'It's not hype': Why the CEO of $20 billion data company thinks blockchain 'has potential to be transformative'
- Blockchain, the technology that underpins digital currencies like bitcoin, is much hyped for its potential application in mainstream finance and beyond.
- IHS Markit CEO Lance Uggla tells BI "there's a good chance" that blockchain "will be adopted in many marketplaces for many asset classes in the future."
LONDON - The CEO of $20 billion data giant IHS Markit thinks blockchain technology has the potential to be transformational in finance.
Lance Uggla told Business Insider: "Technology moves in leaps and bounds. Storage and compute power has been a step change from when I set up Markit. A 2 megabyte line into a barn was a big deal in 2002. We have 100 megabytes into our house now."I think the technology with blockchain, it has potential to be transformative, one of those leaps and bounds technological changes."
Blockchain, also known as distributed ledger technology, is a protocol first popularised by bitcoin. It allows for a ledger to be shared across multiple locations and parties, to be edited by group consent, and to be uneditable once changes are agreed thanks to complex cryptography.
'It's not hype, it's real'
"There are applications to use distributed ledger technology to assist that transference of ownership or identity and, therefore, we're a company that's actively involved in many proof of concepts to look at the application of the technology to our existing products," Uggla told BI at the Innovate Finance conference in London this week
IHS Markit is working on 5 blockchain proof of concepts around the processing of leveraged loans, foreign exchange, KYC processes, derivative processing, and the transfer of ownership of derivatives.
Uggla said: "It's not hype, it's actually real leveraging of new technologies to improve service that are offered to market participants today. Improve might be that you can transfer ownership faster, more securely, accurately, and if you can do that with distributed ledger technology, better than the existing technologies, then there's an opportunity for it."
Uggla is not alone in touting the potential of blockchain technologies in finance. Many other senior financial figures have spoken about the technology's promise including Bank of England governor Mark Carney who said it could "transform" payments, clearing, and settlement.Keith Skeoch, the CEO of asset management giant Standard Life Aberdeen, said in a speech at the International Fintech conference in London on Thursday that blockchain has "huge potential in our view and we're working with a number of suppliers to explore various projects."
One idea is to use blockchain tech to allow Standard Life Aberdeen investors to have a say on how asset management should vote at company AGMs, Skeoch said.
'A good chance' of widespread adoption
Uggla told BI said mainstream adoption of the technology is "probably five to 10 years" away and said the transition to a blockchain-based financial system would not necessarily be a smooth one.
"What you have to understand though is there are already large scale networks that transfer ownership and those would need to be replaced," he said.
"We have to be thinking about what are the infrastructure implications of change? Are they affordable? And then, if they are affordable how long will it take to change? In the implementation, is anyone disintermediated that doesn't want to be, so will they fight? And two, through that disruption, is there any chance for error that could create a different issue?"
But he added: "There's a good chance that distributed ledger technologies will be adopted in many marketplaces for many asset classes in the future."
Uggla started Markit in 2003 from a barn in St Albans, near London. He led the business to a $4.3 billion listing on the NASDAQ stock exchange in 2014 and a merger with data provider IHS in 2016. The combined group is worth close to $20 billion.