On June 20th, Chief Operating Officer of Goldman Sachs Group Inc. David Solomon said that their investment bank is studying blockchain transactions and developing tools for working with cryptocurrency transactions. According to Solomon, in the near future, the company plans to launch full-fledged services for trading futures with Bitcoin, rather than fiat money. After all, Goldman Sachs should "develop its business and adapt to the environment," said the operational director, although the bank's CEO Lloyd Blankfein said cryptocurrencies do not deserve attention.
The attitude of banks toward cryptocurrencies has not changed from the moment of their appearance. Financial and credit organizations still do not know how to perceive blockchain technology and the entire industry. Some banks (such as China Minsheng Banking, Commerzbank, and UniCredit) are involved in research and testing of the use of blockchain for conducting operations on international accounts. Other financial institutions, such as BNP Paribas, are confident that cryptocurrencies are doomed since they differ from the traditional monetary system. Although in 2015, a large world bank from France intended to include Bitcoin in its currency fund.
What are the other leaders of the financial sector from the top 100 rating of the world's banks in terms of assets from the S&P Global Intelligence to the blockchain industry and the cryptocurrency market?
Banks: China Construction Bank, Agricultural Bank of China, Bank of China
Place: 2 and 4 (total capitalization of $8.43 billion)
CCB, Agricultural Bank and Bank of China are the undisputed world leaders among banking institutions and second only to another Chinese conglomerate, the Industrial & Commercial Bank of China. But, unlike it, the CCB, Agricultural Bank and Bank of China view the blockchain as a technical platform for simplifying domestic financial activities. For example, in 2017 all three state corporations introduced decentralized registries.
The CCB has launched a site from a blockchain for the solution of international interbank loans for small businesses, which will be implemented in the retail and commercial banking division in Hong Kong. This was announced after the Deputy Director General of CER Guo Zhipeng confirmed the beginning of cooperation with IBM, the largest software manufacturer.
"After the successful launch of this blockchain project, we plan to extend our experience to other insurance partners to optimize our overall banking insurance business," says Zhipeng.
In its annual report, the Agricultural Bank said that the bank had developed a blockchain network for loans to unsecured Internet sellers in the agricultural sector. The new technology will help to fully automate the process of providing loans.
Bank of China has also announced its desire to create its own digital wallet. In addition, the bank's technical specialists have completed testing of their blockchain in the past year and have already begun to implement the system in their divisions. A month ago, it became known that the Bank of China wants to create a platform together with Agricultural Bank that would help monitor the work of the fund aimed at combatting poverty in Tibet and check all social payments for the poor. Thanks to the blockchain, it will be possible to increase the transparency of all payments, and therefore, raise the standard of living in the underdeveloped region, as the experts of the bank believe.
It is important to note that the introduction of blockchain technologies is taking place in state banking institutions despite the government ban concerning ICOs, and contrary to the desire to liquidate mining.
Bank: Mitsubishi UFJ Financial Group Inc.
Place: 5 ($2.58 billion)
In 2017, the banking division in Tokyo Mitsubishi UFJ Financial Group announced the creation of a platform for new payment methods using digital currencies. The MUFG, however, did not stop there and planned to launch its own crypto exchange and cryptonet, which will be supported by the national Japanese yen, as well as the service of separate Bitcoin accounts at the beginning of 2019. About 100,000 customers of the company will be able to participate in testing the network and the digital money. To do this, the users need to download an application that automatically converts their deposit to MUFG Coin tokens by a 1:1 equivalent ratio to yen.
"Users will be able to pay with digital money in restaurants and shops and, if necessary, transfer funds to the accounts of other project participants. If the launch does take place, MUFG will be the first Japanese bank with its own cryptocurrency," said the representatives of the Japanese financial institution.
Bank: JPMorgan Chase & Co.
Place: 6 ($2.49 billion)
JPMorgan is one of the banks most interested in the blockchain sector. Information about regular tests and studies periodically appears in the media and on the pages of government agencies. For example, in May of this year, JPMorgan's patent application for a blockchain system for the implementation and coordination of financial transactions was published on the website of the US Patent and Trademark Office (USPTO). After all, according to the experts of the bank, blockchain will help improve existing banking operations.
"One option for processing network payments using a distributed registry may include a sender of payment, a sender's bank, a beneficiary's bank, a sender's bank," as JPMorgan said in the application document.
Earlier, the bank launched the platform of interbank payments on the Quorum blockchain. But despite the predisposition to the use of technology, JPMorgan Chase prohibited buying cryptocurrencies with their credit cards because of high risks. In addition, bank traders for trading Bitcoins and other cryptocurrencies are threatened with dismissal, as, according to the head of JPMorgan Chase, Jamie Dimon, there are reasons for this: "First, it contradicts our rules; secondly, they [traders who have been dealing with cryptocurrency] are fools."
