According to a new report released by Big Four Accounting firm PricewaterhouseCoopers (PwC), the Fintech revolution will not revolve around blockchain innovation per se, though it will remain at the top of trends in the banking industry. Meanwhile, banks are still preferring to integrate “easier” solutions, which will optimize day-to-day operations.
PwC on Banks’ Innovation Priorities
One of the more peculiar things to take note of in this PwC report is how banks envision the future technology trends regarding the improvement of their own services and operations. As one would come to expect, the easier solutions are at the top of that list, while blockchain technology is towards the bottom as it will be a challenge to integrate with an archaic legacy system.
However, banks and other financial players need to keep in mind how easier solutions are not always the best possible option. Granted, this could lead to faster improvements in the short term, but these solutions may lose some of their value over time. The race for mobile payments and banking supremacy will not be easy, though, and taking shortcuts could hurt companies in the long run.
Consumers all over the world are looking for simplified user experience options, which is not something blockchain technology can help with right now. At the same time, improving the user experience can be done by making some UI updates, such as simplifying menus, and releasing mobile applications. But do not underestimate the power of social media either.
The PwC report explains this situation as follows:
Online banks rely on transparency, service quality and unlimited global access to attract Millennials, who are willing to access multiple service channels. In addition, new players in the banking market offer ease of use in product design and prioritise 24/7 customer service, often provided through non-traditional methods such as social media.
At the same time, there is a large focus on improving the security of fund transfers and making payments easier and more convenient. These are two areas where blockchain technology could make a big impact thanks to the overall security of cryptographic measures involved in the transaction system, and the convenience of being cross-platform compatible. That being said, the blockchain is not immediately being considered as a way to tackle this problem, even though digital wallets are not outside of the realm of possibility.
Promising But Future Uncertain
Although the PwC report mentions how blockchain technology is “the next evolutionary jump in business process optimisation,” there seems to be a lot of uncertainty regarding the future of distributed ledgers in the financial world. Most participants of the PwC survey acknowledge the importance of this technology, but the majority remains on the fence as to whether or not they will integrate this solution anytime soon.
“A number of start-ups in the field, such as R3CEV, Digital Asset Holdings and Blockstream are actively working to create entirely new business models that would lead to accelerated ‘Creative Destruction’ in the industry,” the PwC Global FinTech Survey 2016 states. “The ability to collaborate on both the strategic and business levels with a few key partners, in our view, could become a key competitive advantage in the coming years.”
As was to be expected, most of the drawbacks stem forth from the unfamiliarity with blockchain technology, as very few financial players feel they possess the necessary knowledge to see the bigger picture. However, this hesitation could also lead to market participants underestimating the impact of blockchain on their day-to-day activities, hurting their overall business as competitors gain a competitive edge.
Are banks underestimating the power of blockchain technology for their business? Let us know in the comments below!