A recent report published by the British Bankers’ Association states that growing popularity of various cryptocurrencies is going to jeopardize “revenue streams of the traditional banking system.”
That’s true that digitisation has been altering lots of industries around the world. Moreover, it is changing the way financial system operates and banks do their business.The world of finance grows acquiring new characteristics. But are these relatively new features dangerous? Banks think that they may be.
In general, there are plenty of various opinions regarding the impact of the cryptocurrencies. For instance, JPMorgan’s CEO Jamie Dimon defined Bitcoin as a “terrible store of value. It could be replicated over and over. It doesn’t have the standing of a government. […] And honestly, a lot of it is being used for illicit purposes.”
Anthony Gallippi, co-founder and CEO of BitPay, a bitcoin payment processing company, told during a US Senate Committee hearing on digital payments that bitcoin “…will certainly disrupt existing fiancial services and their fee structures,” according to the report ‘The Digital Disruption: UK Banking Report‘ discussing challenges and opportunities from the digitisation of banking and published by British Bankers’ Association.
Still, it’s important to say that the financial world doesn’t have just negative opinions about Bitcoin. In the beginning of September 2014 the Bank of England published a report describing the technology behind Bitcoin – the blockchain – as a “significant innovation’ which has ‘far-reaching implications”.
Then, in February 2015 the above-mentioned bank stated in its discussion paper: “While existing private digital currencies have economic flaws which make them volatile, the distributed ledger technology that their payment systems rely on may have considerable promise. This raises the question of whether central banks should themselves make use of such technology to issue digital currencies.”
In fact, in an interview with Wall Street Journal, Oliver Bussmann, group chief information officer of Swiss bank UBS, expressed a similar point of view: “I believe — and this is my personal view — that blockchain technology will not only change the way we do payments but it will change the whole trading and settlement topic.”
He also added: “When somebody with a strong brand and security level establishes it as a reliable service, then the whole industry will follow. That is my personal prediction.”
As for BBA’s report, it suggests that the threat to bank’s free-income streams is growing as digital and cryptocurrencies gain traction. In addition, the report mentions BNP Paribas research analyst Johann Palychata’s opinion: “banks must invest time and energy in understanding how best to use the technology behind principles like bitcoin “…before other players step in to make that decision for them”.
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