Higher costs in blockchain projects
3 min read

Higher costs in blockchain projects

Researching blockchain technology projects, I discovered a surprising fact. Read through the article to learn how RBS prepared itself to succeed with its blockchain technology project

Due to the nature of technology,  there are some costs associated with running the project that are different from the normal costs. A network can only be valuable after it has had time to grow. You also need to invest in building a community since blockchain technology is still relatively new.

“Something like blockchain and distributed ledgers—they require a critical mass to achieve the benefits. And getting enough people educated, getting enough people through that POC journey, getting enough people through their investment committees and to the end of it, with extra money to spend on commercialization, has taken a lot longer because you need that network effect for it to be successful,” says Andrew Speers. Andrew has worked as director of products and innovation at Royal Bank of Scotland (RBS). RBS is an international banking and financial services company. They are involved with various blockchain initiatives in partnership with other industry players: first, Coadjute, working on streamlining the UK property market; second, Marco Polo, a finance network of banks, technology partners, and corporations working on transparency in trade finance; and third, Contour (formerly Voltron) working in the trade finance industry, starting with the Letter of Credit. With his involvement in blockchain projects with RBS, Andrew has developed a good insight into the efforts needed to move blockchain projects forward.

RBS - The challenge

Working with multiple blockchain projects, RBS realized that many factors increase the costs in ROI calculations. Besides giving time for network effects to play out, you also have to make early investments in learning about the technology. With large banks like RBS, if any bank’s business customers have a multi-product need, their experience is typically very fragmented. And why wouldn’t it be? A user’s journey does not necessarily influence product design. In banks, typically, product creation revolves around the silos of specific expertise within the bank. While getting service for a complicated need, a corporate customer will have to go through silos like originations function, the credit assessment, forex, trade finance, insurance, risk, etc. Going through all these silos ends up creating a very disconnected experience for the customers.

One cause of the disconnected user experience is how larger financial organizations acquire other smaller companies with their own systems and processes. At times, the acquiring company’s response could be to keep the acquired company as separate organizations, continuing to use their own systems, which will need to be integrated. This approach further adds to the internal fragmentation contributing to poor user experience.

RBS - Blockchain enters the scene

To respond to these and other industry challenges affecting user experience, RBS identified an opportunity in blockchain quite early. As Andrew says, “Technology—distributed ledger technology is coming to a maturity point now, where it’s helping people knit some of this together. The technology is catching up. We can create client-centric user experiences by having a distributed architecture with identifiable data that we can seamlessly stitch together into bespoke propositions. So, you can have a little bit of FX attached to a little bit of credit assessment, attached to a little bit of trade finance, etc. Once your data goes into the distributed machine, smart contracts can then send the data to where it needs to go and transact on it automatically, or more automatically than it is at the moment, to improve the user experience.”

With blockchain, very early on, RBS had engineering teams with some brilliant people take a look at the technology. Engineers tested and played with and got used to the technology. Once it got to a point where it was clear that there were enough use cases, they created a community of practice with its center of excellence around blockchain.

Cost of building community

When companies are at the beginning of their blockchain journey, the organization’s understanding of commercializing an emerging technology will be limited. Having it run through a centralized function focused on blockchain technology helps evaluate the extensive list of use cases. An investment in building a COE is an upfront cost contributing to the denominator in an ROI calculation. As Andrew confirms on the choice made by RBS, “Any organization needs to be prepared to burn a little bit of money as something new is coming up, to test it, and play with it. And we did that very early on in the picture.”

This is how small costs add up in blockchain technology projects, which would not happen in other technologies.


By understanding that with blockchain technology there may be additional investments, business leaders can budget appropriately. By doing so, you'll be able to accurately manage your project costs  and have successful conversations with your leadership. Leaders who understand the true costs of blockchain projects will avoid nasty surprises


Ep. 91 – User experience on the blockchain – insights from RBS - Insureblocks

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