“A technology that has the ability to conduct and verify transactions via an immutable, time-stamped record that is replicated on servers across the globe has immense implications for the banking sector. We’re talking about a massive overhaul of the banking industry’s processes and a significant reduction in costs,” Chief Economist for BBVA Compass Nathaniel Karp has said in a report titled Blockchain Technology: The Ultimate Disruption in the Financial System.
The bank’s economists have concluded that while interest in the leading cryptocurrency Bitcoin has evened out, the underlying technology blockchain is attraction more attention and investments because of its ability to safely conduct transactions without involving a third party.
The economists also agreed that while the initial mainstream adoption will most probably be in the payments sector, the next wave of adoption might completely alter the way financial markets work.
“Given that the majority of financial assets such as bonds, equities, derivatives, and loans are already electronic it may be possible that someday the entire system is replaced by a decentralized structure.”
Nathaniel is confident that the disruption will eventually happen but stated that it is still questionable when the blockchain technology will have wide applications in the financial domain.
Apart from the financial services industry, banks, governments and industry groups are experimenting with the blockchain technology for improving audits, registering and transferring property, securing voting results, and transforming the way law is practiced. Blockchain Apparatus recently conducted the nation’s first presidential straw poll using the blockchain tech.
Nathaniel Karp leads the research wing at the bank and analyzes the U.S. economy and Federal Reserve monetary policy. The economists create models and forecasts for growth, inflation, monetary policy and industries.
BBVA Compass is a Sunbelt-based financial institution that operates 672 branches and ranks among the top 25 largest U.S. commercial banks based on deposit market share.