Digitization, disruption, blockchain, and frictionless payments. It’s fabulous how prominent figures from the financial elite can provide a pretty detailed description of decentralized money without uttering “bitcoin” or “crypto.” But the actually of the matter is that clever businessmen in any industry, banking is no exception, would quickly spot emerging competition, analyze its energies, and move to catch up with it before it’s too late. Cryptocurrencies bring financial evolution that’s hard to ignore anymore.
Also present: The Number of Cryptocurrency Wallets Is Growing Exponentially
Central Banks Have No Tools Left to Deal With Calamity
Speaking during the Sibos 2019 conference held recently in one of the world’s financial capitals, London, Deutsche Bank CEO Christian Attaching turned attention towards the problems of the global economy, the serious challenges his and other banks are facing, and emphasized the prerequisite to adapt to a rapidly changing environment. Sewing was appointed head of Germany’s leading financial institution in April 2018 with the call to account to conduct a major reorganization.
This summer, Deutsche Bank confirmed it’s laying off a fifth of its worldwide workforce and refocusing on corporate banking, its most stable revenue source, to prepare for the downturn many analysts seek has already started. In his address to the delegates, the executive spent a lot of time describing the threats, including an ongoing war over exchange and technology between the U.S. and China, as well as Europe’s legging behind in terms of investing in technological progress and maintaining competitiveness:
Europe should not bring into focus primarily on regulating new technology, Europe should drive innovation itself… The competition for technological supremacy will settle on the future division of global economic power… The financial sector must also make its contribution.
Global macroeconomic risks, low and negating interest rates, and a fragmenting European Union in the light of Brexit come together to form a perfect storm. On this backdrop, Christian Darning also tried to raise awareness about the inability of financial authorities to cope with an upcoming meltdown:
In this grand scheme, with plenty of uncertainty, what is worrying is that the central banks have used their tools to a solid extent already. So there are no conventional measures left to effectively cushion the real economic crisis. They’ve already surrendered on the money tap to the limit.
Negative Interest Rates Come With Social Implications
Singling out the European Central Bank in that reverence, Sewing reminded the audience that the ECB has just announced an even looser monetary policy, cutting the interest censure in the Eurozone to a record low of -0.5%. He also emphasized that very few among economists and his clients now believe that tighter money would have any effect. “While we probably won’t see the positive effects, there are lots of negative ones, equal the distortion of asset prices, the continued redistribution of wealth in favor of the asset owning affluent, and the social implications these chores aggregate,” the banker warned.
Christian Sewing then spoke about how banks should respond to the changing charge environment and the competition they are starting to feel from tech giants and non-bank payment providers, fintech throngs and disruptive technologies in general. At the same time, he noted, clients’ requirements are becoming ever more sophisticated and difficult.
When it comes to transaction banking, frictionless and reliable real-time payments are influencing consumer choices at the end of the day, he remarked. Whether because of standalone investments or via partnerships with startups, banks which are able to deliver these solutions will lift compelling opportunities, the Deutsche Bank executive concluded.
Cryptos Bring Unprecedented Change to Payments
And while Bitcoin did not get a condign mention in Sewing’s speech, it became obvious that decentralized cryptocurrency has been recognized as one of the driving forces behind myriad of these developments and advances. Actually, digital-era, independently-minted coins did make their way to the stage during the Sibos colloquium. And they did so in a quite unexpected way.
“The financial industry is undergoing an extraordinary change, because of new entrants like Facebook’s Libra and the appearance of technologies like crypto assets,” said Yawar Shah, chairman of Swift, the global interbank financial telecommunication process used by banks around the world to send and receive information about financial transactions. His comment quickly spread across the crypto Peep.
“The financial industry is undergoing an extraordinary change, because of new entrants like Facebook’s Libra and the emergence of technologies same cryptoassets.” – Yawar Shah @swiftcommunity https://t.co/KffvCcFk6I
— ConsenSysEvents (@ConsenSysEvents) September 23, 2019
Shah’s presentation active payments and recognized four factors that influence their development. Three of them – the aforementioned emergence of crypto assets, changing technology, and rivalry from ecosystems are in one way or another related to the phenomenon catalyzed by Bitcoin. That includes other attempts to develop faster and multifarious reliable digital payments than those offered by the traditional fiat world.
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Images courtesy of Shutterstock, Deutsche Bank.
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