ATB & the value [Block]chain — engaging in inspired solution
As a mid-sized financial institution, ATB doesn’t shy away from two obvious realities: their level in investment is a few standard deviations away from, say, Canada’s “big five” banks, and second: that this mid-sized status means they’re able to be more nimble and experimental in making big bets on technology.
So it’s fitting given its commitment to Alberta that ATB partnered with IBM to tackle a very Albertan Blockchain opportunity: Oil Settlement Day.
In the early days, Oil Settlement Day was a very cinematic occasion. All the heads of the energy industry would meet in one location on the 25th of the month with their cheque books in tow, ready to settle their scores.
Then, as Oil Settlements become electronic, the process acquired new complexities requiring resources, such as reconciling and approvals involving countless humans manually entering in data and double checking contracts all the way along in advance of the big day. Both the energy companies and the banks—find the process to have become inefficient at best.
Different companies use different internal systems for managing contracts, tracking finances, compliance, and so on. This meant that the entire process of paying out once a month involved people combing over different contracts, manually entering in agreements, and having to decipher one another's’ processes.
Now enter blockchain.
TRANSFORMATION THROUGH TRUST & TRANSPARENCY:
Since early 2017, ATB and IBM together have built a proof of concept using blockchain that has the potential to make Oil Settlement Day a quick, frictionless and transparent experience for all members involved.
It no longer matters what internal programs and systems any company in the energy sector uses. It only matters that the agreed upon terms are defined in the blockchain. It provides a completely secure and private Blockchain system that all participants in the transaction, including energy companies, can access. Upon entering contracts into the Blockchain system, users will have universal and "permissioned" visibility of their own contracts within the system’s ledgers, which means that when Oil Settlement Day rolls around on the 25th, the system can take care of all transactions almost instantly.
No more manual money moving at ATB, no more clients staring at their bank accounts waiting for funds to arrive. Just slick transactions happening at a scheduled time but with more trust.
We believe the blockchain process will result in 80% of transactions being executed without error and human intervention (as compared to current state). The remaining 20% of transactional volume we anticipate will require “human intervention”. Even with this conservative estimate, blockchain will enable human capital resources to be optimally re-allocated elsewhere across the value chain.
Helping to revolutionize such a traditional and large industry such as the oil patch means understanding how that industry’s ecosystem works, and involving them in the design and prototyping process. We want the customers to be part of the solutioning so that adoption rates on the other side of the process are high.
ENGAGING WITH INDUSTRY:
How ATB addresses solution development and ecosystem adoption is a key part of their journey on all products; as human-centred design is a key internal mandate. As such, working closely with the industry players that experience Oil Settlement Day to ensure they are a key part of the design process is important. This can range from interview to testing to design thinking workshop. People first. Technology next.
The workshops provided critical insights into the ecosystem; such as pain points and motivators; culture around priorities and decision making, and more. The conversations shed light on the reality of the vast stakeholders that are engaged in Oil Settlement Day and the need to ensure that a variety of industry players be consulted as part of the blockchain prototype - such as pipeline companies.
This deeper understanding of the ecosystem from the industry’s perspective has now guided the steps to expand the needed participants for the MVP development and eventual piloting of the system. Plus, this collaborative process to date means ATB feels confident the Blockchain process it created can provide efficiencies to the energy sector not only in its backyard of Alberta, but across Canada.
Over the past couple of years ATB has been on a journey to build its knowledge and understanding of the capabilities of blockchain, and along the way has managed to begin the development of what it believes will be impactful solutions beyond the oil and gas sector - such as solutions around payment and consumer digital identity. With each, they’re engaging ecosystem participants early to help ensure velocity can be maintained as they scale these solutions.
To learn more about ATB’s approach to innovation, visit & subscribe to www.atbalphabeta.com