Blockchain won't kill the banks

In the financial services industry, blockchain is assumed to have significant impacts. From research and practice, we observe two main paradigms of how organizations interact with blockchain. First, organizations use blockchain to optimize existing processes (blockchain-based business process optimization – BPO). Second, organizations use blockchain to disrupt existing processes, foster disintermediation, and enable disruptive business models (blockchain-based business process disruption – BPD).

However, scientific research that evaluates its de facto potential is scarce. We bridge this gap by following a design science research approach aiming at a blockchain-based business process re-engineering (BPRE) for a letter of credit that combines the advantages of BPO and BPD. We conduct three design cycles and develop three artefacts: a BPO, a BPD, and a BPRE approach. Our BPRE approach combines the advantages of partial disintermediation, i.e. increased efficiency and transparency, with the advantages of intermediaries, i.e. process flexibility, provision of liquidity and mediation of dispute.

Our paper "Blockchain Won’t Kill the Banks: Why Disintermediation Doesn’t Work in International Trade Finance" presenting the results of this research project has been accepted for publication at the Communications of the AIS (CAIS).