Blockchain is transforming banking, please stop telling me it's failing.
Blockchain is transforming banking, please stop telling me it's failing.
Bowie: The future belongs to those who can hear it coming
Not a day goes by when I don’t read that blockchain is failing. I don’t buy it, and you shouldn’t either. This short and sweet paper by Accenture does an excellent job of putting things in perspective.
👉TAKEAWAYS:
90% of banks are exploring blockchain tech, but this does not mean they are actively building.
Roughly 70% of banks are in POC or lower stages of activity.
The number one use case is intra-bank cross-border transfers, which leads us to JPM and Citibank….
Meanwhile, fast adopter JP Morgan has a stablecoin JP Morgan coin, which is making $1 bn in transfers daily. Note JPM transfers $6 trillion daily in total.
Not to be beaten, Citibank operates a similar internal transfer system for institutional clients that includes smart contracts to automatically transfer funds if conditions are met.
Internal cost-cutting transfers alone can be a game-changer for larger banks with vast networks.
The creation of a universal bank transfer network is a far bigger problem and has yet to be tackled.
Regulatory and compliance remain leading obstacles to adoption, with 63% and 56% citing them as the top two issues.
👊STRAIGHT TALK👊 :
So who says blockchain is failing?!
I’m sorry but with JP Morgan Coin handling $1 billion a day in transfers it’s hard to see how a fair-minded critic can say this.
What a fair-minded critic should say is that banks with advanced technology like JP Morgan and Citibank are already making blockchain pay, while technologically backward banks are still on the fence.
Undeniably, blockchain took a long time to be put to use for those who remember the heady days of 2016-17 when disruption was promised within a few brief years. Perhaps there’s a lesson in there for those who think generative AI will quickly transform the world.
The Accenture paper misses the use of blockchain in tokenization, which also impacts banks. Tokenization is one of the hottest topics in finance right now, with everything from physical gold to bonds being tokenized. The most recent example I found interesting was HSBC tokenizing gold in London vaults.
So please don’t tell me blockchain is failing.
As Bowie said, the future belongs to those who can hear it coming.
