Decentralizing banking processes won’t actually kill financial service companies–at least according to those financial service companies.
In fact, decentralization may be beneficial for banks, depending on “what do you mean by decentralization,” said Jared Harwayne-Gidansky, North American lead of the emerging business and technology group for BNY Mellon. “Decentralization where you are innovating and creating is great. Decentralization in the sense that there will be no more banks, well, it depends on the application,” he said during a panel at the Ethereal Summit today
In any case, the banking system will not transform “overnight,” he added: “I don’t think the banks will disappear. Will they have to change how they operate? Of course, but most [businesses] need to be flexible.”
Blockchain enthusiasts have long championed the rise of the Internet 3.0–a truly decentralized network that will usher in the rise of new business models, rendering established institutions such as banks and other financial service companies obsolete.
By contrast, bankers and incumbents are skeptical that this new technology will sound the death knell. After all, the original Internet (1.0) was also talked about as a decentralized network, Luke Robert Mason, director at Virtual Futures, pointed out during the event.
However, these incumbents are growing more and more aware of the potential effects blockchain can have upon their business practices; almost a third of financial services organizations are “actively engaged” with blockhain projects, a recent study from IBM suggests.
But while blockchain technology is becoming “largely pervasive” for financial services, according to Sandra Ro, head of digitization at CME Group, it probably won’t induce the same kind of rapid change that it will in other industries–and it’s unlikely to kill the idea of the bank completely.