As FinTech companies disrupt the financial services industry with marketplace lending and blockchain-based supply chains, wholesale banks are meeting the challenge by reprioritizing IT spending and improving their innovation capacity.
On 12 June 2017, a blockchain-based company called Bancor raised approximately $153 million in ether (the coin of the cryptocurrency Ethereum) in just less than three hours by way of an initial coin offering (ICO).
Banking across the globe has been going through a major transformation over the last few years, and this evolution looks set to continue well into 2018, and indeed beyond.
You would have to be living with your head buried in the sand not to realize that we are witnessing the Fourth Industrial Revolution, of which the Blockchain Revolution is an integral part. The necessity of working with digital assets is forcing the reinvention of traditional financial infrastructure, and only those banks that adapt and participate in the metamorphosis are sure to capitalize on the generous rewards.
Blockchain, the decentralized ledger that supports today’s burgeoning cryptocurrencies, has become so useful that it can no longer be ignored by today’s financial institutions. From cutting costs to reducing risks, this indomitable digital technology has moved way beyond bitcoin to becoming an indispensable ally to the bank that wants to most securely and efficiently fulfill its role of tracking, storing and transferring value.
Blockchain is moving beyond cryptocurrency exchange into the world’s most progressive stock exchanges, which are optimistic about the technology’s potential to cut cost, enhance speed and reduce risk. Before it revolutionizes stock markets as we know them, the decentralized digital-ledger technology faces a few obstacles, such as scalability and regulation, but those in the know are barely able to contain their excitement about its prospects.
The global financial crisis of 2007-08 left many marks behind, not the least of which has been increasingly complex financial regulation that has not been easy to uniformly enforce; meanwhile, digital technology is looming ever larger but has been relatively ignored by regulators, who are still coping with the decade-old crisis. The international regulatory debate should move towards a more forward-looking approach.
The global impact of money laundering is staggering; with related transactions estimated at 2 to 5% of global GDP – amounting to up to $2 trillion. The IMF defines money laundering as a process of conducting financial transactions in a manner that obscures the link between funds and their origin.
“The creatures looked outside from pig to man, and from man to pig, and from pig to man again, but already it was impossible to say which was which.” So ends George Orwell’s Animal Farm – a novel all about the danger of becoming that which you set out to oppose.
The cryptocurrency craze has been in full flow during 2017. Bitcoin seems to be setting record highs with every passing week. Initial coin offerings (ICOs) are turning traditional capital-raising on its head.