Report: Retail Banks Still Wary of Blockchain Technology
While distributed ledger technology (DLT) is fast gaining traction in several sectors of the global economy including investment banking, remittance, payments, and others, a new report by McKinsey & Co has revealed that the retail banking ecosystem have been slower to integrate the technology due to regulatory challenges and other bottlenecks, reports Bloomberg on June 7, 2019.
Retail Banks Standing on the Fence
According to a Bloomberg report, citing the latest research conducted by McKinsey & Co, a U.S.-based global management consulting firm, a vast array of retail banks have been cautious or even wary of adopting and integrating the burgeoning blockchain technology into their operations, despite the potential the technology offers.
McKinsey has revealed that the current regulatory uncertainties plaguing the blockchain ecosystem, as well as the super volatile nature of bitcoin (BTC) and altcoins, have made the retail banking sector cautious.
However, governments, investment banks, and infrastructure providers, on the other hand, are busy experimenting with blockchain technology in a bid to formulate new ways of cutting costs, while also promoting transparency and productivity.
“For instance, investment banks envisage a world where transaction execution, post-trade processing, and settlement are instantaneous, cutting-off numerous middle-and back-office processes. They are also focused on the potential for smart contracts to increase automation,” stated McKinsey.
Per the report, despite the fact that financial regulators around the globe, including the United States Securities and Exchange Commission (SEC), the UK’s Financial Conduct Authority (FCA) and others are yet to formulate amenable rules for the space.
Alongside the regulatory uncertainty, large firms and venture capitalists continue to pump colossal amounts of money into the blockchain arena.
Specifically, the McKinsey report revealed that in 2017, when the price of bitcoin hit an all-time high of $20k, VC firms invested a whopping $1 billion in the DLT sector.
Despite the challenges, some forward-thinking retail banks have formed alliances with blockchain projects in recent times, in a bid to leverage the potentials of the technology. As reported by BTCManager in 2018, Banco Santander announced plans to launch a mobile payments solution for its clients using Ripple’s distributed ledger.