By far, the blockchain technology is the most innovative financial creation throughout the past 200 years. Bitcoin, and cryptocurrency in general, are threatening the existence of the retail banking industry and many decentralization advocates think that the advent of bitcoin has triggered the countdown to extinction of banks. Consequently, the world’s top bankers have been researching how they can engage with the groundbreaking blockchain technology.

A recently published study analyzed how retail banks can engage with blockchain’s innovative financial solutions. The blockchain is a unique financial innovation and its competitively low transaction fees demand the collaboration of retail bankers on an intra-organizational as well as an inter-organizational levels. The paper plotted a framework that illustrates how the process of studying, incubating and further development of the blockchain technology can be. This research represents one of the earliest studies in this arena; pinpointing the challenges, ahead of retail bankers, in response to the popularization of cryptocurrencies.

Blockchain and business organizations.jpg

Blockchain and business organizations.jpg

The Blockchain technology : a radical financial innovations:

Radical innovations represents discontinuous events that are the products of research and innovation and have disruptive effects on existing business frameworks. The main difference between radical innovations and incremental innovations is that an incremental innovation typically adds new functionalities to pre-existing technologies, while a radical innovation represents a new technology that offers brand new functionalities. From an organization’s point of view, however, radical innovations can impose serious risks because they may require adapting old systems or developing new frameworks to perform differently.

The blockchain is a radical innovation that will trigger conformational changes in banks’ frameworks and organizational practices, if the retail banking industry is to survive the age of cryptocurrencies. Accordingly, financial organizations require three groups of competencies to cope with the blockchain technology; The need to discover, incubate and accelerate capabilities.


Discovery refers to the capabilities that involve creation, recognition, elaboration and articulation of radical innovation opportunities. Retail banks have to conduct research and hunt for investment opportunities within the world of the blockchain. Discovery includes becoming aware of innovative solutions that weren’t previously known to the organization.


Incubation refers to various activities focusing on developing radical opportunities into formal business proposals. So, discovery recognizes or creates potential opportunities, while incubation competencies formulate these opportunities into applicable business models. Moreover, incubation also includes testing these business models via prototypes.


Acceleration competencies refer to maturing business proposals to function independently of other business platforms within the ultimate receiving unit. This includes development of the business proposal to a predictability level that permits calculation of operation costs, sales and predicted profit. As such, acceleration also focuses on creation of manufacturing processes, customer support and more. To sum up, acceleration focuses on establishing a fully functioning business and once integration of the radical innovation, the blockchain, is successful and profits are generated, this will be submitted to the existing organization and/or ground will be created for building its own business unit.

Case Study and Results of the Study:

The researchers chose one of the world’s largest investment bank with more than 100,000 employees as a case study to determine how the retail banking industry is engaging with the blockchain technology. Some of the bank’s senior executives were introduced to the blockchain technology in 2014. The bank’s executives who were in charge of the blockchain initiative were aware of the uncertainty and risks imposed by the blockchain on their organization. Accordingly, the case company represented an ideal organization for this study.

The case study along with examples from literature showed that there are financial organizations that moved beyond the discovery competencies, have already started through incubation and beginning to delve into acceleration competencies. Moving from discovery to incubation and also shifting from incubation to acceleration represent the cornerstone of the process of initiation of the next innovative financial phase. As the case study shows, there is a large number of basic activities that are crucial for the retail banking industry to efficiently engage with the blockchain technology and move from discovery successfully all the way through to acceleration and incorporate the blockchain technology in the retail banking industry. Many believe that cryptocurrencies represent the future of money and that it won’t be long until most of the world’s countries would issue their national currencies on the blockchain.

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