NEW YORK -- “While some banks around the world disrupt their existing businesses to follow the trend after the emergence of distributed ledger technology (DLT), other banks are rejecting this. Of course, it’s right to disrupt existing businesses to build innovation and provide different services. However, because of the absence of a clear profit model, banks have yet to emerge from the proof of concept (PoC) stage.”

In the “Consensus 2019” blockchain conference under way in New York Wednesday, bankers voiced in unison, “Banks never perform unprofitable businesses. No matter how nice their technology is, the reality is that they can’t make products unless their profit models are clear.”

Lior Glass who is leading BNY Mellon’s blockchain business said, “We can’t embark on a new project merely because DLT boosts efficiency. We have to consider production costs and profit rates together.” Yet his position is that one needs to wait to find out how the industry changes. “It’s necessary to foretell how our existing system would change after the advent of new technology. This is because we have no idea of where we would stand 5 to 10 years later if we begin researching DLT even now,” he explained, meaning that banks have to prepare for the future although profits are not created right now.



Bankers say few banks have already adopted or are about to adopt DLT. Jorge Lesmes who is leading the blockchain unit at everis, part of NTT Data, said, “Few banks are trying to adopt DLT. It is surely a promising technology but not prioritized in the banking industry at the moment. Much to our regret, cyber security is unbeatable.”

Mark Smith, CEO of Blockchain-focused company Symbiont, concurred on this, stating, “Banks cannot but be careful with even promising technology because all existing systems must be touched to introduce DLT.” According to Smith, the U.S. banking industry is currently in the stage of thinking of whether DLT could create new value. “Even after DLT introduction is determined, it might take more than 10 years to revamp infrastructure. Changing the bank’s core system with one technology won’t go smoothly all the way,” he said.

There are also voices claiming that regulation must be addressed before technology. “There are lots of things to consider before discussing the quality of technology. What needs to be scrutinized most precisely is regulation,” Glass said, meaning that banks must be careful because financial regulation as well as infrastructure could be touched when introducing technology.

Yet all these bankers are convinced that DLT will be the trend. Oleg Abdrashitov, director of the Blockchain Laboratory at Sberbank, said, “DLT is perceived as a grand opportunity in Russia. DLT can help reduce risk by destroying inefficient parts.”

All of them are working on DLT at present. Asked about the promising sector by the moderator, they cited the lending management system on the blockchain and new commercial paper.

On a question asking if DLT will be promising because it can be used as an overseas remittance and payment solution, they replied, “DLT-based solutions are weak in computerized networks unlike SWIFT.” “DLT could bring a new paradigm by optimizing global liquidity and adding speed to the payment sector. Still, however, there are lots of unstable factors and inconveniences in using overseas remittance and payment solutions without intermediaries,” they stated. /yjk@decenter.kr

사동석 기자

sahds@dcenter.kr