DCLs also go beyond the capabilities of existing technology by providing transparency where it has previously been impossible or difficult to achieve. One example is anti-money laundering (AML), an area where DCL's potential is attracting growing interest and investment. The London-based start-up Elliptic has harnessed the underlying technology supporting its visualisation of the Bitcoin ecosystem to develop a suite of AML services. As AML becomes one of the hottest topics from Beijing to Jakarta, Asian banks need to sit up and take notice.
These advantages over existing technologies mean DCLs can now enable new business models that would otherwise not have been possible or practicable. DCLs will have a big impact on the payments industry and banks need to act now to address them.
What actions does a bank need to take today?
1. Organise: Appoint a single DCL lead for the enterprise and allocate a central budget, funded by individual business units if necessary, but avoid duplicated/silo-ed investments and teams.
2. Evolve a strategy and architecture: Keep it agile and high level with the strategy focused on the strengths of DCLs. Avoid re-inventing Bitcoin or using DCL technology where it does not add clear value over existing technologies.
3. Build/buy DCL capability: Educate IT and business staff. This includes providing hands-on experience, for example installing Bitcoin ATMs in bank buildings and accepting bitcoins in staff restaurants. Acquire start-ups and their capabilities such as digital wallets and crypto-currency exchanges.
4. Experiment and develop experience: Mine crypto-currency to understand the dynamics of consensus processes. Develop proof-of-concepts as well as initial products and services using a DCL and test them with customers.
5. Engage with customers, finTech and regulators: Focus on DCL companies as a distinct bank corporate customer sector to serve alongside existing segments for money services businesses and electronic money institutions. Keep close to relevant regulators to inform, guide and educate them, especially on R&D findings and incubate innovative start-ups building DCL capabilities.
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