Visa Inc. will soon have a team of engineers at its Bengaluru office to use blockchain, the technology underlying all cryptocurrencies including Bitcoin, to improve its digital payments processes, a top executive said.
The world’s largest electronic payments network’s decision to embrace blockchain comes at a time when banks around the globe from BNY Mellon to UBS are looking at ways to use the technology to make transactions more efficient and secure.
Companies such as Tata Consultancy Services Ltd and Infosys Ltd have also stepped up their investment in the technology and started to look at ways to build applications around it; almost a third of the work done by Indian IT firms is for global banks.
“For now, the focus of this technology innovation centre will be on Visa Checkout and mVisa (Visa’s two new digital mobile payment products), but for certain, India will soon have teams that will jointly work with our two research labs in US and Singapore in studying the many aspects of blockchain,” said Rajat Taneja, executive vice-president of technology at Visa Inc.
Visa has 400 engineers at the technology innovation lab it opened in Bengaluru last week, and expects to scale it up to 1,000.
Blockchain is essentially a distributed database used to make secure transactions that is currently being used by cryptocurrencies, including Bitcoin and Ripple, and helps in authenticating transactions. Blockchain technologies could cut banks’ infrastructural costs by up to $20 billion a year by 2022, according to London-based venture capital firm Santander InnoVentures.
“Blockchain technology is currently the most disruptive technology in the financial space, and its advent is very similar to the Internet 20 years ago,” said Canada-based technology executive and entrepreneur William Mougayar, who along with venture capital firm Andreessen Horowitz has invested $1 million in a start-up focused on cyptocurrencies.
Earlier this year, Visa hired a former Google scientist, Min Wang, to lead the research teams from its San Francisco office, and Taneja said the company has already started work on blockchain.
Visa, which outsources its technology work to Infosys and other Indian firms, said it is open to “working jointly” with some of them on how to build applications around blockchain. For now, Visa has not started work with any Indian IT companies as it is still “early days”, Taneja said.
Last month, professors from Palo Alto-based Blockchain University conducted a week-long workshop at Infosys’s Mysuru training facility to help young engineering graduates understand the potential of blockchain. Infosys’s principal technology architect Manjunath Chintamani had earlier taken a two-month course at the university to understand the scope of the technology.
Indian IT firms’ focus on blockchain and artificial intelligence-powered platforms (Wipro ushered in AI platform Holmes earlier this year and TCS launched Ignio in June) are primarily on account of a slowdown in technology spending by companies across the world.
As commoditized deals witness pricing pressure, IT vendors are investing in these technologies that can help while competing for large outsourcing deals (even if the technologies may not bring incremental business as standalone products).
Mint first reported on 14 April how Michael Reh, Infosys CEO Vishal Sikka’s former colleague at SAP SE and the current head of Infosys’s core banking product Finacle, had hired executives to work on blockchain.
On 26 June, Mint reported on how IT firms, including TCS and Cognizant Technology Solutions Corp., had started evaluating blockchain technology.
Despite the moves being made by Indian IT firms, it is still too early to decide if the investments made on blockchain will bring benefits, entrepreneur Mougayar said. To be sure, none of them have obtained any incremental business by working on blockchain so far.
“The IT vendors are between a rock and a hard stone,” he said. “They need to respond to the demands of their customers (who aren’t willing to rock the boat initially), but on the other they will be tempted to try and lead them into the more surgical re-engineering projects that take longer to boot up, but have a further reaching impact. I hope they can do both successfully.”