The banks were never charmed about Bitcoin for multiple reasons. For starters, when the digital currency was first introduced following the collapse of the US banking system, it was hailed as the killer of the traditional banking sector. As time passed, the digital currency gained enough traction to actually threaten the traditional banking industry with its easy and fast transactions at literally no transaction costs.
The fierce competition offered by the bitcoin to conventional banking institutions did not help the cause either. As the rivalry between the digital currency and banking sector grew, the banking institutions have come to realize the importance of the technology behind digital currency. They are so convinced about the potential advantages of the digital ledger technology that many of them have already invested heavily into its research and development for banking applications,
Some of the leading banking institutions in the world to invest in the blockchain technology includes the likes of Goldman Sachs, BNY Mellon, Mitsubishi UFJ, Deutsche Bank and more. There is also a consortium of international banks created alongside a New York based blockchain solutions company for collective development and deployment of the blockchain solution for the banking sector. The consortium has already made some progress with a custom distributed financial blockchain called Corda for the purpose.
Regarding the banking sectors feelings about the implementation of blockchain technology into their operations, one of the tech publication quotes BNY Mellon’s Chief Information Officer, Suresh Kumar saying –
“This kind of feels like when the Internet started. There is an expectation that, okay, this is something new and different, so there is some value to leveraging it, and the question is: Okay, what are the implications of that for the traditional services, and what kind of services can be enabled that were not practical before?”
The banking sector doesn’t have one particular way of implementing the blockchain technology into its operations, rather different teams are looking into different applications of the technology. It can be for just maintaining AML and KYC requirements or to settle different types of trade, overseas transactions over the blockchain and more. Automation of the entire process is another main attraction for the banking sector. They want to use blockchain technology to switch as many transaction types to Straight Through Processing (STP), thereby completely eliminating human interference.
While the banking sector increasingly looks into the blockchain technology, it also means that those employed in the banking industry may have to start looking for new jobs in the coming years.
The applications of Bitcoin technology are already proven to be endless, it is up to the banks to decide how far they are willing to go with its implementation.
Ref: Fast Company | Image: NewsBTC