U.S.-based IT services firm Cognizant is now actively looking at Blockchain, the technology behind web-based cryptocurrency bitcoin.
The firm recently tied up with Mizuho Financial Group to develop a blockchain solution for the “secure” record-keeping of documents among Mizuho Financial Group companies around the world. Jaideep Poondir, Senior Vice President, Banking and Financial Services, Cognizant, in an interview with The Hindu, talks about why the firm is looking at blockchain and its use cases beyond bitcoin.
For how long have you been actively looking at the blockchain technology?
Cyrptocurrencies such as bitcoin have been making a lot of buzz over the last few years and we have been continuously monitoring their development and impact on the financial services world. But the underlying blockchain technology emerged from the shadows of cryptocurrencies only at the beginning of last year. Since then, we have been rigorously working on exploring the potential applications of the technology and experimenting on it at our Banking and Financial Services Digital Works Lab.
What opportunities do you see for Cognizant?
We help our clients become digital enterprises. In this endeavour, blockchain presents an opportunity to rethink how various business processes might work more efficiently going forward.
Our vision is to enable our clients to identify and incorporate a decentralized architecture, wherever applicable, to cut costs and develop new growth opportunities using distributed ledger technologies.
What are the prospects?
Blockchain is increasingly drawing attention around the world for building new work processes to make transactions and digital interactions more secure, transparent, efficient and cost-effective, thereby delivering superior experience to customers. Any asset transaction between counterparties is a good candidate for blockchain application, as such transactions typically involve record-keeping, reconciliation and reporting. Blockchain offers many use cases in financial institutions, particularly in improving existing processes and reducing the time and risk involved in transactions.
Blockchain, maintained by a network of distributed independent communicating devices, offers a single source of truth for financial and non-financial transactions without any trusted central authority.
It holds significant promise in helping financial services organizations minimize counterparty risks, speed up settlements, improve contractual performance, and enhance regulatory reporting.
Blockchain is the technology behind bitcoin. Does it not make you wary?
Cryptocurrencies such as bitcoin form just one of the various applications of blockchain to have emerged first. The basic premise of blockchain is that it decentralizes the age-old centralized trust-based system.
The fact that blockchain’s distributed database is verified by a network of nodes and continuously grows based on the previous data records, makes it very hard to be tampered with.
How would you look at developing blockchain technology? Would you work with start-ups?
The technology is continuously evolving and various combinations of platforms, programs and protocols are at play today. At Cognizant, we are making focused investments to strengthen our blockchain capabilities, develop innovative digital frameworks and building blocks to harness distributed ledgers, and build a world-class alliance ecosystem.
We are collaborating with some of the world’s leading financial services organizations, including various consortia that these firms are forming, to help build out our capabilities in blockchain technology.
We are going beyond cryptocurrencies into newer areas such as smart contracts — computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or obviate the need for a contractual clause and P2P transactions where senders and receivers can directly send and receive data over a network and where multiple users can connect and share files.
We have developed several blockchain and cryptocurrency accelerators in the areas of P2P payments, asset trading, document storage, identity management, and lending, merchant and other financial transactions.
What are the other applications you see for blockchain?
Cross-border payment and remittances, post-trade settlement, syndicated loans, and trade finance are some of the other areas that many financial services firms are exploring worldwide. We are already working with a few other clients in showcasing the power of blockchain.
We will continue to expand our expertise and closely work with our clients to fulfil their innovation and efficiency aspirations leveraging blockchain technology.
