Why regulators are trying to broker blockchain integration for Irish banks

Rage Comment : The author believes that people should not only focus on the exploration of blockchain technology by large institutions, but ignore the participation of other small banks. After all, this is a technology that deeply subverts all walks of life. For example, Stephen Moran, innovation manager of Bank of Ireland, said that under the supervision of regulators, it has cooperated with Deloitte to explore blockchain technology in the field of transaction reporting. At present, the exploration of Bank of Ireland has just begun, without much theoretical and empirical support, so like all financial institutions, it maintains a slow pace of exploration; but clear goals and extensive exploration by global institutions will definitely guarantee future results.

Translation: Annie_Xu

While much of the news has been about the activities of the global banking consortium R3, the increasing exploration of smaller regional banks has been overlooked.

For example, Bank of Ireland, one of the country’s “Big Four” banks, recently revealed that it is working with Deloitte to explore blockchain technology in the area of ​​transaction reporting. The project involves the bank’s global markets department, which has been trying to build a blockchain-based reporting mechanism for the entire transaction cycle since January.

The bank noted that the trial was partly prompted by regulators.

Stephen Moran

Stephen Moran, Innovation Manager at Bank of Ireland, reiterated:

“I think it helps solve a lot of serious problems for banks, including in the global markets sector. The first and foremost use case is banks’ response to the regulatory agenda. That really drives the need for innovation.”

Blockchain technology may be able to address increasing regulatory requirements and the costs that come with them.

“An immutable, secure and time-stamped database helps meet regulatory requirements and transparency; and of course provides a stable source of information for clients and the company’s front end.”

Transformation pace

Moran said that the Bank of Ireland’s interest in blockchain stems from two sources:

First, banks, like global financial institutions, have noticed that people are beginning to become skeptical about the underlying technology of Bitcoin and its potential for practical banking applications;

“There’s nothing special about the blockchain story, where people are afraid to be left behind; it’s not that we’re hesitant because of distrust; it’s more that the context of different issues in institutions has led people to approach blockchain technology in a roundabout way.”

Moran unfolded a bigger picture for us, pointing out that whether from the perspective of consumer experience or the back-end of the bank, banks choose to view blockchain as a trend of in-depth digitalization of the banking system.

He further elaborated on the bank’s interest in blockchain and its desire to test the technology and deploy other financial technologies.

"We have legacy systems like any other bank and we are going through the transformation process, but it will take some time."

The process mirrors that of other banks around the world, with the seismic shift causing many institutions’ business units to shift resources and ideas toward potential application development.

“We took a stand and we chose to start this blockchain journey. We said, no matter where you are, if you want to join us, then take action. I think this is our key significance. Our technology department, financial department and retail department are all cheering for us.”

A bright future

Moran said the transaction reporting test project was prompted by the bank's innovation department's desire to move beyond discussion of use cases and into actual action.

The test, which is currently using Deloitte’s Rubix blockchain platform, has raised concerns among bank innovation chiefs about how to evaluate and select existing platforms or networks.

The final project will definitely be very rewarding.

"We have to persist. We don't have to take the lead. We have to have enough information to decide what to do next until someone points us in the right direction. The most important thing right now is to make our own decisions."

Other use cases include remittance and value transfer, which the bank’s Ireland-UK money transfer business in particular needs to explore.

Whatever the use case, it requires internal testing as well as joint testing with Deloitte and other partners.

Looking ahead

Moran pointed out that the Bank of Ireland sees the potential of blockchain in the domestic financial system and hopes to work with domestic startups to explore use cases and develop product prototypes.

He pointed out that events like the Dublin Hackathon give us the opportunity to communicate and learn from startups in the blockchain field.

“Now we have an opportunity to get in there and collaborate meaningfully with those startups.”

Like other financial institutions, Bank of Ireland is exploring slowly but steadily; all that’s left is for it to present its findings to bank leadership to determine which use cases to test and which departments should be involved.

"The future is unclear, but we have the momentum and we know where we are going; that's the message we want the bank and the country to know."