Wells Fargo, a well-known US financial services broker, that offers its own bank, payments network, credit cards, loans and more, announced today its own pilot program to use distributed ledger technology, commonly known as blockchain for their internal network of clients.
It is obviously not the first bank to attempt a private blockchain, with JP Morgan’s already using an Ethereum-based private ledger, Bank of America, and ING among others using R3’s Corda ecosystem, and many Japanese and Korean banks preferring Ripple’s XRapid (XRP) when it comes to digital settlements.
The major difference is that for now, it is unclear whether Wells Fargo will be using a pre-established blockchain network, as the prementioned banks did, or plans on creating its own blockchain from scratch.
The fact that it will be backed by the United States Dollar (USD), but not be able to be used in a cross-border fashion with any other digital payments service is also notable.
The financial company previously completed a successful pilot within its ecosystem using US and Canadian banks as the peers of the network.
Lisa Frazier, head of Innovation at Wells Fargo, said that such a system will allow the bank to bypass third parties involved in the asset transfer process, eventually saving money and time for the company.
“We are eliminating the intermediaries which can often extend the timeline to be able to do cross border money transfers,”
Additionally, Wells Fargo says that nothing will change for their individual and corporate clients, as the system is meant to not affect the clients’ interactive interface with the bank, meaning that the background process of how money is transferred will be changed, while a client’s action to do so will remain practically the same.
Quite convenient I would say. It reminds me of the Greek European Parliament member Eva Kaili, who said that people won’t have to understand blockchain for it to be adopted, they will just have to keep paying for that coffee.
Wells Fargo believes that while blockchain technology has huge potential, cryptocurrencies such as Bitcoin, which is basically the reason blockchain is known, to begin with, will not be part of the future of payments.
We can breathe the same air in Europe, where earlier this Monday, 28 Central Banks, including the European Central Bank, and the Federal Reserve Bank of New York, had a meeting with high-ranking Libra Association executives to settle on whether it (Libra) should be discussed further or if Facebook’s native cryptocurrency should be banned before it even enters European soil.
A lot of European countries, with Germany being the most recent, announced the development of their own, government-backed digital currency, not just to fight Libra, but similar to Wells Fargo, to express concerns of volatility attached to certain projects and not blockchain technology as a whole.
Concluding, it seems that the worldwide banking scene is now fully-focused on the developments in the DLT sector. While we still have some regulatory barriers that will delay mass adoption, it is now clear that blockchain is part of our lives, starting from the unavoidable global financial network.