IBM Exec: With Blockchain, It's All About Governance Interoperability

There’s sometimes a misconception about the point of blockchain, said Brigid McDermott, vice president of digital transformation at IBM, who was speaking at last week’s IBM Banking Day.

“The idea of blockchain is not necessarily full transparency. The idea of blockchain is trust,” she said. “As we think about all of these industries changing, one thing I think is interesting is financial services, maybe for the first time ever, was actually behind retail and consumer products [as it pertains to] innovation with blockchain. And I think it was because financial services wasn’t quite sure how to think about trust outside of their four walls.”

Evidenced by terms such as “collaborative” and “interoperable,” which are increasingly found in most firms’ and vendors’ announcements of late, both retail and institutional industries, alike, are now banking on what IBM calls the “platform economy.” Platforms are by no means new, but what’s changing is how companies interact with them. What used to be monolithic projects, as providers hoped to create and sell utilities, are now ecosystems, with any number of contributors, buyers and sellers on any given platform. For example, Amazon Marketplace is, of course, owned and operated by Amazon, but the tech giant isn’t selling (most) of the products on it, nor driving (most) of the delivery trucks.

I’m not worried at all about technical interoperability. What I’m worried about is governance interoperability. What if you try and join a platform where the person who has the data, before they get on, owns the data, to a platform where whoever sees the data owns the data? Can you do that?

Brigid McDermott

In her last role, McDermott founded and ran the IBM Food Trust, a network of growers, processors, wholesalers, distributors, manufacturers, and retailers, which was powered by IBM Blockchain. The very first question she and her team were asked was: “Who owns the data?” That was closely followed by: “Who’s allowed to join?”, and, “How do I know that it’s secure?”

With a one-to-many solution, she said, a platform curator can choose who uses it and, likely, that wouldn’t include competitors. In a many-to-many platform, that’s inevitable. And the reservation that participating companies had with the IBM Food Trust echoes those of financial services—firms don’t want to submit their data into an ecosystem where competitors could see what could potentially be highly-competitive information.

“It’s not that hard if you have one platform—and when I say not that hard, it’s actually hard, but it’s not impossible—to say these are the rules that we’re going to have. But now think about all these platforms working together.” McDermott said. “I’m not worried at all about technical interoperability. What I’m worried about is governance interoperability. What if you try and join a platform where the person who has the data, before they get on, owns the data, to a platform where whoever sees the data owns the data? Can you do that?”

• READ MORE: As Blockchain Evolves, Interoperability Between Vendors Could Create Challenges. During the most recent CFTC TAC meeting, members discussed interoperability issues. Click here to read more.

Though the concerns are similar—trusting the data, understanding who see can see it, and the ability to control access to it—she reasoned smaller retail companies had been able to outpace institutions simply because they were willing to be more flexible. If providers, such as IBM, can flesh out this kind of open governance, and align new ideas with ownership, rights, and value, that may change things.

“That’s going to be a fun thing. I figure that’ll be the next five years,” McDermott said. “So put on your seatbelt—enjoy the ride.”