Report: Blockchain Could Benefit Banks (May 26, 2015)
A new report claims that “cryptotechnologies”—like blockchain, the underlying technology that serves as a record of bitcoin transfers—have the potential to benefit banks. Issued by the European Banking Association (EBA), the report cites several possible use cases in which cryptotechnology can help banks reduce costs, improve product offerings and speed new product development.
For example, foreign exchange transactions, which currently involve multiple payment services providers and clearing-and-settlement mechanisms, could be simplified significantly by using a blockchain-powered electronic ledger. The report notes that at least one bank, Germany’s Fidor, already offers customers instant foreign exchange transactions by using open-source settlement technology from Ripple Labs.
Cooperation between established payment services providers and the cryptotechnology community will be key moving forward, the report said. Such cooperation “will not only influence the success of crypotechnology implementation, but will impact the very level of innovation of cryptotechnologies that PSPs (payment services providers) will have access to,” according to the report. Established PSPs that cooperate with crypotechnology providers will enjoy the benefit of seeing what new developments are on the horizon, and be better positioned to capitalize on those new developments when they reach maturity. The cryptotechnology community, meanwhile, stands to benefit from PSPs’ “legitimacy and procedural knowledge,” the report noted.
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