In the midst of today’s retail revolution, blockchain technology is being pushed up to the surface.
E-Commerce’s increasing popularity over the last decade is likely the driver of blockchain technology implementation. As we reported just a few months back, this technology is set to disrupt the financial industry because it enables secure cross-border money transfers.
Making purchases online has effectively taken a global economy and made it more localized due to the ability to click a few buttons and have practically anything delivered from anywhere in the world. In the U.S. alone, Pew Center Research’s data shows that eight out of 10 Americans are now online shoppers, while 82 percent are checking online reviews before buying an item.
It can be argued that one of the biggest threats to online transactions can be data breaches where money is either stolen or lost altogether. Committing identity fraud is typically at the core of data-stealing schemes in an attempt to steal money. In 2016, Javelin Strategy and Research’s data showed that there was $16 billion stolen from two million victims which is said to be a $1 billion year-over-year increase
That lost money is nothing to scoff at.
As such, it should come as no surprise that banks from around the world are dipping their toes into blockchain technology in various projects. Business Intelligence’s latest research, The Blockchain Banking Report, confirms banks’ decision to figure out a way to work blockchain into their inner workings. The report shared, “Most banks are exploring the use of blockchain technology in order to streamline processes and cut costs. However, they are also looking to leverage additional advantages, including increased competitiveness with FinTechs and the ability to use the technology to create new business models.”
One of the seemingly largest barriers for banks with blockchain technology are federal-level regulations. As blockchain does not depend on any one centralized system to operate, this likely poses a problem for the well-regulated banks around the world. From the U.K. receiving £3.6 million to fund blockchain projects to China’s Central Bank, The People’s Central Bank of China, moving the ball on its five-year plan to integrate blockchain technology, it would appear that there has been some level of legislature overseas when it comes to allowing financial institutions access.
Meanwhile, in the United States, we’re just starting to dip our toes into the blockchain pool. With Illinois gearing up to put regulations in place for blockchain, Delaware has made a significant dent with the passing of its blockchain regulation amendments to its state’s law earlier this month.
In his recent contributed article to The American Banker, Financial InterGroup Advisors’ President Allan Grody shared his thoughts on what’s holding blockchain back from the financial sector. Among his reasoning for this, he highlighted the complexities of the banking system.
“Because of its incremental unplanned design, the large value B2B financial system is one of the most expensive and vulnerable ecosystems,” said Grody. “Not only because it conveys high-value transactions, but because of the age of the thousands of interconnected systems that rely on mapping multiple identifiers and nonstandard data elements, reconciling differences manually when they do not match up.”
At the precipice of blockchain technology’s use in the banking industry, there are a few examples that have popped up in the past week.
European-based banking group Swissquote has announced news of its plans to move forward with making bitcoin available for trading through its partnership with cryptocurrency exchange company Bitstamp. The hope is that with this action, both bitcoin and blockchain will become more welcome in mainstream financial uses. According to Barclays’ former CEO, Antony Jenkins, banks who refuse to implement blockchain technology will risk ending up irrelevant, which goes to show the power behind the online decentralized ledger.
A startup from the United Arab Emirates, ArabianChain, shared news that it has received a $817,000 jolt of funds through Saudi Arabian telecoms firm House of Invention International’s Vice President Ahmad Abdullah Bugshan. The purpose behind ArabianChain is to build out a blockchain platform for Islamic banking and government service applications.