Category Archives: Blockchain Banking

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Only 3% of Americans Would Use Blockchain Banking

banking, blockchain

A Foton survey has revealed that 3% of Americans are ready to use blockchain banking products or apps, given the opportunity.

The survey of 5,000 American internet users was conducted across a range of age groups. Feedback indicated that the technology was being increasingly pushed forward by the willingness of banks to implement it, despite slow growth in the numbers prepared to use such services.

Another 34% said that they would be prepared to use blockchain banking given that they were actually ready to, which currently they were not. 63% were unhappy about using blockchain banking solutions at the time of the survey

A much greater percentage of these, 34%, would be willing to use blockchain banking solutions if they felt they were currently ready – which they do not, representing 20 times the 150 people surveyed who said they would be ready to take the plunge towards changing their banking habits to employ emerging technology.

The survey points out that currently 90% of North American & European banks are exploring the blockchain, far in excess of IBM’s projections about the future of blockchain banking made in 2017 when the technology was beginning to emerge on a large scale in the financial sector. It suggests that 2019 would see the tech blossom. Some estimates put the value of blockchain in the trillions by 2030, estimates that have little chance of success if public confidence in the technology doesn’t show more willingness to adapt than the 63% of dissenters in this particular survey.

Banks will only take backstage in the years to come should a more universal trust in blockchain technology gains a much higher degree of trust around the globe, and only then can blockchain be deemed a success in the final sector. However, the banks have begun to sit up and take notice, forming 5 consortia led by HSBC and Standard Chartered, using distributed ledger technologies (DLT) to process live trade finance transactions.

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Barclays: Blockchain Should be Built With Law in Mind

Barclays

Julian Wilson, an intrapreneur from financial services firm Barclays has opinionated that blockchain systems should be built while keeping in mind the law.

Wilson expressed these ideas while speaking at the Hard Fork Decentralized event. He said blockchain developers should “reconfigure our approach and way of thinking” because the technology’s practicality is overhyped and many businesses do not even require it. He said that the technology should be developed not as a disruption, but a complement to regulations: “To make a blockchain legally compliant, it should be built with the law in mind, and not the other way around.”

Wilson also said that although the decentralized technology had its advantages, shifting overnight to it from the current business model is a daunting task for a bank such as Barclays.

Barclays has shown interest in cryptocurrencies and their underlying blockchain technology in the past but has denied it has any intentions of setting up a trading desk for digital currencies. It has already filed two patents related to the transactional and storage use of the technology with US patent office this summer. The bank also held a blockchain hackathon in August this year. The driving force being exploration of the technology’s application in executing and processing of derivative contracts.

Many banks around the world are looking into the decentralized technology. Russian state-owned Gazprombank has announced it will be setting up crypto trading service. Spain’s second-largest bank, BBVA, recently conducted a syndicated loan in the tune of USD 150 million to the country’s national grid operator.

 

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Parker-Fitzgerald, UK Finance Report Sheds Light on Institutional Attitudes and Approaches to Blockchain

Banks have been flocking to disruptive technologies such as Artificial Intelligence (AI), cloud technologies as well as blockchain technologies. A recent joint report from UK Finance and Parker Fitzgerald warns of the “systemic risks” attributed to the three technological innovations.

New challenges

More specifically, the three-part report goes on to identify the risks attributed with distributed ledger technology (DLT) and blockchain technology. For starters, the paper makes a note of the growing scale of “experimentation and potential adoption” within the industry; it holds the belief that blockchain technologies will require “industry scrutiny,” which is because of issues regarding privacy, scalability, security, and competition.

The paper argues that while the technologies will benefit banks as they can move away from their archaic, inefficient legacy systems, they still carry new risks. For instance, the report harbors concerns with privacy as blockchain anonymizes data such as the keys or certificates of each transaction.

This causes trouble for smaller financial institutions as the transactions will be easier to identify within a smaller network and gives them right to be “understandably concerned” running a network that allows for even their competitors to see the anonymized transaction records.