Bank: HSBC Holdings Plc
Country: United Kingdom
Place: 7 ($2.37 billion)
The British conglomerate HSBC, as well as many other leading world banks, is testing the blockchain. In May of this year, together with ING Bank NV, a successful transaction was made using a digital application. The letter of credit was reinforced by the supply of soybeans, which were transferred from Argentina to Malaysia. The transaction took one day instead of ten days, says HSBC's director of innovation and growth of commercial banking Vivek Ramachandran.
"Due to blockchain, there is no need for paper reconciliation, since all sides are connected on a platform, and updates take place instantly," Ramachandran said.
But the attitude to the cryptocurrency from the representatives of the bank remains skeptical. Director of HSBC John Flint believes that the banking business requires transparency, but all cryptocurrency transactions remain anonymous.
Bank: BNP Paribas
Place: 8 ($2.19 billion)
In 2014, during the period when Bitcoin became popular among laymen, the largest French bank assumed that the new digital currency would be a substitute for the existing settlement system. BNP Paribas even intended to add Bitcoin to one of its funds, said financial institution analyst Johann Palychata.
"Investment funds have good chances to become one of the first real banking users of cryptocurrencies. This will ensure the emergence of a standardized platform for international distribution," Palychata said about his point of view and added that Bitcoin, with its constant development, can do without banks.
But two years later, the mood and attitude towards Bitcoin from BNP Paribas changed dramatically. Specialists published a report in which they described their vision of the prospects of Bitcoin. In their view, the cryptocurrency will not be widely spread due to its structure, which is aimed at curbing the growth and absence of a "lender of last resort.” The bank also notes that the cryptocurrency may pose a risk to the monetary policy of individual countries.
Around the same time, BNP Paribas launched a test program for processing payments and transactions between branches of the bank, which are located in Germany, the Netherlands, and the UK. The pilot project was then part of the Bank's "Cash Without Borders" program for international payments, which uses distributed accounting technology to avoid delays, unexpected costs and errors in processing, and also provides real-time calculation and reporting, says Jacques Levet, Head of Transaction Banking EMEA at BNP Paribas CIB.
"Perfect translations demonstrate that blockchain technology offers real opportunities to significantly improve our offer for corporate treasury managers. We plan to accelerate our participation in a number of market initiatives aimed at improving corporate payment experience using a distributed registry," Levet said.
Bank: Bank of America Corp.
Place: 9 ($2.18 billion)
BoA is one of the leaders in the study and implementation of blockchain in the banking system. It is this financial institution that accounts for the largest number of patent applications that relate to the automatic exchange of digital currencies.
"We try to be one step ahead. Many are surprised that our bank is occupied with patents for technologies with blockchain and cryptocurrencies. In the world of intellectual property, however, it is extremely important to reserve a place before the commercial application is available," said Cathy Bessant, head of the Department of Operations and Technologies of the WA.
But in March 2018, the bank, together with JPMorgan, banned the use of its credit cards for the purchase of cryptocurrencies. This is due to the fact that customers can spend large amounts, which are then difficult to pay. Although, unlike its competitors, VoA left the right to contribute to digital assets through debit cards.
The annual report of Bank of America on the results of 2017 was published in the same period, and it stated that Bitcoin and other cryptocurrencies pose a threat to the business model of the bank. Digital assets are on the list of risks along with a number of economic, geopolitical and operational risks, said Cathy Bessant, who previously spoke about patents.
"As a payment system, cryptocurrencies are a reason for concern. After all, the basic principle of the banking system is transparency between the sender and the recipient, and Bitcoin is designed to be opaque," Bessant said.
Bank: PJSC Sberbank
Place: 64 ($413.58 billion)
Sberbank, the only Russian representative in the Top 100 list of world banks in terms of capitalization, does not lag behind its competitors and is testing blockchain platforms. In early 2018, a laboratory was opened to study the functioning of blockchain. The subdivision will cooperate with startups and all those who want to implement the technology on the network, says Igor Bulantsev, senior vice president of Sberbank, head of Sberbank CIB.
"Blockchain can significantly change many business areas related to the financial market, and to the classic activities of the bank and our customers. The development and implementation of the most promising technologies is not only an important element of our competitiveness as a bank but also an indispensable part of our future as a technology company. It is important to note that blockchain is a tool for increasing the effectiveness of interaction between market participants," says Bulantsev.
As noted in the press service of the bank, Sberbank has created more than 20 different pilots for blockchain technology, including solutions with the mining company Severstal, the electronics store MVideo and FAS, which are already used in practice. In addition, Sberbank together with Alfa Bank conducted a blockchain transaction.
Also in January 2018 it became known that Sberbank intends to conduct trading operations with cryptocurrencies through its subsidiary, which is located in Switzerland, Sberbank Switzerland AG, as Russian legislation does not allow transactions with the help of digital assets. This was stated by Andrey Shemetov, the head of the department of global markets of Sberbank CIB.
"Conducting trade operations with the cryptocurrencies will be available only to legal entities. We want to satisfy the interests of our clients, therefore we believe that we should have access strategically to any kinds of services and products," Shemetov said.