Assessment of risks and benefits from the arrival of Blockchain technology in the consumer finance industry
The exposure of financial institutions towards FinTech companies and innovative solutions has grown significantly over the last years. This paper addresses the potential of Blockchain technology in the consumer finance industry, evaluates how it impacts traditional business models and recommends how a credit institution should react.
Jann Stutz, 2018
Bachelor Thesis, cashgate AG
Betreuende Dozierende: Rolf Meyer
Keywords: Blockchain, consumer finance industry
The client has recognised the need to address changes arising from new technologies in order to adapt to an increasingly digital world. One of the buzzwords of recent times has been Blockchain, which enables completely new markets and business models by making use of its unique infrastructure. Even though the client's parent company currently employs a department that analyses innovative technologies, it does not focus on solutions applicable in the credit institution's main markets.
The project is distinguished into three main stages. First of all, an evaluation of promising Blockchain applications in the financial and consumer finance industry is necessary to serve as the basis for the project. The obtained data is used to create 4 different scenarios that potentially have an impact on the client's current business model or enable it to exploit new markets. The established scenarios are presented to a group of employees that have experience in the respective business areas that may be impacted. They discuss the probability of occurrence of each scenario and develop solution approaches, which provide the foundation for reasonable recommendations.
The paper found profitable opportunities for the credit institution that arise through the integration of Blockchain technology into its existing operations. It enables the client to enter new markets and profit from new services, decrease its processing costs thanks to increased automation and to add more value to its traditional services. However, the technology can also likely lead to an increase of competition arising from Blockchain start-ups, can make its current services obsolete and pose a
risk of technological clustering. This paper concludes, that the credit institution needs to monitor the continuous improvement of this technology and precisely quantify opportunities and risks arising. For one case, the client is advised to take immediate actions after a detailed analysis of the presented scenario to exploit the current state of cryptocurrencies, which still suffers from low applicability. For the other cases, it should not decide to actively develop any Blockchain applications,
due to the lack of adequate capabilities, but should integrate profitable business models once the client's and the public's awareness towards Blockchain is at a high level.
The focus needs to be set on similar applications developed on other technologies, since it is yet unknown whether Blockchain will ever reach a mainstream adoption or not.
Studiengang: Business Administration International Management (Bachelor)
Fachbereich der Arbeit: Banking & Finance