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The development of the blockchain in the banking business

04/25/2019
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The sphere of banking service is among the most conservative, however, new technologies penetrate here. Blockchain-based financial products are increasingly becoming available to their customers. So, Societe Generale Group has already launched its own tokens-bonds worth $ 112 million.

Societe Generale Bonds

The financial product from the French giant is currently used only for the exchange of capital with its subsidiary structure. That is, ordinary customers cannot yet buy bank bonds on the blockchain. However, the very fact of their release proves the technological possibility of introducing new technologies.

Tokens-bonds from Societe Generale were created on the Ethereum platform. Their maturity is 5 years and allows an increase for another year. Holders of securities on the blockchain have the same rights as ordinary bond holders.

When developing their financial product at Societe Generale, they used the help of large legal and technical companies. As a result, they managed to issue bonds on the blockchain, which in fact are no different from classic securities. At the same time, the issue procedure itself was carried out without the use of a chain of intermediaries, which can significantly reduce overhead costs and simplify the process of financial turnover.

The first blockchain bank securities

However, it cannot be said that Societe Generale was a pioneer. Back in August 2018, the World Bank, using the Commonwealth Bank of Australia, issued tokens worth $ 73 ml. Then this project allowed investors to get profitability at the level of 2.251% per annum.

In February 2019, Spanish Banco Bilbao Vizcaya Argentaria issued $ 169 million worth of bonds on the blockchain to finance environmental projects.

In addition, a number of large financial companies have chosen a different path. They launched their own cryptocurrencies, or are working on their use. But now, in fact, such tools are used exclusively for internal use. That is, most of the similar offers are not yet available to the private client. With all the sophistication of new technologies, credit institutions are wary of increasing the scale of activity in this area.

Yes, the World Bank issued bonds worth $ 73 million. However, it annually issues similar securities with the traditional form of issuance for $ 50-60 billion. And its joint project with Commonwealth Bank of Australia can be called a test launch only.

Causes of blockchain in the banking sector

The representative of Credit Suisse Emmanuel Aidu gave his explanations for the long implementation of the distributed registry in the banking sector. He is sure that the reasons are not the shortcomings of new technologies and the unwillingness to accept the blockchain as such. The root of the problem is rather in the ethical sphere. Banking business has been developing for centuries, and any innovations take root very hard.

Emmanuel Aidu directs the blockchain direction at Credit Suisse. This is the second largest bank in Switzerland. It was founded in 1856.

The expert notes that financial structures have a very strong interest in distributed registry technology. Recently, it has increased significantly due to the possibility of a global reduction in the burden of transactions.

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