There are high expectations associated with blockchain technology. Not only do blockchains power all of today’s popular cryptocurrencies, but they will also make a splash in the financial sector. BBVA CEO Carlos Torres Vila is confident that distributed ledgers will make their mark within the next five years.
The Financial Sector Needs Blockchain and Transparency
Even though the financial sector has grown significantly over the past five decades, it has also seen little to no real innovation. That in itself is always a bit worrisome, although it hasn’t caused that many issues until recently. Ever since the 2008 financial crisis, it has become apparent that some things will need to change sooner rather than later before consumers lose all confidence in this particular industry.
One particular technological innovation set to make an impact is blockchain technology. While it’s best known for its potential in the world of cryptocurrency, there are a lot of other potential use cases for this technology as well. As of right now, a lot of opportunities are being explored in the financial sector.
Despite the overall interest in new technologies, many believe that blockchains will not make an immediate impact. BBVA CEO Carlos Torres Vila, on the other hand, has a completely different opinion in this regard. He is confident that blockchain technology will transform financial services and products in the next five years, if not sooner. There is a good chance his vision will come true, depending on which products and services are developed.
There are myriad benefits to incorporating distributed ledgers in the financial sector. Multiple parties can have simultaneous access to a ledger which is constantly updated and immutable. It is important to distinguish between a distributed ledger and a glorified database, though. Whether or not banks will embrace the true decentralized nature of blockchain technology remains unclear at this time.
While Torres Vila’s optimism is to be commended, it is still up to individual banks to incorporate blockchain technology in a meaningful manner. Until consumers can access this new technology and witness its potential first-hand, there will be no immediate pressure to push banks toward newer technologies and solutions. Even so, various service providers are making their mark in the industry already, including the likes of Mercury FX and Western Union.
For the time being, it remains a bit unclear what impact blockchain technology will have in the financial sector. A lot of business models can be streamlined and made more transparent, although there is no ‘one size fits all’ solution either. A lot of interesting solutions will need to be explored moving forward, and the excitement will not quiet down anytime soon, for rather obvious reasons.