Bank of America, Chase the Latest Banks to Buy into Blockchain
So much has happened with blockchain over the past couple of weeks—so very much—but let’s talk about the banks:
Firstly, Bank of America is the latest to join the ranks of financial institutions experimenting with blockchain. Bank of America Merrill Lynch recently announced at Sibos that it was collaborating with Microsoft to run a proof-of-concept with the technology, attempting the first-ever blockchain transaction between a corporate treasury and a financial institution to run on Microsoft Azure.
Of the project, Chris Bozek, head of global product and head of North America, global trade and supply chain finance at Bank of America Merrill Lynch—that is a title—told Bank Innovation:
Through these POCs, Bank of America Merrill Lynch continues to “test and learn” about distributed ledger’s technology capabilities and limitations, as well as defining the challenges ahead in moving forward from a proof of concept to commercialization. The POC was successful, as it demonstrated that digitizing the documents and making them available to all parties on a near real-time basis can significantly streamline and improve the end-to-end process for all parties. Moreover we learned how transacting trade via “blockchain as a service” in the Azure cloud can help address the adoption challenges. While much work lies ahead, we are very encouraged by this pilot, and look forward to moving the project forward.
Microsoft’s Azure is cloud-based, which allows for greater security when banks are completing transactions. According to Bozek, Microsoft also served as the user in this proof-of-concept, standing in for the role of a multinational corporate treasury, while Bank of America served as the advising bank.
In other bank and blockchain news, JP Morgan Chase has built Quorum in partnership with EthLab, a blockchain based off ethereum that will allow the bank to conduct hundreds of transactions each second according to the presentation documented here.
As you’re probably aware, these two banks are not the only ones experimenting with how blockchain technology could potentially revitalize the world of banking—Bank of America and Chase join the fifteen banks collaborating with Ripple, for example, and Bank of America is already on the Global Payments Steering Group or GPSG.
Obviously, this is a technology that has captivated the banking world—but why, exactly?
David Horton, head of digital innovation at Synechron, says it might have something to do with the changing tides of the finance world:
“The advent of fintechs—which are really changing the culture of banking—rubbed off on the industry,” says Horton of the rise of blockchain; Synechron has also recently launched six blockchain accelerators for enterprises including mortgages and trade finance. “More than 70 banks are now in the R3 Consortium collaborating on a common ground; as [blockchain] sort of matures it could bring a new efficiency to these sort of processes.”
Bank of America and Chase are just two out of a multitude that are attempting to utilize blockchain to improve or push the gears of finance to the next level, and yes, this push may have come about because of the rise of fintech—competition inspires progress, after all.
But as Horton and others have pointed out, blockchain technology is still in its early stages, a fledgling in the same stages as artificial intelligence, or biometric security; all technologies that have yet to reach their full potential.
According to Horton, the real revolution of the banking (among other) industries will come not only when blockchain has sufficiently matured but when it is combined with equally sophisticated AI or like technology.
“The intrinsic value that you get [from a blockchain] is the trust; but it’s really a combination of technologies that will drive the industry forward,” says Horton.
In case you were curious about what else happened with blockchain, people are still really, really unhappy about Accenture’s proposed editable blockchain; “the war drums could already be heard from the Ripple camp last week” at Sibos (who exactly is it battling? Just curious), where Ripple either stole the show or ruined it depending on who you follow on Twitter; Hyperledger developed a working blockchain for healthcare needs, and a group of attorneys formed the “blockchain legal defense coalition.”
via Bank Innovation http://ift.tt/L6cPGg
October 4, 2016 at 03:23PM