Deutsche Bank, a German global banking and financial services company has released yet another research paper about the blockchain technology entitled “Attack is Probably the Best Form of Defense,” to expound on the potential applications of the blockchain technology in the traditional financial sector and the banks’ increasing interest in the technology.
“Several financial institutions have already established what are known as innovation labs that deal exclusively with all the technology involved in the blockchain,” writes Thomas F. Dapp of Deutsche Bank on the company’s research forum. “However, stock exchanges, credit card firms, clearing houses and insurers are also increasingly focusing on the technology and analysing the potential of the P2P movement for their own purposes.”
The research further explicates the impact of the blockchain technology on intermediaries and third party operators, since a successful implementation of the technology could threaten their existence and eliminate them once and for all.
“Blockchain technology is one of the first truly disruptive ideas from the fintech sector. After all, pure blockchain theory says that not only will individual business divisions of traditional banks become redundant in future, but there could also be a real paradigm shift in the prevailing financial system, because many intermediary services could be replaced by a P2P network.”
On the flipside, the “speed, efficiency, internationality and cost savings” that the blockchain technology could provide to the financial sector could help banks interact with each other, settle payments, transfer assets, etc. The author then outlines how banks could benefit from implementing the blockchain while retaining their customer base.
“With a new proprietary digital IT infrastructure banks could thus quite conceivably be able to position themselves relatively well in relation to the blockchain technology. Furthermore, in the blockchain age, it is also conceivable that banks could additionally assume new tasks – e.g. as custodians of cryptographic keys. While such activities would probably generate little revenue in comparison with today's business models, this extra service could help to ensure that customers stay on a bank's own financial platform longer in order to use other monetarisation options. To this end, traditional banks would have to play their wild card of trust – which they (still) hold – in a much better way than has been the case so far.”
However, the bank’s research concludes that the blockchain technology is still in its infancy, and the regulations and policies of governments worldwide could slow the growth of bitcoin and its underlying technology.
As previously reported by Cointelegraph, Deutsche Bank has begun to show increasing interest in the blockchain technology and digital currencies since at least June of this year, launching three Startup Innovation Labs to accelerate fintech and blockchain startups globally. Since then, the German banking group has been working side by side with blockchain and fintech startups to improve the technologies and systems used in the banking industry.