After a decade since the emergence of the blockchain technology, numerous sectors of economic activity started to experience changes that may lead to considerable technological and market shifts impacting economical and social aspects of our life. The financial services sector is one of the most prominent sectors exploring this promising new technology and its potential of improving current systems and imaging new classes of services provided to customers.
Being in simple words a shared list of records (or blocks) linked to each other and protected by advanced cryptographic means, the blockchain technology (or in other words, Distributed Ledger Technology) by the moment succeeded to demonstrate dozens of use-cases and many proofs of concepts for the financial services sector by both new challenger firms and incumbents in areas such as securities trading and settlement, cryptocurrencies, identity management and KYC, trade finance, automated (smart) contracts, and many others. Gains in terms of operations streamlining, cost reduction, margins and security resulting from prospect applications of blockchain-based solutions appear rather promising.
However, reliable running of these applications require a sufficient degree of scalability, reliability and interoperability of the underlying network serving as a backbone for all eventual applications that can be securely run by all interested parties. Such a demand is the logical evolution of the technology and its forthcoming application in multiple economic sectors.
In this regard, Luxembourg, being already populated by a few dozens of firms experimenting with the blockchain technology (see www.fintechmap.lu), has recently become a forerunner in Europe and one of the key players worldwide in terms of setting up a governance framework for blockchain networks. Established more than one year ago, Infrachain is Luxembourg-born non-profit organisation supported by both Luxembourg government and market players. The entity aims at introducing governance mechanisms that would facilitate development, deployment and adoption of blockchain applications, for various sectors including banking, FinTech and financial services in the current regulatory environment. Infrachain strives for the creation of the European community of certified host operators by ensuring trust and accountability of all network actors (nodes), reliable and resilient operational environment and necessary degree of regulatory compliance. By the moment, Infrachain is represented by 25 founding members and 12 full members developing projects on permissioned-based blockchain infrastructure.
The ABBL points out significant potential of this and other similar initiatives that introduce blockchain governance framework going beyond national borders allowing ABBL members and its partners to experiment with new blockchain-based products and services in Luxembourg, Europe and beyond proceeding to the next level of the technology adoption and subsequent digital transformation with an aim to improve customer experience, streamline back-office operations, cut costs and increase profits.
By Andrey Martovoy, FinTech Adviser – ABBL