Supporters of digital currency value the capability of digital currencies to enable consumers to have no need for banks. The recent buzz, however, surrounds the benefits that block chain technologies can provide to institutional banks.
Opacity and centralization have proved to be major problems for private banking institutions around the world. By allowing securities traders to not have to rely on central clearing houses to confirm trades, block chain technology can help cut costs. Some believe it can also boost investor confidence. Additionally, regulators will have easier access to the books of large financial institutions.
Many major companies are already investigating the use of the block chain. For example, Santander recently released a paper covering 20-25 uses of block chain technology. The banking giant has created Santander InnoVentures, a $100 million fintech investment fund.
UBS technology innovation department is also experimenting with smart-bonds on the Bitcoin blockchain. Director Alex Batlin said that the smart-bonds were bonds where
risk-free interest rates and payment streams were fully automated, creating a self-paying instrument. They key attraction is that there is no middle or back office, and no registry, so clearly a major impact on costs.”
Financial giant Barclays has jumped on the ‘Bitcoin bandwagon’ with their recent approval of a proof-of-concept (PoC) trial of bitcoin technology with Safello, a Bicoin startup. The partnership begins with a trial allowing for donations to be sent to charities using Bitcoins. At the Barclays Accelerator Demo Day in London, Barclays chief design and digital officer Derek White explains Barclays’ desire to be the leader of fintech initiatives, remarking,
At Barclays, we’re embracing the digital revolution, exploring innovations early on so that we can help to shape their development and co-create the future of financial services with these startups. We’re leading the industry with new pioneering technologies, which will be paramount to helping us achieve our ambition of becoming the ‘go-to’ bank.”
The banks are targeting millennials that find banks difficult to reach. Experts believe that it is only a matter of time before distributed ledgers become a trusted alternative for managing large volumes of transactions. Members of the cryptocurrency community are hopeful that the growing number of partnerships between large financial firms and bitcoin/block chain startups will help propel digital currencies into mainstream use.
Read more here- “Barclays Trials Bitcoin Tech With Pilot Program,” (Grace Caffyn, CoinDesk)
Mackenzie is a Marketing Fellow and a rising junior at Villanova University. She is planning to co-major in Marketing and Finance and minor in Business Entrepreneurship. As a part of her studies, she has created and presented a comprehensive marketing plan to professionals from The Vanguard Group featuring Vanguard's exchange-traded funds.