is where all these trends converge. For example in 2016 Mastercard started building a set of blockchain APIs, and recently filed a patent for a system that would enable multi-currency blockchains. As ever integration of technologies is what unlocks their network effect, so these key steps will mark major advances in the market capabilities, such as interoperability between Blockchains.
Blockchain as a Service
As we start to define the specifics of Blockchain for banking innovations, first we can consider the market of general enterprise Blockchain adoption, such as the Enterprise Ethereum Alliance.
This highlights another dimension of how open source development is itself conducted as an open innovation ecosystem, with thousands of developers across the world extending the code base through voluntary contributions, such as Cello among others, a module that enables on demand ‘as a service’ deployments.
This underlying infrastructure of ‘BaaS’ – Blockchain as a Service is a market that the Bank of America forecasts will reach $7 billion. Ventures like Thought Machine are offering Vault OS to leveraging the blockchain to deliver an entire banking system via the Cloud, an ‘operating system for banks’. Bankex also provides a complete Banking as a Service platform.
Nagashwini Hebbar shares this short presentation that documents a concise summary including a maturity model:
Blockchain-enabled Digital Banking innovations
The banking industry can leverage these capabilities to launch innovative new business models, disrupting operating models and key use cases like currencies. MIT explores the building blocks of enabling functionalities:
By examining what they are trying to do with #blockchain, what value they want to capture with it, and which stakeholders they hope to serve, companies can use the technologies to solve strategic problems in a more targeted way ➜ https://t.co/FIQ9Cqnzin pic.twitter.com/weBrmElCj3
— MITSloan Mgmt Review (@mitsmr) December 5, 2018
Sierra Leone and the UN launched a Credit Bureau of the Future, and Goldman Sachs has launched Circle, a ‘stablecoin‘ – a cryptocurrency designed to minimize the price volatility by pegging it to a stable asset, such as gold or fiat currencies.
In the case of Circle this is the US Dollar, and what is especially noteworthy is their plans to harness the open source ecosystem effort: Circle will run on a network called CENTRE, an open sourced consortium, which means there is no single issuer.
“What makes us different is that it is launched on an open sourced framework, meaning other companies can issue it [assuming they are a member of the CENTRE consortium],” said Jeremy Allaire, founder and CEO of Circle. “Because this is an open standard model there has been industry support out of the gates,” adding that more than 20 companies, including wallets, exchanges and software applications will announce or launch support for USDC.