Like the Internet did 25 years ago, Bitcoin and its block chain technology are bringing the next generation of technological advancement to industries around the globe. One industry that certainly needs an infusion of new technology and efficiencies is the banking industry. Major financial companies like Goldman Sachs, NASDAQ, and The New York Stock Exchange have stepped forward to invest and learn what these innovations can do for them. Some are open-minded to bitcoin as a currency, but bankers are looking more at integrating the block chain technology without the currency.
“The block chain can fundamentally reduce costs and provide real-time service,” said Chris Skinner, chairman of the Financial Services Club networking group in the U.K. tells American Banker. “But on the other hand [bankers] want to make it centralized, which runs counter to the concept of the block chain.”
BNY Mellon used a simple and direct approach to reach internal goals. The downloaded the open-source code from Bitcoin.org and adjusted it for their internal systems, essentially creating an altcoin called BK Coins. These tokens are currently being used as an employee rewards program that can be redeemed for vouchers and gift certificates, so the incentive program that Bitcoin uses is being duplicated elsewhere, to some extent.
“It’s a way for own employees to understand what it is so they can think about the implications of their own work and for our clients,” said Suresh Kumar, BNY Mellon’s chief information officer. “It’s not that we were interested in Bitcoin, we’re more interested in the block chain.”
“What’s been talked about is around creating efficiencies in a process,” said Alex Marquez, managing director of corporate development at USAA. “That’s what’s intrigued us from the start. Because it’s an immutable contract, there’s an element that is a proof of record of a transaction that’s very deep in security, using cryptography,” Marquez said. “There’s an element of that that invokes trust. We’re excited by the broad array of companies that are pursuing it, from the large traditional technology companies to the other financial institutions that are kicking the tires on it.”
It seems the banking industry will spend the next several years turning Bitcoin’s core technology into a centralized data entry system. It would be nice if Bitcoin could somehow benefit from this blatant, as the Internet does when new websites and programs are linked to it. Being open-source has pros and cons. The technology being co-opted by the banking industry for their internal objectives may, in fact, be a little bit of both.
And who knows? Maybe someday, years from now, sending money to a family member through your bank to another country will become as quick and seamless as it is when using bitcoin today? The only difference with bitcoin will be that the bank will track what you do and who you do it with, internally. With higher consumer costs, of course. They do that now, but this will allow users improvede speed and efficiency while the bank can track your money and use of it faster and easier. Sounds like a “win-win” to me.
What do you think of bankers creating internal block chains? Share above and comment below.
Last modified: March 4, 2021 4:44 PM