DaLand Delivers Blockchain Alternative
Author: Roy Urrico
Published in: CU Times
Blockchain’s dynamic, mobile capabilities have appealed to some credit unions; however, others have found it decentralized, reportable and untrackable. Now, an alternative solution from the Aurora, Colo.-based DaLand Solutions could offer blockchain-like benefits without the obstacles.
DaLand Solutions built Secured Transaction Image, a complete mobile transaction platform that can provide the underlying infrastructure for an unlimited number of transaction types.
Big banks have been collaborating to develop blockchain technology, a public ledger of transactions run without a primary authority that could allow for the exchange of data, assets and currencies more efficiently and transparently.
“There is a reason why everybody is enthusiastic and excited about blockchain – it represents something that is much needed,” Jon Ungerland, cofounder of DaLand, said, adding the technology’s changeable encrypted values take it beyond plastic cards.
Some static value provides the basis for every transaction, Ungerland explained. These include 16-digit card numbers, 10-digit account numbers and PIN numbers, in addition to passwords and pass-phrases.
“There is some static unchanging value that is the basis for how we do transactions in our world,” he said.
He added there are many good principles built into blockchain technology, such as limited lifespans for a transaction identifier that allow individuals to initiate a high-dollar transaction with a one- or two-hour window for completion.
“The reasons why we don’t like it for the banking space is that in the banking world, doing your own thing is frowned upon,” Ungerland said, noting financial institutions are encouraged to work within designated legislative and regulatory constraints.
“Having a decentralized system is not an ideal set-up if it is going to be immediately beneficial to the banking world,” he added.
Another blockchain stumbling block is irreversibility, which is paramount for financial institutions.
“Disputes and mistakes happen. With blockchain, once you finalize a transaction, it’s cost prohibitive to reverse it,” Ungerland noted. “In the financial world, the financial institution is there to legitimize the transactions as a central authority.”
However, the DaLand cofounder pointed out the industry still uses payment tools that are 70 to 80 years old for checks and 50 years old for credit cards.
“With STI, we’ve concluded future transactions are going to have to be dynamic with no static values and independent from a physical medium like plastics, checks or cash,” Ungerland explained. “It is going to have to be digital, and be able to be delivered via mobile device, Internet, email, text or whatever.”
DaLand said he believes now is the time for credit unions to create their mobile transaction strategy, but the piecemeal nature of the mobile payments industry poses a problem. Vendors, for example, are still pushing one product for P2P and another product for merchant services.
The second problem, he said, is that the market is flooded with products designed to bypass community financial institutions completely, potentially rendering credit unions irrelevant in the mobile payments space.
DaLand Solutions’ STI platform addresses both of these issues through its mobile transaction platform. For example, a credit union might start with deploying a P2P solution. Later, it can add a credit union-branded mobile wallet and offer business members a fully branded consumer app. STI was designed with the future in mind so users can easily adapt to any changes in the market, he noted.
The STI process also uses dynamic, visual tokens and requires no device-level or public processing. Tokens are also centrally generated and decrypted.
By offering robust mobile transaction solutions for both consumers and businesses, credit unions become relevant, integral financial hubs in the local economy, Ungerland emphasized.
“What we see is the potential for a tremendous amount of time, energy and money to be wasted trying to shoehorn a technology, with some foundational cornerstones, that doesn’t really mesh with what financial institutions are all about and the roles they are meant to fill,” Ungerland said of blockchain.
Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).