New solutions

However, it also goes on to state that “technological solutions are possible”; the implementation of ‘cross-chains could address the concerns surrounding privacy by “allowing each participant to maintain a separate bilateral chain with all other participants. To increase security and address privacy others have suggested the potential of storing data ‘off-chain’”.

Though it continues to admit that this could reduce the benefits of using the technology as using cross-chains slows “the clearing of transactions” and in the instance side-chains are used, “reducing the ability to test and confirm the veracity of information on the ledger”.

Some conclusions are made and are generally rather optimistic, acknowledging that despite challenges ahead, embracing the emerging technologies carries far-reaching benefits and will catalyze the enablement of efficiencies and new economies as detailed in the report.

Timing is everything, Poland, and the GDPR

Furthermore, the paper was published a week after Poland became the first country to move banking records on a gigantic scale onto blockchain and recently, “temporarily” suspended tax collection for digital currencies.

It also comes just days before the new EU General Data Protection Law (GDPR) guidelines around data protection were released; the legislation which has been in the works for some years is to be implemented on 25 May 2018 in all EU member states.

In the build-up to the legislation, there had been some knee-jerk responses, fear, and uncertainty, though it is argued that blockchain technology can be used to authenticate user identity as opposed to storing it, which can be a helping hand in meeting the new GDPR provisions.

It appears as though the global conversation surrounding blockchain technology is reaching a pivotal moment, one in which the global community acknowledges the validity of the tech and works hard to ensure it can be safely, securely and effectively utilized.

 

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Japan’s Largest Bank Partners with US Tech Giant for Blockchain Payment Service

The biggest bank in Japan has partnered with a US tech company to design a blockchain capable of handling 1 million transactions per second, boosting speed and reducing transaction feeds through distributed ledger technology.

MUFG and Akamai partnership

The Mitsubishi UFJ Financial Group (MUFG) partnered with US-based Akamai to deliver a new global payment network service, which is intended to be available from 2019 and will be compatible with Internet of Things (IoT) style payments and other emerging technologies.

“MUFG and Akamai, using Akamai’s globally deployed high-speed and high-security platform, will utilize this new blockchain’s high-speed processing and secure value transfer abilities to promote pay-per-use, micropayments, and other new IoT generation payment methods, and to support the diverse payment options of the sharing economy by offering an open platform,” reads the 21 May press release.

The new blockchain developed contrasts with the original cryptocurrency Bitcoin, which was built on the first blockchain in the world and can only process seven transactions per second; the distributed ledger developed by MUFG and Akamai is “permissioned”, which means that verified computers are the only ones able to join the network.

Risk and reward

MUFG and Akamai detailed the growing interest in blockchain technologies and highlighted its capacity to “strengthen protection against falsification of transactions and drastically lower costs”, as well as the fact that financial institutions across the globe are partnering with tech companies to also test proof of concept designs.

While the technology is reported to “create new risks for banks”, the Japanese financial giant has embraced it with Akamai, which according to the press release is “the world’s largest and most trusted cloud delivery platform”.

Blockchain has been receiving surging amounts of interest from governments and institutions since ICOs and cryptocurrency markets exploded in 2017. Industry heavyweights such as IBM, Amazon, Microsoft, and JPMorgan are making bold steps toward adopting the disruptive technology, which will only contribute to the future successes of the blockchain industry.

Blockchain, banking, and a cryptocurrency

Earlier in May, the Japanese financial giant reported that it had intentions of trialing its own cryptocurrency in 2019, which lines up perfectly with the intended release date for the new blockchain service.

As reported by Japanese local news outlet NHK, the fifth largest bank in the world by assets will be rolling out a trial app to approximately 100,000 MUFG account holders who can install the app on their smartphones and convert their deposits into the MUFG coin; one MUFG coin will be worth one Japanese yen. Users will also be able to use the currency wherever they so please and transfer the currency to accounts of other participants.

It is a clear indication that the global stance on blockchain and cryptocurrency technologies is shifting toward the mainstream. Should the partnership and digital currency trial be successful, it will prove a transformative moment for the industry, financial institutions and society.

 

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