As if banks do not have enough on their plates, yet another challenge has arisen in the form of Bitcoin, the digital crypto-currency. At first, most banks ignored Bitcoin, but Bitcoin and other similar crypto-currencies have gained traction. Some banks are still reluctant to act, but some have jumped in in hopes of seizing early bird opportunities. KCRA spoke with Netherlands-based Moe Levin, the Chief Liaison for New Technologies at ABN AMRO Bank, about how Bitcoin is reshaping the banking world.
KCRA: How do you see Bitcoin transforming the banking world? Or, what should change-resistant banks fear?
Levin: I think that banks have never been change resistant. Banks have been saddled by managing the dilemma of handling other people's moneys, and adopting risky (but potentially profitable) innovations. Bitcoin, blockchain, crypto-digital currencies all present many, MANY innovative features that can help banks adjust, change, and adapt to new technology, but need to be battle-tested, need to be anti-fragile, and need to be stable. At this point the technology is wowing, but still in laboratory mode.
KCRA: The emphasis in discussions about Bitcoin for banks is usually the potential for disruption in the payments area, but are there other product lines or customer relationship areas where banks should be concerned?
Levin: The payments area could potentially be disrupted by bitcoin, but the magnitude of disruption is far from clear. A more safe bet for disrupting payments is in the payment processing companies. Especially companies that are settling from mobile wallet to mobile wallet, without using banks to clear every transaction. Clearing/ settling and high frequency trading may benefit greatly from blockchain technology.
KCRA: Some in the banking industry dismiss Bitcoin itself, but still see value in the underlying blockchain technology. What are your thoughts?
Levin: Dismissing any idea is idiotic. There are potentially very valuable applications in both bitcoin and blockchain technology. These applications are evolving, transforming, and creating many new opportunities. Blockchain technology seems to be on every company's whiteboard right now, due to the tech being superior to many current ledger-based technologies. Moreover, when there is stable proof of blockchain to blockchain communication, and a protocol for many different blockchains to communicate with each other, there is also the ability to create easy interbank communication, which allows for a lot of efficiencies currently unseen.
KCRA: Are the legacy financial and payments infrastructure in the West a serious impediment to the adoption of Bitcoin-driven services?
Levin: I have been to many emerging countries and have seen the passion, dedication, and drive to create the most efficient and cost-saving technologies. From fintech to drone tech to IoT innovation, there is something beautiful that happens when communities emerge to tackle issues together. Infrastructure in the West is stable. The ugly sister of stability is complacency. And with complacency comes a lack of development, insight, and passion. It is often the case that complacent and lazy companies get disrupted quickly by passionate and lean companies. This is the case with many technologies, and may or may not be the case with banks. Banks have the added option of being able to incorporate any new technologies and roll-out quickly and globally. Small tech companies, especially in industries that require hardware deployment or consumer adoption, have very large hurdles to face when acquiring traction.
KCRA: Do you foresee bank-focused state regulators addressing Bitcoin-like currencies and related technologies soon?
Levin: Regulation is necessarily slower than innovation. There will always be regulation when it comes to money, handling / transferring of money, and exchanging money. Many, if not all regulators have made statements on bitcoin, some have issued guidelines, and some, like the Bitlicense in New York, have gone even further. The bigger bitcoin gets, the more clarity there will be. I hope.
KCRA: What would you suggest banks should be doing to prepare for a world where Bitcoin plays a significant role?
Levin: I disagree that bitcoin will play a significant enough role in customers' financial lives. I think that it has the potential to play A role, but will likely be the underlying tech for other banking and payment services, and run in the background. The future is unknown, and innovation is happening every day that could change how things go."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.