The quotes are certain to raise eyebrows among bankers, everywhere. The Vice President of Sberbank, Russia’s biggest bank by assets and the third largest bank in Europe (2014 figures) has opined that the advent and spread of blockchain technology will see banks disappear by 2026.
Speaking at Metro Expo 2016, an industry conference, Sberbank’s vice president Andrey Sharov shared his thoughts about the future of the banking industry.
With quotes reported by Russian news agency , Sharov predicts that the rise of blockchain technology will lead to the demise of the current banking industry as the way we know it to be.
The Vice President of Russia’s largest bank stated:
In 10 years, I fear that banks will not be around and I will have nowhere to go to work. Now, there are peer-to-peer lending platforms and those developing payment systems, based on blockchain technology.
Incredibly, the banking executive then went on to state that the Bank of England had established a banking consortium of 50 banks to work on blockchain solutions for the financial industry. As readers will be well-aware, the only banking consortium of such numbers that sees blockchain-based research and proof-of-concept solutions, is that led by New York-based blockchain startup, R3.
The Bank of England made a consortium of 50 English banks – those that are completely rebuilt on a model based on blockchain technology. I won’t have any place to work at.
The opinion echoes that of Antony Jenkins, former group CEO of Britain’s biggest bank, Barclays. In a speech last year, Jenkins predicts a future wherein financial technology, led by innovations such as blockchain, will severely disrupt the current banking system. The former banking executive predicts that those employed in banking institutions will be reduced by at least 20% in the coming ten years, if not up to as much as 50%.
As Russia’s largest bank, Sberbank has notably shown interest in joining R3’s global banking consortium that consists of 42 leading banks from around the world. In December 2015, quotes attributed to Leve Khasis, Sberbank’s First Deputy Chairman of the Management Board are as follows:
R3 [was created] in order to develop protocols, standards and technology. As soon as [these] are implemented, we believe we [Sberbank] will be among the first to take part in it.
Khasis revealed that Sberbank was actively looking into documentation related to R3, with a final decision pending at the time.
Khasis also revealed that Sberbank was not looking to endeavor into facilitating Bitcoin, or indeed, developing its own cryptocurrency due to strict Russian regulations. Furthermore, he sought to draw a line differentiating bitcoin from blockchain technology.
Cryptocurrencies are irrelevant here, it [blockchain] is a simpler, faster and more reliable accounting method.
The interest toward blockchain technology by Russia’s biggest bank is one shared by the Bank of Russia, the country’s central bank.
Toward the end of February 2016, the Bank of Russia announced the establishment of a ‘blockchain working group’. The group will study and research innovations such as distributed ledgers & mobile and payment industry breakthroughs, among others.
In December 2015, Nikolai Nikiforov, the Russian Minister for Communications and Mass Media spoke also spoke encouragingly about blockchain technology, noting that it was necessary to exploit distributed ledger tech “in the best interests of the [Russian] public.”
Notably, there are also efforts among authorities calling for the ‘legalization’ of blockchain technology, in an effort to distinguish it from bitcoin and cryptocurrencies.
A recently proposed roadmap by the Internet Development Institute was submitted to Russian President Vladmir Putin in December 2015, calling for the legalization of blockchain technology in 2017.
According to those involved in crafting the roadmap, blockchain technology does not relate to Bitcoin.
Blockchain – is not the same thing as Bitcoin. It is a revolutionary technology of distributed databases that could be helpful to banks and organizations that work with securities.
As things stand, an official proposal by the Russian Finance Ministry is currently going through the State Duma, in an attempt to officially ban Bitcoin in Russia. The proposal also calls for prison terms for those using or mining Bitcoin, deeming it to be a criminal offence. Currently, the Russian Finance Ministry if proposing up to 7 years in prison for using the cryptocurrency.
Featured image from Shutterstock.