Decisions about the kind of blockchains to use in rolling out banking products creates future path dependencies. It’s important that banks get this decision right. The industry has stopped debating whether blockchain matters and started asking how to implement it. Forward look: Banks evaluating blockchain rails should ask three questions: Who controls the network? What are their incentives today? How will those incentives change as the network gains adoption?
But this shift obscures a more consequential choice: Should banks build on proprietary systems controlled by vendors and consortiums, or on open networks with no single owner? Get this wrong, and the lock-in lasts for generations. Banks know this pattern.
Open infrastructure works differently. With no shareholders to satisfy, fees can remain minimal, access remains open and standards can evolve for users rather than for owners. Four advantages matter here.
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