Operational hurdles hold back banks’ blockchain adoption as Previdium Commander targets controls

Matter Labs co-founder and CEO Alex Glukowski introduced Previdium Commander as a way to reduce the operational burden of bringing banks’ digital asset services into production, combining permissions, policies and integration with existing systems.

The difficulty of building operational controls is a major obstacle to expanding blockchain pilots into live financial services, he said. Institutions need identity management, administrative access and compliance controls alongside the underlying digital asset technology.

In an October 21 interview with CoinDesk, Glukowski discussed the product announced at Money 2020. He described Previdium Commander as software that lets banks and financial institutions issue and operate digital asset services under their own rules, providing a central control system for those activities.

Glukowski said more than two years of work with institutions had shown that operational friction accounts for much of the gap between pilots and adoption. A small team can test a service, but deploying it across a heavily regulated organization requires integration with identity systems, different levels of user permissions, administrative access, monitoring and connections to data analytics systems.

That work can divert institutions’ resources from understanding markets, financial products and customer needs, as well as managing compliance, he said. Commander is designed to connect with existing systems and give institutions a single place to manage, control and operate their digital asset services.

Connecting banks introduces stricter control requirements than running internal experiments, Glukowski said. Systems operating within a closed organization cannot simply be opened to outside participants without permissions, policies and compliance controls. He cited Cari Network’s tokenized deposits, involving 30 banks and moving toward production. While tokenization itself uses a relatively simple smart contract, he said, much more work goes into providing each bank with tools to manage users, permissions and policies and connect to its core systems.

Commander supports institutions’ existing private and public blockchains, including public permissionless networks, he said. Institutions can subsequently expand to a zero-knowledge-based Previdium ledger, which he described as a secure, high-performance blockchain, and later connect with other institutions.

Privacy is essential for regulated institutions moving internal operations onto digital asset infrastructure, Glukowski said. Fully anonymous systems can prevent regulators, auditors and internal security teams from obtaining oversight, while arrangements that delegate confidentiality to outside parties require trust in those providers. He said zero-knowledge proofs allow data to remain within systems controlled by the institution, which can decide who receives information and who may access or transact on the network.

Performance is not the leading concern for most institutions today, but it is critical for some, he said. Certain institutions process hundreds of thousands or millions of transactions per second across their systems and need spare capacity before peak demand arrives. Reaching processing limits could restrict transactions and contribute to cascading liquidations, he warned. He said blockchain engines and zero-knowledge proofs now offer the high throughput and low operating costs needed to address those demands.

Glukowski described the broader goal as an interconnected global digital asset economy. He expects markets to adopt digital assets and institutions eventually to move their core systems to more efficient and flexible technology. The product, he said, is intended to accelerate that adoption while allowing institutions to retain control over how they connect and operate.