Noelle Acheson is a 10-year veteran of company analysis and corporate finance, and a member of CoinDesk’s product team.
The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday, exclusively to our subscribers.
Last week, CoinDesk reported on the results of a survey on digital innovation in financial services, in which 200 executives from large banks and investment firms were asked their opinion on the benefits of collaboration.
Over 70% saw industry consortia as vital for the development of solutions. However, a similar percentage had serious reservations about the format, from incentives to the lack of control. Over 60% believed that joining could negatively impact competitive advantage, and that existing groups had too many participants to be effective.
Does this mean we are on the verge of a shift in sentiment?
Rather than point to an imminent slump in expectations, though, the results could indicate a pending realignment of the blockchain sector.
The departure from R3 last year of a few early members hinted at the difficulties inherent in large associations. From conflicting priorities to governance roadblocks, bigger is not always better when it comes to getting things done.
The large consortia seem to realize that. Most of the work going on in R3 is within small teams, in essence producing a fragmentation of the pool. And Hyperledger recently formed two thematic working groups, one for healthcare and another focused on China.
This does not mean that their days are numbered. For their breadth and reach, the industry’s giants are in an ideal position to develop standards for the sector. And their clout makes them an essential counterparty to negotiations with regulators.
At the same time, small consortia are taking on a greater role.
The tech arm of financial giant Fidelity surprised the market last week by joining the small yet focused IC3, instead of one of the larger groups like most of its peers. Other sector-specific associations are focusing on use-case testing that is likely to reach production in the short term, solving concrete needs.
The increasingly public discussion of the difficulties of consortia governance does not mean that the model is flawed. It is a sign that the concept is maturing, which implies a deeper awareness of the problems that need solving.
Large groups will continue to have an important role to play, but this will evolve as the ecosystem continues to grow.
Small groups will pick up an increasing share of the work, and businesses looking to explore the technology and its impact will most likely end up joining more than one consortium as requirements become more focused.
After all, the underlying technology calls for collaboration. Its strength derives from being able to share information in a decentralized manner (even if the decentralization is limited) without having to worry about veracity and permanence.
Without consortia, network effects will be difficult to achieve. Businesses that would prefer to continue operating in a centralized silo might as well use a database.
The consortia landscape is not doomed. It’s not even hitting a speed bump. It is evolving.
Businessman running image via Shutterstock
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.