Much like artificial intelligence, Blockchain is a double-edged sword extending its range of motion toward the equipment finance industry. Just like Fintech, blockchain faces barriers to entry before it can carve out a legitimate position in the marketplace. That’s why when it comes to blockchain, a patient approach to adoption is key. Especially with security and compliance with the standards that regulate the industry and the fundamental fear of the unknown.


Following the Great Recession, financial institutions were left searching for ways to restore trust in transactions with customers. A decade later, many are quick to assume the answer is blockchain. Blockchain is a secure ledger among members in a peer-to-peer network of computers. Everything is instantly visible and traceable. In theory, blockchain maximizes confidence in data security and minimizes risk, as the decentralization of authority virtually eliminates criminal activity. It also reduces the time spent and cost incurred by the day-to-day operations of just about any business. According to the Equipment Leasing & Finance Foundation, blockchain will lower infrastructure costs by $15-$20 billion by 2022.

For example, take smart contracts – the most relevant application of blockchain technology to the equipment finance industry. By managing contracts across a neutral blockchain network, users drastically reduce the inefficiencies associated with physical documents. They also safeguarding against human error and external threats during points of vulnerability, such as the transfer of ownership.

All of this sounds great on paper. So, what could possibly go wrong?


According to Robert Braun, the rise of blockchain may not be a response to financial collapse of 2008 after all. Rather, it may be “the result of a fascination with the possibility of an unregulated currency. One which has benefited, most of all, those who wish to operate outside financial markets.” This is a daunting reality for the equipment finance industry, given the significant regulatory efforts over the past decade. Given its volatile nature, blockchain could turn out to be more susceptible to malicious behavior than many existing solutions.

Thousands of players are vying for market share, all of whom come equipped with their own collection of bugs. Blockchain’s lack of standardization limits its potential in the equipment finance industry. One that is certainly in no rush to change. There are still an abundance of kinks and quirks to smooth out before it can be embraced with complete confidence.


Furthermore, Braun offers baseline criteria every company should weigh before signing on to blockchain. A clear-cut improvement upon what it’s substituting and it should solve an additional pain point. As Braun explains, “blockchain is a solution in search of a problem, not a problem in search of a solution.” This begs the question – if it isn’t broke, why fix it?

The implementation of this technology also requires you to extend your perspective beyond your immediate user base. How far does the impact of your business decisions reach? It’s not like you’re deciding whether or not it’s time to pull the trigger on that new copier you need. The adoption of blockchain requires meticulous vetting to thoroughly assess the risk at hand for your company, internally and externally. Although these considerations may seem obvious, they could be easily overlooked when a proposal for a shiny new object.

To be clear, this is neither a ringing endorsement nor a sweeping denouncement of blockchain technology. This is a call for the industry to carefully evaluate the current emerging technologies taking the world by storm. Because at this point, equipment finance has a lot to lose, without knowing for certain what there is to gain. As more and more innovative developments continue to surface, so too will dangerous setbacks and challenges. That’s why when it comes to blockchain technology, patience is key.

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