The financial industry is leading the charge when it comes to implementing and experimenting with blockchain technology.
While Dharmaraj Ramakrishnan, Sr. Director-Banking & Payments at FIS, wrote that blockchain isn’t expected to replace the payments or messaging systems of financial institutions, these networks will eventually connect to distributed ledgering technology (DLT).
“When it comes to digital cash – blockchain is the way to go,” explained Ramakrishnan. “Blockchain technology allows a digital currency to maintain a trusted transaction network without relying on a central authority.”
In fact, the World Economic Forum has predicted that by the year 2027, 10 percent of global GDP will be stored in blockchain ledgers.
With that in mind, it’s no surprise that some of the world’s largest banks are embracing blockchain. According to a recent study by Envision IP, a law firm that specializes in intellectual property rights, Bank of America holds the largest number of blockchain patents compared to other major banks and tech companies. TD Bank also landed in the top 10.
In addition, JPMorgan launched the Interbank Information Network (IIN) in 2018 to compete with payment startups, and in April the bank announced that it would expand its use of blockchain technology to improve the banking industry’s payment system. In August, HSBC became the first bank to use the blockchain platform we.trade to execute a trade finance transaction.
And others in the finance industry seem just as enthusiastic about the emerging technology. A recent study by TD Bank found that 90 percent of treasury and finance professionals surveyed believe that blockchain and distributed ledger technology will be positive for the payments industry. The results also found that 29 percent cited the creation of stronger audit trails as the top benefit of blockchain, while 22 percent say it will be a faster payment process. In addition, 22 percent pointed to improving the efficiency of cross-border payments, 18 percent cited a reduction in payments fraud, and 14 percent revealed that their organization was investing in blockchain training.
“Blockchain technology has broad implications for the commercial payments space, from speeding up settlements to securing cross-border transactions,” said Rick Burke, Head of Corporate Products and Services at TD Bank.