By Barbara Seynaeve (Trendwolves)
Blockchain is claimed to be the transparent system that will gain back Millennials’ trust in finance. Blockchain is the means to an end, gaining trust has everything to do with giving back control to the consumer. Do banks dare?
Blockchain is most known as the technology underlying Bitcoin. What makes it special is that it uses a public and fully distributed network of nodes and users to move any digitalized asset from peer to peer, that anyone can access the ledger and see the transactions which are validated without any intermediary. The transparency of the process even extends to the name itself: transactions are recorded in blocks which are cryptographically secured and sequentially chained together from the oldest to the newest, offering a non-refutable and unbreakable record of data.
Big banks are now seeing its massive potential to make the existing financial system more efficient, and find cost savings in a landscape that is coming under increasing cost and compliance pressures. NASDAQ, the second largest stock exchange in the US, are currently trailing blockchaintechnology for the process of clearing and settlement. And consortiums like R3 or the Hyperledger Project are rapidly establishing a global presence to be reckoned with.
The technology has a lot of potential outside of finance too. It could well prove to be the missing link in creating viable sharing economies, lessening transaction chains and allowing providers to sit closer to their end users and consumers.
And, most importantly, it could allow people to reclaim their online identity, begin to own it, monetize it and protect its privacy.
Now we’re talking. Gaining Millennials’ loyalty and trust is becoming increasingly difficult for banks. This generation has grown up with Occupy Wall Street and the Indignados. One third of Millennials believe they won’t need a bank in five years, and one in five think banks will no longer be people’s primary financial institutions.
Blockchain technology could be a viable solution for a new kind of engagement which would put transparency and trust at the centre of the business stage in the aftermath of the global financial crisis, whose effects already produced a first real change of habits among millennials fuelling their eagerness for impactful and good companies, to which to be loyal.
It’s naïve to think we’ll move to a world where transactions are completely transparent, but selective transparency is a realistic pursuit.
Selective transparency puts the consumer in the driver’s seat: he or she decides which information to share with chosen parties (such as regulators or employees), while at the same time not revealing them to anyone else. Blockchain network Ethereum already plans to add this feature to its system.
That’s exactly what Australian start-up Meeco aims to do. The app helps consumers to securely collect, organise, manage and control their digital information by letting them share it on their specific terms. Every bit of data added to Meeco is encrypted and stored in a secured cloud, which only the user itself can access directly. It enables consumers to negotiate with businesses who want access to their data. This makes for an open and transparent exchange, which enhances trust and respect between consumers and businesses.
Fintech and banks are fighting the same fight in this matter: who can earn Millennials’ trust by giving consumers the power over their own data, be it with a cloud based platform, a blockchain or some other technology?