Citi Innovation Labs have been looking at distributed ledger technology for “the last few years” and has put together a dedicated, skilled team, according to International Business Times UK.
Ken Moore, head of Citi Innovation Labs, said: “We have up and running three separate systems within Citi now that actually deploy blockchain distributed ledger technologies. They are all within the labs just now, so there is no real money passing through these systems yet; they are at a pre-production level to be clear.”
“We also have an equivalent to bitcoin up and running, again within the labs, so we can mine what we call a ‘Citicoin,’ for want of a better term. It’s in the labs, but it’s to make sure we are at the leading edge of this technology and that we can exploit the opportunities within it.”
Although the group believes digital money is inevitable, according to Greg Baxter, Citi’s head of digital strategy, bitcoin’s economics are inherently flawed, and it isn’t mature enough for mass adoption.
So, Citi are busy looking for an alternative, exploring how cross-border payments can be done in seconds and in a very transparent way. The group is mostly interested in blockchain technology for cross-border payments and remittances, which is why it did not file a patent for its Citicoin technology.
“Most of our efforts have been focused on payments; trade probably being a second runner,” Moore said. “Because we are a global network, a global bank, we can look for opportunities to use this technology to move money from country to country — country A to country B, across our network.”
Citi has been vocal lately about how it believes cash and paper are outdated. Last year, the group released in the U.S. its checkless Access Account following survey data saying that one in five younger account holders did not own a checkbook. In April, Citi Chief Economist Willem Buiter even argued that cash should be outlawed, so central banks could reduce interest rates below zero in times of crisis. One of the group’s aims now is to “bank the unbanked” by providing financial services to people with no bank accounts. Citi partnered with Safaricom, the largest mobile network operator in Kenya, to process payments using just mobile phones.
To innovate, Citi has a global network of innovation labs in Tel Aviv, Dublin and Singapore and a venture capital outfit based in Palo Alto. New labs — one in Blue Ash (the Ohio base of Citigroup’s information technology activities) and one in Singapore — will soon be created to focus on the consumer banking side to add to the two it already has.