Will blockchain technology play an important role in your credit union’s future? CO-OP Financial Services and TMG announced this week that they are commissioning a body of work by Mercator Advisory Group on blockchain technology to help credit unions make wise decisions regarding this emerging digital ledger technology.
“We will have Mercator survey the current blockchain landscape in order to create a strategic decision framework for evaluating blockchain and other technologies,” said Stan Hollen, President/CEO of CO-OP. “CO-OP and TMG wish to support the credit union movement by creating some much needed clarity around this technology.”
Both CO-OP and TMG see value in blockchain technology and the transparency and security it can offer. However, blockchain is not an easy fit for credit unions. Blockchain operates as its own discrete system – one that represents a complete departure from the current systems credit unions use.
WHAT IS BLOCKCHAIN?
A blockchain is a distributed database that maintains a continuously-growing list of transaction records hardened against tampering and revision. It includes two types of records, transactions and blocks – transactions include the actual data stored in the blockchain, and blocks confirm exactly when and in what sequence transactions have occurred.
Blockchain has been heralded for its simplicity. But for credit unions – which operate within complex systems and environments – blockchain’s integration architecture may be a stumbling block for wide-scale adoption. Shazia Manus, CEO at TMG, suggests that other industries may be first to adapt blockchain, with opportunities for financial services to follow:
“Knowing other industries see value in blockchain, they are likely to forge ahead with developing and implementing systems to support the technology,” Manus says. “Those industries that are successful in developing and implementing systems where data integrity and secure exchange of information remain unbroken will most likely pave a path for the financial services sector.”
GETTING THE FACTS
The first of multiple studies will be completed by late summer, in time for credit unions to use during their 2017 budget planning processes. Both CO-OP and TMG will be sharing the resulting white paper with their respective clients. “Our two organizations are committed to taking a methodical approach in providing the credit union movement with the research needed to determine if there is a way to move forward,” Manus says.
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