In the report, which Bank of America submitted to the U.S. Securities and Exchange Commission (SEC), the bank mentions cryptocurrencies only briefly. The context, in which the word “cryptocurrencies” appears, however, is something that has never been seen before in an official document issued by a renowned financial institution.
Banks Will Have to Adapt in Order to Compete with Cryptocurrencies
In one short paragraph from the 190-page report, Bank of America admits that cryptocurrencies and other online payment systems are a large threat to their business:
"The competitive landscape may be impacted by the growth of non-depository institutions that offer products that were traditionally banking products as well as new innovative products. This can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet services, cryptocurrencies, and payment systems, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions. We might not be successful in developing or introducing new products and services".
The statements made in this report are confirming the fact that bankers finally realized cryptocurrencies and the underlying blockchain technology is here to stay and that they cannot be eliminated from the market. Countries like Indonesia, South Korea, Japan, Venezuela, Russia, Israel, the United States and the European Union have already concluded that banning cryptocurrencies is close to impossible and are since focusing more on the regulation of their use. That is how cryptocurrencies became a legitimate competitor to the established banking system.
Adaptation is already underway: The Banks Investigating Blockchain-based Solutions
Because the blockchain technology eliminates the need for a third-party intermediary by creating an instant, permanent and secure ledger, many banks are now seeing cryptocurrencies as a serious threat to their business. The Bank of America’s report includes also some of these worries:
Many major banks from all around the world, including the Bank of America, have already employed some blockchain experts, which leads to the belief that banks are researching possible use of ‘new technologies’ within the established financial system. The second largest US-based bank registered more than 70 patents that incorporate blockchain technology. They also hold patent rights to several dozens of other solutions for digital wallets, authentication methods and other processes needed to utilize the blockchain potential in the banking and commerce sector.