In general, the credit union industry has an interesting relationship with blockchain. A year ago, industry leaders in distributed ledger technology were answering “is this bitcoin?” questions. Now, there is a much broader general understanding of blockchain technology. In particular, certain innovative chief technology officers (CTOs) and CIOs who do “get it” no longer mention “blockchain” early in our discussions. Rather, and more interestingly, they are talking about a digital banking strategy that may include blockchain technology. At this point, a CTO looking for blockchain technology is like a hammer looking for a nail.
Distributed ledger technologies are the future of banking, but as is the case with all new game-changing technologies, the industry needs to have a measured approach. In recent years, the blockchain technology projects that have been successful most often address a specific, manageable use case. Self-sovereign identity (SSI) is a perfect example of one specific use case that the industry has zeroed in on. While it is often talked about on its own, SSI is ultimately a foundational piece of a bigger decentralized platform that impacts every part of a credit union’s digital banking strategy.
Three Leading Blockchain Questions
In speaking with credit union leadership teams and other colleagues in the industry about blockchain technology and digital banking strategy, these industry leaders typically have three common questions that come up in conversation. So, let’s briefly address these frequently asked questions:
- Is there a difference between blockchain and Bitcoin? While this question isn’t as frequent as even a year ago, players in the credit union space are still asking it, which means there are misunderstandings about cryptocurrencies. Bitcoin, and cryptocurrency in general, is simply an application, or protocol, of blockchain technology. Imagine it as an app on your phone, not as the operating or data management system.
- Like with other cloud-based solutions, do I need to run a node in order to use a blockchain technology? From our perspective, the answer is no.
- Why is an SSI-based solution different than other ID products our credit union already has for our website or call center? With SSI, the credit union owns the ID credential, as opposed to numerous vendors and they issue the credential to members to hold. This singular decentralized identity solution, which remains with the member for life and can’t be taken away, works across all banking channels. In short, our blockchain-based technology takes control back from vendors and returns it to credit unions and their members.
Clearing the Path
Credit union CTOs are approached by countless vendors each month. They are tired of hearing that a new ID solution is different than what they currently have in operation; they are rightfully cynical. CTOs that have worked with CULedger’s MyCUID, however, have realized that this unique solution is in fact different and addresses ID-related problems, while streamlining digital banking operations across all channels.
For those credit unions sitting on the sidelines watching how this “blockchain game” plays out, don’t wait too long. One way to get involved is by educating yourself and team on this technology. Pay attention to the numerous credit unions that are clearing the way – those that are piloting blockchain-based solutions. What those credit unions learn from the ever-important pilot process will be shared with credit unions of all asset classes.
What has been established so far? Applying blockchain-based solutions have been successful, proving that, blockchain technology is not a digital banking strategy pipe dream, but instead quickly becoming a reality in the industry.