European banks risk falling behind its Wall Street competitors in the blockchain race as it struggles with cost-cutting measures after the 2008 financial crisis, reports Reuters .
According to the World Economic Forum (WEF), blockchain technology is expected to change the way financial organizations conduct business with global banks who have initiated blockchain projects by 2017 after engaging with more than 200 industry leaders and subject matter experts.
However, a transatlantic imbalance is likely to ensue because of the costs required in developing the technology, reports Reuters. U.S. financial banks are reported to have moved swiftly while its European counterparts have been left struggling with cost-cutting measures since the 2008 financial crisis.
While patents for blockchain-based products have been filed from the likes of JPMorgan, Bank of America, Goldman Sachs, and Wells Fargo, only one is reported to have been filed by Switzerland’s UBS.
According to Simon Taylor, co-founder of London FinTech consultancy 11:FS, the different market conditions means that American banks are attempting to generate revenue.
Reading between the lines, that says: ‘we want to profit from this, we want to build the thing.
Interestingly, enough, while Reuters reports that U.S. banks are seeking to develop their own projects, the Bank of England was reported last month as saying that it won’t stifle FinTech innovation.
While it was assessing the risks and advantages of digital currencies and blockchain, Mark Carney, the governor of the Bank of England was quoted as saying that ‘FinTech should neither be the wild west nor strangled at birth,’ and that resources were being used to ensure its development was sustainable.
However, even though no bank in the U.S. or Europe has announced the amount of spending in blockchain, the WEF estimates that around $1.5 billion has been invested in the technology from industries including tech and financial companies.
While it may seem that the U.S. is ahead in the blockchain race, many may not think that’s true.
The U.K.’s Financial Conduct Authority (FCA) was reported last month as accepting 24 out of 69 applicants to take part in its FinTech sandbox, which saw applicants from countries including Canada, Denmark, Singapore, and the U.S. Of the 24, seven were from payment firms, including blockchain companies.
In this instance, it would seem that the U.S. is the one playing catch-up with the U.K. after a House bill was announced aiming to prevent financial businesses from moving to the U.K.
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