Blockchain Could Have Prevented The Wells Fargo Scam
Wells Fargo scam was possible due to non-transparent data management. Could implementation of the Blockchain have helped?
A major factor which played a part in the Wells Fargo scam was poor and non-transparent data management. Could implementation of the Blockchain have helped in preventing the occurrence of such fraudulent activities?
Bank too big to manage
The unethical behaviour by Wells Fargo has generated a lot of reaction from both the legal and the financial institutions in recent weeks. Wells Fargo employees secretly created millions of unauthorized bank and credit card accounts without their customers knowing it. The illegal accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money.
Wells Fargo claims to have fired 5,300 employees over the last few years related to this behaviour, but US Senator Elizabeth Warren insists that the management team must be held responsible for their inability to keep track of the procedures within the system.
“My view on this is one of two things, either they knew or they didn’t know. In which case, how can you run a giant multinational bank where you are supposed to keep track of people’s money, safety and security and not know what more than 5,000 of your employees are doing? If they really didn’t know, then that tells me that this is a bank that is simply too big to manage.” Says Warren.
Blockchain will introduce transparency
The Founder of Coinfirm Blockchain Lab, Grant Blaisdell, tells Cointelegraph that certain characteristics of the Blockchain such as client identity and KYC processes could be of help in the future. Blaisdell say:
“I see it in a few ways. First, at this point in time, it's kind of abstract but in the very near future it probably won't be, but it would require that banks truly built a wider infrastructure on Blockchain beyond what is heavily discussed today. But two ideas could help. One is that client identity, KYC process etc are registered in the Blockchain, and all activity related to that client ID is tied to that Blockchain and then, for example, a client can then transparently see what activity is tied to their ID. On top of that, any activity would have to be approved by their private key. And all of this could be put into their bank app.”
This is more of a legal issue
However, the CEO of EC District, Aleksandar Matanovic, sees the Wells Fargo case as more of a legal issue, rather than a technological one. Matanovic believes that the most effective way to correct such an anomaly would be by punishing offenders.
“As long as bankers easily get away with it, we will keep having such incidents. When someone starts putting bankers in prison for scams, they (the bankers) will think twice before doing something like this (the Wells Fargo scam). So, for me, it is more of a legal issue than it is a technological one.”