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SAP’s Kris Hansen on blockchain: ‘Put the trust into the algorithm’

  • Blockhain hype still outstrips real world activity.
  • To see what's going on in the real world, we spoke to a blockchain expert at SAP.
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SAP’s Kris Hansen on blockchain: ‘Put the trust into the algorithm’

In our coverage of bitcoin and supporting blockchain technologies, it’s clear that the hype way overshoots what’s actually happening on the ground. So, to better understand how companies are actually interacting with distributed ledger tech, we went to Kris Hansen.

Kris is a senior principal at SAP, focused on financial services at the global software player. In his role on the value engineering team, he works to identify ways that digital approaches can be used to find interesting opportunities to create disruptive business value. A self proclaimed “recovering” chief architect of a bank, he brings an interesting perspective on changing business models and technology platforms in financial services.

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Below are highlights, edited for clarity, from the episode.

The challenging transformation of today’s banks

I often refer to myself as a recovering chief architect from a bank. It can be a tricky job. You have all this technology complexity and legacy investment. And then you have the business showing up and saying it wants to do something completely different. You’ve got to somehow get this massive legacy shaped and formed in the right direction to go forward. Occasionally, you get an opportunity to transform and rethink the legacy. But that becomes a challenge in managing scope and finding a solution that’s really going to make a difference. You’re on the hook for feasibility (the stuff has to work) and the business outcomes (the business has to be happy with what they get). Being a bank architect is a tough job.

Preparation for the coming blockchain movement

Personally, I’m a tacit learner. For me to understand Bitcoin and Ethereum, I set up a node to see it and understand it. Businesses need to start getting hands-on. Understand what cryptocurrencies are and the differences in the platforms. From there, you have to start thinking about what it would take to connect the existing world to this new world. Quantifying that gap and determining what’s involved to change is where organizations should be at this point.

Industry cooperation around distributed ledgers

I’d really like to see us get to industry-wide collaboration. One of the great advantages of the consensus protocol is that we can establish trust where trust doesn’t need to be explicitly built between counterparties. We can put the trust into the algorithm. We can put the trust into cryptography.

I don’t see a lot of that happening with most of the enterprise adoption of these platforms. We aren’t there, yet. There tends to be more of a closed network. Some of it is the challenge of building the network and getting people to the table and agree on how to run these proof of concept projects. It’s hard enough to get multiple divisions in a bank to work together. Multiply that by 40 and you can see the challenge with some of the blockchain consortia. They have a lot of meetings. What we need to see is some of the bureaucracy-breaking concepts built into the platforms. Instead of having meetings, let’s lean on consensus technology to agree on how we’ll form this consortium. So far, the technology hasn’t helped align these groups.

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