From Pilot to Production: The Institutional Path Onchain

Transcript

Well hello. How nice to see you all here and welcome to Ecom New York. My name is Cla Adelan and I'm the global blockchain leader at EY. And today, oh you you don't see the title for my my session, but the title for my session is pilot to production and the institutions's path to onchain. Uh I think the title captures really well where the market is today. And so I'm going to give you a few of my thoughts around what that path looks like and um what does institutional production readiness

look and feel like and and why I I personally am feeling very optimistic about it. Just to step back a little bit though and some have some context. At the dawn of railroads, um people understandably focused a lot on the trains and they at the time they argued a lot about speed, they argued about cargo, they argued about destinations and then over time uh the biggest story turned out not to be about any single train. The bigger story, it was all about the rail network itself

and how the infrastructure changed entire economies and how entire economies moved. And then similarly, the invention of the car in and of itself didn't create the modern transport system. That only happened when societies started to invest and build out roads and safety standards and uh the institutions in and around those rules that were needed.

That's what scale looks like. And so I think there's a lot of parallels when you look at those learnings to where we are with blockchain technology today. Uh for years the attention was very much on cryptocurrencies tokconopic tokconomics and could be seen as the first vehicles on the rails if you like um the first things on the track. But the biggest shift and the biggest shift that's happening now is towards the rails themselves and the infrastructure and that underlying infrastructure that's about moving assets and setting value and uh coordinating trust in a

programmable way and the rules and the standards uh that are needed to be able to operate at scale. If we look back just a few years, the institutional conversations were quite different than they are today. Um they really focused on blockchain still being framed as experimentation and uh the focus tended to be on pilots and on PC's.

Uh there was sort of a lot of collaborations and consortia being formed um and very often in controlled environments um sometimes off-chain models, sometimes hybrid uh semi- detached models. Uh it gave the institutions the opportunity to explore without making or having to make a full operational commitment. And that caution makes sense. Uh I the institutions were not evaluating a new technology um or whether the really um the technology was really up to the

standard. What they were really doing was trying to figure out whether there was a path to meeting the standards that would be needed for real markets or real assets, real clients, and whether it would be able to meet the standards for rigorous uh regulatory scrutiny. That's uh a different framing of the problem. If you fast forward to 2026, the conversation is very very different today. uh industry outlooks from World Economic Forum to blockchain.com, you name it.

Everybody is talking about a very broad shift and it's a shift for blockchain moving from experiment to uh more uh enterprisegrade deployments and tokenization and digital digital assets becoming really part of the framework of um mainstream uh financial infrastructures. And we're seeing this flurry of major banks with headlines on new products. Uh we're seeing uh regulators creating um better and uh I would say clearer lines of of uh reg engagement with us and and being able to show the path. And we're seeing a growing pipeline um of uh real

world assets being queued up to be put on chain uh for issuance and for uh servicing and distributions. And so I think the question that's shifted now is not can the technology work. I think the focus right now is can institutions operationalize it at scale in a way that's going to be trusted and governable and compliant and with real business value.

Um and that for me is what moving from pilot to production uh is really really about. So why now? Why does this moment feel a little different than other cycles of enthusiasm that we've we've had? Um regul regulation is clearly a part of it. I think we all felt that last year. Uh it was definitely a catalyst and it's an important part. uh clearer policy frameworks they bring uh they reduce uncertainty and so they're giving the institutions more confidence to be able to move from

observation into action. So, it's undoubtedly a really important part of the puzzle, but um it's not the whole story. And I think uh the reason that this moment feels quite different is that there's a number of other things that happen to be happening at the same time and are beginning to align. So, the technologies matured. That's a really important factor. Uh the economics are becoming far more workable. I think privacy and uh confidentiality um are improving and I think that uh interoperability and we've heard quite a lot about that in the last two or three days actually

interoperability is getting much more serious attention and so the combination of all of these things is what gives institutions um a more credible path to uh innov from sort of innovation into implementation. Um at EY I think we've long held the view that um scale adoption, real scale adoption uh would happen only when there were several sort of things in place at the same time. And so public blockchain infrastructure, which was always very important to us, had to be ready.

