Standard Chartered Innovation Chief Bullish on Bitcoin for Financial Institutions
Standard Chartered Chief Innovation Officer Anju Patwardhan is the latest senior banker to praise the potential of the blockchain technology behind Bitcoin as a way to cut costs and improve transparency for financial transactions, Finextra reports.
Standard Chartered is a British multinational banking and financial services company headquartered in London. It operates a network of more than 1,700 branches and outlets (including subsidiaries, associates and joint ventures) across more than 70 countries and employs around 87,000 people.
Patwardhan has 25 years of banking experience, with Standard Chartered and Citibank, in regional and global roles in Credit Risk and Operational Risk Management. She is an IBF distinguished fellow, the highest banking accolade in Singapore, and a fellow of Singapore Management.
Finextra notes that Citi, UBS and Barclays all have recently confirmed that they are exploring the blockchain, while a BNP Paribas analyst speculated that the distributed ledger has the potential to completely upend post-trade infrastructure.
Writing on Linkedin, Patwardhan proposes that Bitcoin could be a disruptive force for good. The financial services industry is being disrupted and digitally re-imagined, and some of the disruptors, who are working to revolutionize current business models from the ground up, could become mainstream.
“Bitcoin has been viewed uneasily as an exotic alternative currency,” notes Patwardhan. “But the banking industry is starting to see the many potential benefits of its underlying technology. For banks, the blockchain has the potential to become a technology model for a low-cost and transparent transaction infrastructure.”
Patwardhan is persuaded that the technology of Bitcoin could permit drastically reducing the price of financial services to the benefit of consumers, and be adopted to make financial transactions more secure and traceable for banks and regulators.
Of course, Standard Chartered and other financial institutions must comply with regulations (anti-money laundering, know-your-customer, etc.) and make sure that their financial technology systems aren’t used to fund undesirable activities. Of course, Patwardhan mentions drug trade or terrorism, like all banks and financial service providers are doing these days, although some restrictive regulations seem rather aimed at keeping peaceful, law-abiding citizens and business under constant surveillance.
The reason why the regulatory authorities and world of mainstream finance are warming up to the emerging blockchain-based fintech is that, contrary to naïve perceptions, bitcoin transactions are not anonymous. Every transaction and the full transaction history of any bitcoin address are permanently recorded in the tamper-proof public blockchain, and therefore open to analysis and often more easily traceable than traditional transactions (let alone paper cash transactions).
Therefore, “sanitized” implementations of blockchain fintech could become useful tools for the authorities to fight crime, as well as any activity that they find undesirable. With the use of blockchain technology, says Patwardhan, transactions can be fully recorded and traced, making the ultimate destination and use of the funds clearer.
“Whether cryptocurrencies, the likes of Bitcoin, will fail or succeed remains to be seen,” concludes Patwardhan. “But if they do take off, it is not impossible to imagine a scenario where even the central banks themselves might look at issuing digital currencies. No bank can afford to ignore what it augurs for the ongoing avalanche of digital innovations to come.”