by Joseph Young
Deutsche Bank AG, a German global banking and financial services company, has published a report entitled “Blockchain – attack is probably the best form of defence,” in an attempt to explicate the block technology as a potential financial instrument that may enhance the firm’s banking system.
“Blockchain technology is one of the first truly disruptive ideas from the fintech sector,” said Thomas F. Dapp of Deutsche Bank. The blockchain technology’s decentralized nature allows individuals, merchants, businesses and even financial institutions to avoid intermediary or third–party services, and thus holds the capability to cut more than 90% of banking costs.
“However, the blockchain technology behind Bitcoin has much more to offer than a mere cryptocurrency. For example, discussions also involve standardised, fully automated and/or programmable agreements, referred to as smart contracts, that can be processed via the P2P network – bypassing intermediaries, national borders and, at present, even regulators,” explained Dapp.
Technically, anyone could create and send a very small bitcoin transaction, also known as microtransactions, worth less than a dollar, and attach or integrate texts or other forms of data into the transaction to create an unforgeable storage of information.
Recognizing such advantage of the Bitcoin blockchain, fintech accelerators, credit card companies and traditional financial services began to launch cryptocurrency / bitcoin innovation labs, where blockchain-based startups are given the chance to connect with banks and well-established financial institutions to test out their technologies and applications.
Deutsche Bank is already taking a proactive approach toward bitcoin. The bank announced in June that three innovation labs will be launched for fintech– and blockchain-based startups, and those that qualify will be given opportunities to stay connected with Deutsche Bank staff, technologies and most importantly, the banking system. The bank has said that startups can freely test out their applications on the bank’s current banking systems and develop applications that may optimize their system.
“It comes as a little surprise that traditional banks and other players from the financial sector are now taking increasing interest in this new technology. However, stock exchanges, credit card firms, clearing houses and insurers are also increasingly focusing on the technology and analyzing the potential of the P2P movement for their own purposes,” said Dapp.
Some banks have already implemented blockchain technology in their current banking systems, enabling users to send payment in real time acrossborders and to other existing banks.
An example of this is Fidor Bank and CBW Bank’s integration of Ripple Inc.’s real-time settlement technology, which is a blockchain-based application built specifically for banks hoping to secure and settle international payments with fewer costs. Like Deutsche Bank, Fidor and CBW have also adopted forward-thinking relationships with fintech– and blockchain-based startups.