Bitcoin and SAP Banking.

Dear,
If I ask you if you’ve heard about Bitcoin, I’m sure you all know it’s a cryptographic virtual currency.

But if I ask you about Blockchain, I think it will be the first time that many of you have seen this word.

Blockchain is the protocol supporting Bitcoin payment transactions, and the technology which is going to drive the biggest transformation in payment methods, since Bank of America launched the first credit card on 1958 (BankAmericard).

The first reason is cost; Bitcoin fees are very low (zero in most cases), while Creditcard fees are around 3.5% of the transaction value.

On the other hand, you probably know that Bitcoin is a very volatile currency (due to its low monetary mass compared to the major currencies), but this weakness has opened the opportunity of new services for hedging the Forex risk in Bitcoin transactions, the most popular one is bitpay
https://bitpay.com/

Combine a new technology, capable of a dramatic reduction of payment costs, with a world of limited economic growth, putting pressure on reducing costs; and you will understand the opportunity that Bitcoin represents.

And remember that the real importance of Bitcoin is not in the currency, but in the Blockchain technology.

In few words, Blockchain is a shared public and encrypted, decentralized ledger.

Every payment in the Bitcoin network is posted as a transaction in the Blockchain ledger, opening the gate for posting, not only the transfer of money, but any agreement, representing a right or obligation, with its correspondent value.

Financial Contracts (Loans, Deposits, Options, Forward Contracts, Swaps) are just that, transfers of rights and obligations, and their correspondent value, between two counterparties.

With the Blockchain protocol, we have the capacity of developing new services for value transfer, encapsulated in “smart” financial contracts.

Blockchain represents to the Internet of Value, what the TCP/IP protocol has represented to the Internet of Data.

When Vint Cerf and Bob Kahn developed the TCP/IP protocol in the 70’s nobody could imagine that Facebook or Linkedin were going to change the way that humans interact. In the same way, it’s very difficult to imagine how new services developed on Blockchain are going to change the way in which value is transferred.

In the next 10 years we’re going to see many startups developing new services on top of the Blockchain protocol, services that will modify the shape of the financial system forever.

At the same time, the mobility paradigm is changing the interaction model between the financial system agents.

SAP is aware of the importance of this paradigm change, that’s why it’s delivered SAP Fiori, opening the gate for the integration of internet services in the SAP Banking landscape, including Blockchain services.

https://www.sapappsdevelopmentpartnercenter.com/en/build/sap-netweaver-gateway/sap-fiori/

But the transformation can’t be limited to the interface; the opportunities of the technology change are also threats for those who are not capable of reshaping their business processes according to the new paradigm.

And the question is; how to reshape your business processes if they rely in obsolete legacy systems developed when Internet was not even a dream.

I’ve worked as SAP consultant for more than 20 years, and in SAP Banking for the last 10. When I look at the bank’s systems; I see business processes isolated in silos of information supported by multiple, heterogeneous customer and products databases.

By making these processes visible on the Internet they are just showing their weaknesses to new and more agile competitors. Paypal is a good example.

We’re working already in new business processes leveraging SAP Technology towards the new paradigm; you will see some examples in the next posts.

Today is the time to start the change, tomorrow can be late.

Looking forward to read your opinions.
K. Regards,
Ferran.