Pressure Mounts for Banks To Embrace the Blockchain

by Tim Sloane 0

Banks, slow to embrace Web technologies even with a product design that was obvious, are now finding themselves facing a fever pitch of press activity and interest in how banks respond to blockchain technology, even though no specific product use or design is obvious. This article identifies a standard bitcoin adoption by PrivatBank and highlights the activities of Commonwealth Bank of Australia that is trying to find problems that blockchain technology can solve and the blockchain trust models that will support those solutions (Readers that need help understanding the role of the blockchain trust model can read this Mercator Note for help):

“Established financial institutions and banking groups have intensively looked into blockchain technology.

Leading global banks such as the Commonwealth Bank of Australia, PrivatBank and other international banks that are part of financial services company R3’s blockchain conference have begun the development of banking specialized blockchain networks, that will allow their clients and other financial institutions to settle and clear transactions, assets and identities securely, with significantly lower costs.

PrivatBank
One of Ukraine’s biggest banks, PrivatBank announced the “finalization of testing period for a service providing merchants with an option of accepting bitcoins for their goods.” The compliance teams of PrivatBank are currently working with the Central Bank of Ukraine and the federal government to establish certain regulatory policies.

PrivatBank, the country’s largest commercial banks and a multi-billion dollar investment and financial services company has millions of users in its internet banking system called Privat 24 and operates various payment networks such as LiqPAY, Electronic Coin-Free and SMS-mobile banking systems.

Through the integration of bitcoin, the bank hopes to target small and medium-sized businesses that often struggle to deal with high transaction fees and maintenance fees from its 3-D Secure Technology, a financial solution used to protect user funds from fraud.

Commonwealth Bank of Australia
Commonwealth Bank of Australia (CBA), one of the country’s largest banks have announced the launch of a pilot blockchain network built by its computer engineers in CBA innovation lab.

The bank announced that the distributed ledger will be used to create decentralized financial solutions and applications that will be adopted by its clients, institutional customers and partnering banks.

“It is clearly … faster, cheaper and more transparent than some of the existing practices we have today,” chief information officer David Whiteing stated at a bitcoin conference.

“But more importantly than that, as we’ve looked at this and explored and experimented, it goes way beyond just banking, and from our perspective, that’s an exciting opportunity as well.”

An increasing number of banks are gearing towards blockchain technology to capitalize on the limitations of today’s banking systems and applications. In the upcoming months, banks plan to launch commercial applications to help users obtain financial transparency.”

This article is woefully short on example, as there are many other financial institutions that are investing significant dollars and talent to research blockchain solutions. Which solutions will make it to market first and which, if any, will prove to be game changers remains unknown.

Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group

Read the full story here

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