Wells Fargo and Mastercard have both been experimenting with blockchain technology, but their CEOs say it has yet to pay off.
Despite their research into blockchain technology, the CEOs of the two major financial firms say the technology has yet to live up to the hype. Wells Fargo CEO Tim Sloan and Mastercard CEO Ajaypal Banga both told CNBC’s Andrew Ross Sorkin at the Fintech Ideas Festival yesterday that they agree the “fundamentals are interesting,” but that “blockchain has been way oversold.”
The CEOs point towards the pilot programs which have been met with lackluster results. The Commonwealth Bank in Australia, for example, just recently tried using blockchain for trade transactions. However, this experiment resulted in just one real transaction.
Mastercard, nonetheless, is deeply invested in the blockchain space. Banga told CNBC that the potential really lies in its ability to improve supply chains and prevent the counterfeiting of goods. To ignore this “would be a bad idea,” he says.
The sentiment has been echoed across other financial firms as well who, after investing their time and money into the technology, don’t see the returns just yet. Just recently, the Chief Operating Officer at Bank of America argued that, secretly, she was pessimistic about the technology.
It remains difficult to say for certain whether or not these large financial firms will stick by their current commitments to blockchain technology. What’s lacking from their comments, however, is the recognition that blockchain-based networks still aren’t properly scalable. This creates a whole host of issues for financial firms which must handle hundreds of thousands, if not millions, of transactions every day. Right now, many of these firms are investing in the hopes that the technology can someday reach its potential.
Others in the traditional financial market, however, are not so pessimistic. Fidelity, for example, has been leading the charge in making blockchain a core part of its trading platform.
Ultimately, it’s now mainly a race until who can best adapt the technology for their financial services. All of this pessimistic chatter is just that — chatter.
Why do you think banks are skeptical of blockchain technology? Will they eventually come around? Let us know your thoughts in the comments.