Daft question? The solidity and reliability of the banking industry is the rock – the near certainty – on which most of our lifestyles have been founded. Until recently that is. Financial crises and new technologies are beginning to crack the four value pillars of banking’s operational code: Payments, Funding, Risk & Product Management, and Customer Relations. Take Payments for instance Transferring money has always required a bank-related transaction (e.g. withdrawal and fund transfer). All of the world’s retail and credit payment processes use the banking infrastructure for validation and security and we’ve always assumed that banking services could weather any kind of technological disruption. Blockchain technology (e.g. Bitcoin) could undermine this assumption. Blockchain, a public ledger, makes it possible to validate and authenticate peer-to-peer transactions with a higher level of security, next-to-no handling charge, and no time lag. This effectively bypasses the traditional money-transfer system and the danger is, before too long, this nascent technology will disrupt traditional payments much like the way Uber disrupted the taxi industry. As long as banks can protect their near-monopoly in the payment value chain they have the upper hand against potential disruptors. The R3CEV is a consortium of financial institutions keen on researching blockchain technology to work out how they can integrate it into their existing systems. Banks are brilliant at funding great ideas, but… As for Funding (the second pillar), providing the financial wherewithal for people who need it – entrepreneurs, business owners, builders, developers, and consumers in need – drives society by making idle money more productive. The traditional funding process is being disrupted and bypassed by new sources from peer-to-peer networks. Today, if someone needs funding to launch a start-up, they could approach a tech company like Kickstarter , who provide an efficient platform pool for crowd-sourced funds. […]
