Bank of America’s tech chief, Cathy Bessant, is skeptical on blockchain patents.
Bank of America received or applied for 82 patents for the blockchain technology, the most by financial institutions.
Bessant said that she has the most reservations about public blockchains. However, BofA’s patents could allow the bank to plug into blockchain if the need arises going forward. She added that private blockchains could potentially enable banks offer better services in the future and to cut costs.
Some players are rejecting some of their blockchain plans, trying to find substantial value when compared to existing methods.
Others have showed use cases for blockchain, but scalability questions still remain. JPMorgan plans to launch JPM Coin for its payments business. HSBC said it settled $250 billion in 2018 in forex trades over blockchain and that it wants to make the platform available to its clients . However, have to prove they can scale.
Recentely, Citibank announced it’s leaving plans to launch its own coin. It would generate greater value by focusing on improvements to current payment ecosystems, like SWIFT.
Blockchain is still a technology in first steps and funding continues to flow into the technology. FIs are searching on more certain opportunities.
Money continues to flow into the technology, so there are hopes for more significant results in the future.
According to Greenwich Associates, Financial services firms are spending around $1.7 billion per year on the technology. Cited by CNBC: In 2018 VCs invested $5.4 billion in blockchain startups.
There are some promising applications of the technology. Trade finance, is well suited for blockchain disruption. Bringing benefits such as, transparency, real-time review, reduced processing times, etc. Citibank, after abandoning its crypto plans, announced, it will continue to experiment with blockchain in trade finance. I additional, many large banks belong to trade finance blockchain consortia, such as BNP Paribas, NatWest, Standard Chartered, ING, etc.
FIs should try to narrow their focus. Blockchain is still continuing investigation into its potential benefits. However, FIs’ approach to blockchain adoption and innovation is driven by the problems they are looking to solve.