A significant and rapid move towards blockchain adoption was made by Bank of America in recent days. The banking industry giant filed 20 (!) new patents related to blockchain in addition to the 15 that it had submitted to the US Patent and Trademark Office (USPTO) earlier.
Bank of America COO and CTO Catherine Bessant commented to CNBC that the bank has a strong interest in the technology and plans to submit 20 more patents later this month.
"<…> we have tried to stay on the forefront. I think we have somewhere around 15 patents; most people would be surprised at Bank of America with patents in the blockchain or cryptocurrency space. (It's) very important in the intellectual property world to reserve our spot even before we know what the commercial application might be," commented Bessant.
At the end of last year, the USPTO revealed a list of 10 patent applications that were filed by another major bank—US bank—earlier that year. Submitted patents covered a range of applications from a cryptocurrency transaction payment system to offline storage risk detection.
Bank of America is clearly not the only one aggressively patenting blockchain technology applications. Other major financial institutions like Bank of England have released a number of notes over the last year on the potential of the technology and have created teams within their organizations to look into how to develop cryptocurrency, as reported by CNBC.
Bessant also shared her insights on blockchain and the reasons it is an attractive field to get into, "Blockchain is very intriguing and for us, it's a balance between not wanting to be Neanderthal but not wanting to put something out in a commercial application where the commercial application is still very unclear. As a technologist, the technology is fascinating."
Blockchain technology was a hot topic in 2015 and is expected to be even hotter in 2016. The LTP team has been actively following activities around blockchain adoption in 2015, which demonstrated strong interest from banks for the technology and opportunities it provides.
A comprehensive overview of activities by financial institutions and banks around blockchain can be found here.
Financial institutions globally are setting up teams to explore the ways blockchain can boost operations in various implementations.
One of the examples is a team of computer engineers from the Commonwealth Bank of Australia, which has built a working “blockchain” in its innovation lab in Sydney to show regulators how blockchain might be used to reduce risk and the costs of making international payments or other applications.
Another financial institution to play with blockchain is Visa Europe that in November 2015 announced its collaboration with Epiphyte, a provider of blockchain-based SaaS for immediate financial transactions. Visa Europe Collab and Epiphyte, a recent graduate from San Mateo incubator Boost VC will be working on a proof-of-concept to use bitcoin and blockchain capabilities to make remittance services more efficient and easier to use.
Even though blockchain is believed to have flaws in application, FinTech startups working with technology are attracting significant attention from banks as the advantages of the application are expected to take banking to the next level.
Recent news from R3CEV serves as a proof of the real-life applications as the consortium has announced its first distributed ledger experiment, involving 11 of its member banks, using Ethereum and Microsoft Azure’s blockchain-as-a-service. The 11 member banks and R3 are connected on a private P2P distributed ledger, underpinned by Ethereum technology, and hosted on a virtual private network in Microsoft Azure, the public cloud platform offering blockchain-as-a-service (BaaS). These 11 banks include Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo. Multiple tokens among offices in North America, Europe and Asia were exchanged over a period of five days, from January 11 to January 15, on this private blockchain. Banks also witnessed instantaneous financial transactions across the global private network. The banks simulated exchanging value, represented by tokenized assets on the distributed ledger, without the need for a centralized third party.
Another significant step in blockchain adoption was taken in December by NASDAQ. The company has announced that its blockchain ledger technology, Linq, was able to successfully complete and record a private securities transaction—the first of its kind using blockchain technology. Blockchain startup Chain documented the issuance of shares to a private investor using NASDAQ's blockchain-enabled technology.
As previously covered by LTP on many occasions, blockchain use cases have gained huge traction not only in terms of funding but also in terms of bank and financial institution partnerships. Especially, the non-financial use cases have started to attract a host of startups to building a multitude of solutions that can leverage blockchain. To prevent falling behind, every major bank now has a dedicated team looking at the potential and new ways to explore blockchain. Lending companies are also actively looking at blockchain.