Blockchain in Kuwait's Banking and Supply Chain

Banking and Supply Chain, Blockchain in Kuwait.
Abstract
A block chain is one of the best finds in technology in the past decade. It is basically some form of database, upon which changes can be made, records added and edited, and shared with the authorized personnel in it. The fact that is only shared amongst the authorized personnel means that there is enough security around its operations. Block chain technology is quite important since it enables the authorized users to not only share but also integrate a lot of things into one functional unit. It is these smaller units adding into the one major one that are known as block chains , and ones that are now quite instrumental in pushing this kind of technology. The block chain technology is applicable in quite a number of operations, such as the supply chain and logistics, finance, and even warehouse management. Some countries have embraced it faster and more readily than others.
Kuwait being one of those that have hesitantly but surely picked it up, block chain technology continues being used extensively especially in the finance sector; with some banks in Kuwait regularly using it. There is still a lot of potential for the technology to be embraced even further in the country, given its great abundance of natural resources and an ever-booming energy sector. The country’s supply chain and banking sectors stand at a great precipice to reap from this technology, given that the rest of the world is already in the same race. In order to see the opportunity that the country stands to benefit from, it is crucial to break down how the technology works, and how it has worked in various areas of other economies, pinpointing the few bottlenecks that shareholders in the industry often experience and then analyzing how the supply chain and finance sectors in Kuwait can also reap from the same.
A Brief Background On the Technology
Ever since the advent of the information technology age, there have been great innovations and advancements in virtually every sector. Things have become increasingly automated and the results quite close, if not accurate enough. Today, virtually every financial transaction has become automated. There is a lot of effort placed upon the ability to not only run the processes, but also solve emerging problems within the supply chain or whichever industry. Through automation, a lot that was otherwise being done manually is now being handled by systems. Block chain came into existence around the same time as cryptocurrency was beginning to garner traction. After the financial crisis of 2008, new ways of handling financial transactions became the trend. People turned to technology for refuge, and that is how block chain technology started becoming a norm.
It then dawned on people that there was a lot that could be done using block chain. Tasks were made easier as everyone had his or her own ledgers upon which they could work independently before then coordinating or integrating with the larger system. Soon, countries around the world picked up the technology and implemented it in most of their sectors. The West picked up the technology faster compared to countries from the East, especially the Arab world. The biggest beneficiary of block chain technology was arguable the financial sector. For it to benefit that way however, the supply chain was also affected. It is in this manner therefore, that banking and the supply chain became the focal point of the block chain technology, not just around the world but also on Kuwait. It is through these two sectors that the technology has penetrated the country, and still shows much potential of being even better.
Brief Background about Supply Chain and Banking
The banking industry and the supply chain are in most cases usually interconnected in operations. There is always a way in which each of them not only captures the distinct aspects of online operations, but also the challenges related to it. A supply chain basically entails the people, processes and resources that are involved in the creation and consumption of a given product. The supply chain is one of the industries that can reap the biggest benefits from block chain technology, since it will help reduce the operational and administrative costs overall. This can in turn increase the profit margins within the industry.
A major characteristic of the supply chain and financial sector is its entrenchment in a lot of bureaucracy and paperwork (Chang & Chen, 2020). This basically makes it so difficult and slow to fully realize the potential within both sectors. With its conservative approach, Kuwait faces the same in its operations, as it embraces a traditional approach to handling of its supply chain. From a traditional perspective, the approach might be hands-on and therefore appear to be safe. This is however, never the case in most instances. Time is often of essence, and this therefore, eliminates the overall importance of time when it comes to production.
Keeping of records also becomes a challenge in paperwork, while everyone working on different sectors of the supply chain might not be working with the same bit of information. Cleaning it up and reconciling it takes up another valuable chunk of the operations. Durugbo and his team (2021) note that the process of counterchecking the records against the information available is usually the biggest undoing of a traditional supply chain such as that in Kuwait. Looking at it in a different way, such processes just work to increase the operational overheads for the respective companies in the supply chain.
Kuwait has for a long time been so cautious when it comes to embracing new technologies and practices (Abdeldayem & Aldulaimi, 2020). This is a good approach, given the vulnerability of some technological aspects that might need time and a lot of tests to be approved and therefore implemented. The government therefore, took up the advent of cryptocurrency with quite a pinch of salt, and they still do to this day. Hothefa Shaker (2021) notes that the major problem with cryptocurrency is the fact that it is now being used as an avenue to carry out illegal transactions due to its untraceability. Furthermore, given that is digital currency, it is quite difficult to regulate by the central bank. Perhaps that is the reason why Kuwait still takes it slow with the same. Citizens are however, free to transact with them but on a personal level and therefore, at their own risk. However, it is just a matter of time before the country eventually comes up with ways to control it through the government, given that the East is slowly taking measures around the same.
Application of Blockchain in Kuwait's Banking Industry and the Supply Chain
Kuwait has been a historically conservative country, having a lot of control over its systems and being so careful about picking up new trends. This is something that has done it good, given that it continues to be among the strongest currencies in the world, backed by its rich natural resources. The country has been so resistant about cryptocurrency, failing to give it legal status amidst the wave currently being experienced around the world. Malak (2021) noted that despite it being the cheapest country for cryptocurrency mining due to its cheap electricity costs, the country still viewed cryptocurrency as highly volatile and hence unpredictable for its markets. On the other hand however, it has allowed block chain to be used in some of its sectors, especially the banking sector. Other international companies that have an office there, such as DHL, also have embraced the use of block chain in their operations.
Now would be a good time for a nation like Kuwait to revisit its stance on widespread application of block chain technology, especially in its energy sector, in a similar way that it is doing in the banking sector. Blockchain technology can be applied to a wide range of economic use cases in both the public and private sectors. As a result, a new area of financial services that would be advantageous to individuals and businesses would emerge, enabling faster, less expensive, and more secure transactions. NBK (National bank of Kuwait), KFH (Kuwait Financial House), Boubyan are examples ...