William Mougayar is a Toronto-based angel investor and four-time entrepreneur who advises startups on strategy and marketing. In the first of this three-part series, he discussed how banks dealt with the emergence of the Internet and how blockchain technology is causing these institutions a whole new headache. Here, in part two, he looks at why and how banks should start embracing blockchain technology.
Build on-ramps, not barriers
Banks can’t really pick and choose a small subset of use cases and claim they are embracing the revolution. If you use “blockchains without bitcoin” just to avoid public blockchains, you will be subjected to a huge market blind spot because there are millions of users that want to trade with bitcoin, and you’ll be insulated from them.
Bitcoin’s adoption does not seek permission from any bank or government. The cat is already out of the bag, and a new parallel financial environment is forming around it and other cryptocurrency-related technologies, powered by networks of computers that secure it, validate it, enforce it and run it.
If financial services were to be re-invented today from scratch, we would be fine with virtual, online, Internet and blockchain-enabled services. There would be no traditional bricks and mortar branches.
Instead of visiting a branch, we would do a video call with a remote service representative who can verify our identity, and it goes from there. Technically speaking, bitcoin, blockchains and their related ecosystem can replicate a bank today without much difficulty, both for consumer retail banking and business-to-business services.
Truth is, there will be pressure from consumers who are already getting a taste of freedom from banks via alternative FinTech services. Blockchain-enabled solutions will take that freedom bar even higher via decentralization, peer-to-peer behaviors, and by putting
Originally appeared at: http://www.coindesk.com/why-and-how-banks-should-embrace-blockchain-tech/