May 24, 2022

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Banks, capital markets embrace blockchain in automation push

The robots are coming– for your money.

With banks and capital markets expected to trend towards more automation, firms are slowly considering applying blockchain technology — the foundation of the cryptocurrencies — in the midst of a digital acceleration that heightened during the COVID-19 pandemic.

“We aren’t entering into a complete disintermediation of middlemen in the near term,” Matthew Blake, the World Economic Forum’s head of shaping future financial and monetary systems, speaking at Yahoo Finance’s Future of Finance.

“But we do see increased adoption, and the critical decision on whether or not blockchain technology is adopted is really the use case that’s in question,” he added.

Blake sees rising evidence of the integration of blockchain technology, which underpins Bitcoin (BTC-USD), Ethereum (ETH-USD) and Solana (SOL-USD), among other digital coins.

He noted examples like certain repurchase agreement functions being repurposed on digital ledgers. Also, securitized products are being digitized and used in offsetting accounts receivable/payables in one currency.

In general there’s a push towards digitalization, according to Blake, a trend that was already well established before the pandemic, but has been accelerated by the virus. Banks are embracing technologies like artificial intelligence, machine learning, chat bots, and robots.

The pandemic, which caused and rely on smartphones to shop and conduct business, also prompted financial firms to pivot rapidly. Changes included how they carry out business, like handling customers and protecting against fraud.

“The benefit of technology supporting those processes was huge,” Blake told Yahoo Finance. “So we saw a major uptick in adoption and in a migration toward cloud computing, and multi cloud strategies. So I think those operational forces are here to stay.”

Blake stated that banking institutions are also starting to think beyond profits, to thinking about all stakeholders in their business. That includes the people the bank deals with, to the communities, the planet, and the purpose of their institutional mission.

“The ability to maintain that one social license in an operating environment became much more critical and having a narrative and the substantiating data to support that narrative is a fundamental shift, I think that has been yet again, accelerated as a result of the COVID environment,” Blake added.

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