Omnichannel Way to Integrate Blockchain Banks and Branches

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Lucep is one of the sponsors of the Branch Transformation Conference being organized by the International Quality and Productivity Center (IQPC) in Singapore this month. In addition to Lucep CEO Kaiesh Vohra, the list of speakers invited to speak includes the CEOs and the top leadership of the world’s biggest banks. Two recurring themes in the case studies and presentations on the agenda for the conference are blockchain banks and an urgent need for moving to omnichannel banking.

This post is meant to explore the correlation between these rising trends of blockchain banking and the move from multichannel to an omnichannel approach.

1. The Rise of Blockchain Banks and Other Distributed Ledger Banking

BI Intelligence, Business Insider’s research division, recently published a report based on in-depth interviews with banks on how they’re using blockchain technology. The highlight of the report is how banks are streamlining their operations and cutting costs using blockchain, but also notes an increasing interest in actual use cases for specific financial sector issues such as KYC, payment transaction security, and fraud reduction.

2. Relevance of the Bank Branch

With blockchain and other distributed ledgers capable of getting rid of the middleman in the financial sector, where does this leave your branch operations? The trend, based on what the world’s largest banks are doing right now, is to make your branch available as a channel where customers can get support for their digital banking issues, instead of a physical in-person place of banking.

Out of all the users who purchase in-store, a full 80% start with online research, according to Symphony Financial’s Major Purchase Consumer Study. So bank branches facing budget cuts and digital transformation are turning to an omnichannel marketing funnel. The consumer is provided with a seamless brand experience, rather than a transaction.

The bank branch of the future, as envisaged by the bank leaders (see whitepaper on Future of Branch Banking), morphs into different designs and formats depending on the type of customer typically served in that location. What’s common to all these models is that these branches serve as a physical location where their customers can learn, try and make use of the new technologies the bank is providing as digital banking services.

3. Benefits of Integrating Blockchain Banks and Branches

A. Reduction of Fraud: Adopting blockchain technology to replace or complement current banking systems reduces the risk of fraud and hacking (see Blockchain Use Cases for Banks, by FinTech Network).

B. KYC: KYC statements stored on a blockchain that any authorized banking institution can access simplifies a process that is the biggest bottleneck for opening new bank accounts. ICICI secured half a million new banking accounts by providing their reps with Tablets that allowed them to collect KYC documents at the customers’ home and open a new account within 24 hours. Adopting Blockchain can further reduce this time down to nothing. A customer applies online or walks into a branch. If they are opening an account for the first time, you ask for their KYC documents. If they have already opened an account elsewhere and have provided KYC docs that are stored on blockchain (possibly on a KYC registry), you can open an account for them right there without any additional paperwork required.

C. Lower transaction fees: Reducing transaction fees for payments (especially overseas remittances) would make your banking services very attractive to customers. Moving to a blockchain RTGS (real-time gross settlement system) could reduce operational costs for international payments by up to 33%, and complete the transaction in seconds. So customers who use Blockchain banks or walk into bank branches to make or receive payments will pay lower transaction fees and can have the money credited or withdraw it instantly.

By Zal Dastur

January 25th, 2018

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