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Banks likely to lead blockchain adoption in SA

Kgaogelo Letsebe
By Kgaogelo Letsebe, Portals journalist
Johannesburg, 01 Mar 2017
From Left to right: Cillian Leonowicz, senior manager consulting at Deloitte Ireland; Thys Bruwer, director at Deloitte Management Consulting South Africa; Eoin Connolly, technical architect at Deloitte Grid Blockchain Lab EMEA and Roger Verster, financial services country leader for Deloitte in SA.
From Left to right: Cillian Leonowicz, senior manager consulting at Deloitte Ireland; Thys Bruwer, director at Deloitte Management Consulting South Africa; Eoin Connolly, technical architect at Deloitte Grid Blockchain Lab EMEA and Roger Verster, financial services country leader for Deloitte in SA.

Local companies seem to have a deep understanding of blockchain and cryptocurrency world in general and the knowledge thereof has definitely moved on past the negative historical connotations with Bitcoin and is now focussed on the potential of the technology to bring value into businesses.

This is the opinion of Cillian Leonowicz, senior manager at Deloitte EMEA Blockchain Lab, Ireland who was presenting the Blockchain Africa Forum hosted by Deloitte earlier this month in Johannesburg and Cape Town.

At the roadshow, Leonowicz explored the opportunities and risks for South African businesses posed by the disruptive technology. He said that the financial services and banking were likely to lead blockchain adoption in South Africa. "There are banks in South Africa right now looking at use cases for this technology within their businesses," he said.

In early February, Standard Bank joined the global blockchain consortium R3 in a bid to improve its exploration of blockchain technology, particularly in cross-border payment solutions. Speaking on the membership at the time, Peter Schlebusch, chief executive for personal and business banking at Standard Bank, said being a partner member of the network will provide the bank with an opportunity to fast-track its adoption of this technology.

R3 is a financial innovation firm that leads a consortium partnership of more than 75 of the world's largest financial institutions to design and deliver advanced distributed ledger technologies to global financial markets. R3 has developed its own distributed ledger platform Corda that is designed to record, manage and synchronise financial agreements between regulated financial institutions. Barclays Bank subsidiary Absa joined the same consortium in July 2016.

Thys Bruwer, director at Deloitte Digital South Africa, is in agreement, saying a group of South African banks, including the South African Reserve Bank (SARB), came together last year to test using blockchain for the issuance of syndicated loans, "These investigations into effective use cases for the technology will progress and will all contribute to the maturing of the blockchain landscape within South Africa. We're seeing development of use cases around payments, lending, insurance, investment, identity services, Know Your Customer, anti-money laundering and the enablement of peer-to-peer services over the blockchain."

Leonowicz furthermore said there was enormous potential in South Africa for blockchain technology to provide a tangible difference to South Africans, but its adoption and the speed of that adoption depends on a large number of factors, including regulation, investment, the quality of the products being offered and possibly cultural flexibility to accept the changes that those products bring.

Leonowicz said the requirement for regulatory compliance was one of the few challenges as this could become more complex if the products being offered span more than one country. "The maturity of the technology within the enterprise and the availability of both the middleware and expertise could also cause issues, primarily from a risk perspective."

Turning to the regulation of blockchain technology and related activities, Leonowicz said globally regulators were investigating and reviewing the technology.

In conclusion, Leonowicz said blockchain is a nascent technology with a lot of potential. "But it also needs scale and maturity to replace or augment existing systems within the enterprise world. In general, we expect to see greater adoption of blockchain by 2020."

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