A Year Ago…
A year ago, there wasn’t as much clarity as there is today on how soon banks would embrace blockchains. Realistically, it takes these heavily-regulated multinational companies quite a while to implement things as simple as a new policy, let alone restructure parts of their operations or add new technologies to improve their services. Nonetheless, the banks aren’t wasting their time finding out how they can innovate to improve their bottom line. Today, they are helping incubate fintech (financial technology) startups (including blockchain startups), exploring the technology themselves, and signing contracts with companies offering blockchain services. The partnership between Techstars and Barclays (known as the Barclays Accelerator) is a great example of a big bank fostering companies that are building and utilizing the latest financial technology.
Much Needed Innovation
Compared to other industries, some will say that the banking sector hasn’t seen the same pace of innovation and competitiveness as other industries up until lately. Internet banking was the start, but mobile devices have brought financial services to a whole new reach. The blockchain will also be a technological phenomenon in banking that will help expand the reach and scope of offerable financial services because it provides trust in the digital world, where most things were found to be mutable.
Financial institutions often exclude large populations of people because they deem them to be in an area with high rates of fraud. Having verifiable identities and funds on the internet is crucial to support the foundation of digital economies. Another problem facing the unbanked is the cost and access to banking services. Blockchain technologies can help solve these problems in part and wholly.
What Are Banks Doing Now?
For the banks, the blockchain gives them a new way to facilitate and document transactions of financial data both within their organization and with other financial institutions more efficiently and effectively. Banks currently and will continue working on private ledgers; however, blockchains can help secure these by making them more easily distributed so they can’t be changed or lost. Some banks are building their own blockchains to do this and/or having companies like R3CEV to build these systems for them.
Barclays, the British Banking Giant, has signed multiple deals with blockchain startups that have been a part of their accelerators that specialize in everything from compliance to trading blockchain assets.
Banks have also directly invested in blockchain startups further validating their place in the future of finance. These will become more common as these startups mature, and it won’t be surprising when regulations are clarified, and the technology matures to see acquisitions by the banks of these startups.
Years to come
It’s going to be a few years to see blockchain technologies implemented by the banks. Banks are simply too large to implement changes to their operations quickly and there still needs to be testing and design work done on today’s technologies to fit each institution’s specific needs.
Therefore, to utilize the benefits of blockchain technologies today, you have to work with the vast number of startups offering different solutions to the problems of our world.
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