The price point had to be in a place where it made sense for scale uh use cases and um privacy had to be good enough for industrial use. Um and all of those are to an extent technical challenges. Um the technical challenge was necessary but it was never sufficient. I think the technology is the table stakes. institutional readiness has always really been what would unlock this whole momentum in at least in our view and I think that's really where the conversations

changed uh for many many years the industry focused on um can this work or variations of that that question uh can assets be represented on chain can settlement um be improved Can workflows be uh automated? Can new rails be built? Um and now the questions are much more can this work in a way that institutions can trust, govern, control and scale. And this is a fundamentally different challenge. Um moving from pilot to production is not just simply about taking the same idea and making it

bigger. uh that's somewhat of a fallacy. I think it's about moving from a technical feasibility to institutional operability. Um and so this next wave that's in front of us, the work that's going on now and what's keeping us all busy is not going to be defined by innovation. In my view, it's going to be defined by industrialization.

Uh going back to those um sort of metaphors that I was giving you at the very beginning. Uh it's about whether blockchain can be embedded into real operating models, real control environments and um real business outcomes. So what does um production readiness really mean when it comes to institutions? Right? We talked about the technical aspects of it, but production readiness, I think it means uh a number of other things that are incredibly important that need to be in place. Uh it means um really seriously thinking

about trust and governance. Who's accountable? um how are the decisions going to be made? How are participants aligned? Um how do institutions uh trust not only the technology but the ecosystem and the rules that are defined for the ecosystem that they're operating in? I think the second one is about compliance and controls. Production systems need to be able to stand up to auditability, risk management, uh regulatory scrutiny, um an operational discipline, uh the legal and the operational consequences for deployment. They're no longer a sort of a theoretical

um they're immediate. So you actually have to implement those things. Um it does mean interoperability to legacy systems. Institutions don't replace everything overnight, right? Um you have to onchain workflows are going to have to connect to existing infrastructure. So that can be records, controls, uh enterprise environments and architecture. Um if they don't, I think scale is still going to remain elusive. So that has to happen. Um and then I think privacy and confidentiality.

Uh institutions cannot move sensitive data uh transaction data, client data um into environments that don't meet confidentiality expectations for them. uh that's why the I think privacy prefer pres preserving infrastructure and selective disclosure are becoming such an important part of this next phase. Uh it's also one of the reasons why EY invested so much over the last few years in really being able to answer that thesis on how do you create privacy on a public blockchain to meet the standards of confidentiality

in the world of B2B and the way that it really operates. And then there's a final fifth one which I think we need to keep in mind of what industrial readiness really looks like. Um, and it's a a relatively simple one, but it's going to come up in every single business case that you're going to encounter, which is is there a measurable business value? Uh, it's this is not going to be innovation theater as the institutions are scaling. It's quite the opposite.

It's about what's the value that's being created. Is there greater efficiency uh fastest? It can be faster settlements. It can be improved liquidity. It can be any number of things. But there has to be very clear and measurable uh business value that's being created to support the activities that I've just been describing. And that's the work that's really happening right now. Um, it's about institutionalgrade production ready onchain infrastructure. It includes all of those things that I've mentioned that need to go around it. Not just technically possible but governable compliant connected

confidential and valuable to the institutions. That way they can get behind it. Um so this is the moment that we're entering right now. Um so what does it mean for the leaders and institutions? It means that we're leaving a point in time where um I think pilots alone are enough to show progress. Uh I think the next phase is going to belong to the institutions that can move from curiosity into a capability and really from experiments into execution. And this is an execution phase.

Um the opportunity is really real and the momentum is very real. Um the success in the next chapter uh will not be determined necessarily by who talks about loudly about innovation and the most innovative or new ideas. I think it's going to be determined by those who cannot actually operationalize those ideas. um as an enterprise infrastructure with the discipline and the controls and a strategic intent that institutional adoption really demands. Um the question isn't really about whether the future will be on chain. I think the question that institutions are really looking at is are they ready to

build for that future in a production grade way. Um, and for me that's what this path really looks like and what we should all be, I think, quite excited about in this room. I think this is where the next phase of growth is going to come from. Um, and it's just the beginning. At EY, we we look very closely at digital assets and and it's a big part of what we do every day. Um, and there's a a huge amount of building going on right now, but ultimately we've always seen this as being something that will radically change the way all businesses interact and transact. Um,

and so the use cases go well beyond what we're what we're seeing today. Uh, and that's that's the path. And so I thank you all for listening. Um and uh and hope you enjoy the rest of the conference.