Blockchain is gaining traction in other parts of the world, but what’s the outlook for Malaysia?
You may have heard of bitcoin, but not the technology which enabled it – blockchain. In fact, many may perceived it as hot technology at present, including Malaysians. However, how it is actually applied in our shores?
Several major banks are collaborating with Bursa Saham to develop
blockchain-enabled lending pool. This marks the first of its kind in the country. It is to suit industry-specific needs, cost and efficiency pressures for securities borrowing and lending (SBL).
High data security of blockchain would expectedly experience a boom in finance sector. Evidently, local and foreign banks are jumping on the bbandwagon. HSBC Malaysia Sdn Bhd is looking to encourage local regulars to create blockchain-supported trade finance platform. Its competitor, CIMB Malaysia Sdn Bhd is also taking a page out of their playbook. The Malaysian bank partnered with RippleNet to develop
cross border payments across its various markets.
Blockchain is not associated to finance only. The research centre of
Ministry of International Trade and Industry (MITI) partnered with Oracle to introduce blockchain into business operations. Implementing the technology would help to increase traceability in supply chain management. This can help increase transparency in conducting business and forecast food-related crisis such as supply shortage or contamination.
AirAsia seeks to revolutionize the use of its loyalty points afforded by its strong presence in multiple Asian markets. This can be accomplished by decentralization and turn the loyalty points into digital currency. It is also expected to use the technology to optimize flight operations and cargo business. The high data transparency can be used to prevent frauds and study consumer behaviour for better pricing.
Blockchain In Neighbouring Countries
Singapore. The Lion City has developed blockchain accelerator program known as Tribe Accelerator to hasten adoption in Singapore and beyond. It would also permit government and private sector to collaborate on projects. In addition, the government also set to incorporate it into finance sector. Blockchain technology is expected to help lower the cost of settlement and clearing which costs up to SGD 20 million annually.
Thailand. While Malaysia and Singapore are figuring out how to take advantage of blockchain, Thailand is way ahead of both countries. The government in Land of Smile has partnered with an agency to develop its own digital currency. Interestingly, the government sees an unique use for renewable power trading. The ambitious project would permit residents in a Bangkok neighbourhood to trade power stored in solar panels.
Barriers To Adoption
According to Deloitte, organizations faced multitude challenges when it comes to blockchain adoption. These top four challenges are faced across the world by various enterprises. This could illustrate why we are progressing in adoption at a different pace compared to other nations.
The new technology is an uncharted territory for some enterprises. As such, while the business owner has the intent, an uphill struggle is expected when it is introduced to the operation. The fear of unknown is plausible and it could take a period of time for the employees to get used to it.
Unclear and non-existent policies on cryptocurrency and blockchain leave business owners in the dark. It puts organizations at disadvantage when there is no regulatory body and policies to govern how it is used within accepted legal parameter.
Potential security threats
Cyberattacks on bitcoin and etherium blockchain is not news. Hence, there is a valid concern on how prepared cybersecurity specialists to deal with security risks. This is more worrying for financial organizations because it may result disastrous loss and PR meltdown.
Lack of in-house capabilities
Blockchain require maintenance for it to run smoothly, as with all software and hardware devices. Business owners must be prepared to hire and train the employees to maintain it. A hefty investment is required for implementation and employee training.
Blockchain In The Future
It is expected that 10-20% of global economic infrastructures will run on blockchain-based systems. To keep up with the rat race, business owners in Malaysia must be ready to change and remain competitive.