Blockchain, banks and big iron

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Banks don’t know where their money is. Think about that for a second. With so many ledgers and systems in place, no bank in the world knows exactly how much cash they have at any given moment – or exactly where it resides. That’s why they have to sync up all their systems every day to create an accurate snapshot of their assets and the assets of their customers. And then the process starts over again, and for the next 24 hours the uncertainty grows until the next such reconciliation – which is so disruptive it usually takes place in the middle of the night. This cycle is a bit like Prometheus waiting for the eagle.

What if there was a way to eliminate this confusion and chaos? Shouldn’t we be able to get real-time visibility into any system in 2017? That’s where Blockchain comes in. Most of us first learned about this ledger-management approach in the context of bitcoin, and may still associate the software with quasi-legal and black market transactions. We need to get over that bias: Blockchain is the perfect technology for major banks stuck in a world of Heisenberg-esque uncertainty about where their money is. If you don’t believe me, you should see what IBM Fellow Donna Dillenberger says about it. Blockchain has yet to be adopted by many major financial institutions, but is poised to kick off a major disruptive paradigm shift in the way we do business.

In layman’s terms, Blockchain links every step of a transaction together into discrete and secure “blocks” with every step visible to every stakeholder, and requiring permission from all stakeholders for any party to alter any of the data. Blockchain is ideal for financial institutions because it creates a single ledger of all transactions and resources rather than relying on cumbersome reconciliations to stay accurate. This makes real-time visibility possible – so for the first time it’s possible to do real-time analytics to reduce fraud, improve the customer experience, and drive strategic decision planning.

Of course, this all takes place seamlessly on mainframe computers, perhaps the most reliable platform ever invented. Just about every major bank in the world relies on Big Iron, meaning one of the hottest new technologies runs beautifully on one of the longest-serving platforms – just one more way mainframes are leading the way in the 21st century.

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Gregg Willhoit

Gregg Willhoit is Chief Technologist at Rocket Software

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