Why and How Banks Should Embrace Blockchain Tech

In the first of this three-part series, he discussed how banks dealt with the emergence of the Internet and how blockchain technology is causing these institutions a whole new headache.

Here, in part two, he looks at why and how banks should start embracing blockchain technology.

Build on-ramps, not barriers Banks can't really pick and choose a small subset of use cases and claim they are embracing the revolution.

Technically speaking, bitcoin, blockchains and their related ecosystem can replicate a bank today without much difficulty, both for consumer retail banking and business-to-business services.

Truth is, there will be pressure from consumers who are already getting a taste of freedom from banks via alternative FinTech services.

It's very possible that startups in the blockchain space will also be chiseling at the banks' business, just as dozens of successful FinTech startups have already dissected and unbundled many banking services.

Banks risk being on the outside looking in, if they don't build on-ramps and exits to the new world of cryptocurrencies.

In 1995, several banks and financial institutions issued warnings about Internet payments and online commerce as not being safe.

We don't need to hear that cryptocurrencies are high-risk, because of anonymity, or other factors, just because banking executives don't fully understand them yet, or because the banks are not yet ready to adopt them.

The banks must meet these startups half-way by dreaming-up how to apply their technology.