Each financial institution has dozens of blockchain pilots underway. There is undoubtedly a huge demand for the technology and as each of the institutions will proclaim at their world stages and events, it is the future. How come, then, there are so few pilots actually making their way to production?

I recently had the chance to exchange notes with one of the heads of delivery for a global financial institution. The introductions were the same as always, everyone’s systems are perfect and flawless and as usual, when you go deeper you find that the end user still has to bear the frustrations of legacy systems, paperwork and processes that take weeks and even months to complete.

Perception and surface are very different than the end users’ reality.

So it seems we have this dual reality, where on one side lives the infinite optimism in technology (often blockchain) and countless of pilots and on the other side lives the politics of a large organization, protectionism and legacy systems. Where does the end user live? Of course, in the latter, which we can also call ‘the reality’.

Now, this isn’t criticism toward large organizations, they have a certain inertia by design to protect them from falling prey to impulses and short term decisions. However, this design is ill equipped as it comes to recognizing what changes are fundamental and which are fads, and treating both the same.

“The reality” is also often replaced one step at a time by new operating models and new services, yet some times this reality is overtaken by others, that operate at a speed that is undeniable and unachievable for the large institution.

So how do you get from a pilot pipedream to a production reality?

This requires fundamental understanding of the institutions’ processes and requirements, and the navigation of different excuses (at the end of the day) which sound credible until you get to the bottom of them (“regulation”, “we are a bank”, etc.).

One senior executive from one of the largest investment banks in the world has mastered this process, of finding new technologies, building internal buy in and ensuring the right stakeholders are included in the process, but also equally that those who take a sadistic pleasure from killing projects are not. They initially introduced me to this phrase of “death by pecking” which I’ve grown to love, not because of the concept itself, but by how representative it is. 

Death by pecking refers to trying to take a balloon through an organization of ducks, who try to peck the balloon apart. I’m sure you can piece together the analogy, but the representatives come when you work through the internal procurement process multiple times and skillfully learn to navigate each hurdle along the way. This is no easy feat, yet it’s a critical component of getting the organization from launching pilots to actually being able to deploy cutting edge business models and services.
Like anything, this is a combination of taking one step at a time and making sure we are going in the right direction.

From our experience working with organizations both on the “innovation arm” as well as their “traditional business”, you certainly need both. But we’ve had no where near the success from the innovation business, that we’ve had by the day to day business from a production point of view. Technology is great, but all technology and all new business models exist to serve the customer and as long as the customer lives in “the reality” of the business, that’s where the biggest adoption will be.

You can of course shift “the reality”, but that takes persistence and a real vision from the top. It’s not easy and often times it’s not popular. But it is the only way to guarantee the organization can respond to the changes in the landscape, including break neck technology adoption in China and the changing end user preferences.

We have to live in the reality. Shiny pilots are not what we can measure. We are judged by what the end user can perceive and gain value from. What ever our marketing team pushes out and we might even for a moment believe, reality is where our focus has to be.

 

Markus Lampinen

Internationally awarded digital finance entrepreneur, active in pioneering new securities models worldwide. Has worked in digital finance since 2009, recruited over 100 individuals, built up a operations on six continents and been recognized as one of the top 100 thought leaders in crowdfunding. Markus has pioneered new funding models in the US and Europe, advised policy makers worldwide – including the SEC, the European Commission and Italian regulator CONSOB – for more effective markets, and worked with visionary organizations such as the World Bank and the Kauffman Foundation to improve frameworks for digital finance. Markus has studied computer science and economics (M.Sc).