The Royal Bank of Scotland has developed its own experimental cryptocurrency and is in process of testing it. That is what Neil Bellamy, the Head of Technology, Media & Telecoms at NatWest has told The Memo.
The initiative is a part of the RBS Group's strategy which, the way it is outlined in Bellamy’s interview, is aimed at “working with, and not against, the new challengers”.
The strategy involves working with those start-ups and technology developers that offer their ideas on contractual basis, when, rather than acquiring or investing into them, the bank becomes their client and co-developer. Bellamy believes that it is a good example of a win/win situation, the term exactly applicable to the cryptocurrency initiative.
“Our Edinburgh centre has test servers as well so if someone has a big data solution or a trading platform for example you can try it out with the kind of volumes that banks have to deal with. Recently we had a cryptocurrency business come in and start doing testing out their bitcoin distributed ledger technology,” he said, mentioning that while the test is going on, direct talks with Ripple are taking place about possible future cooperation.
In June the RBS introduced automated bank transfers with the Proof-of-Concept based on Ripple technology. Bellamy reminded that the RBS Group as a whole includes the Royal Bank of Scotland, NatWest, Lombard, RBS Invoice Finance, Ulster bank and Coutts, which are separate legal entities. The separation leads to difficulties when the banks are transacting with each other within the traditional legal system framework, so using blockchain for transactions could be a reasonable solution.
“It’s a pipedream, but imagine if you could take a distributed ledger system and put it in a back office and do away with a lot of that legacy infrastructure. A lot of people think we’re going to be very wary and defensive or shy away from some of this newer cryptocurrency but I think the actual process and the sentiment behind it could be very exciting,” added Bellamy.
The RBS is one of many influential financial institutions which are now paying closer attention to the blockchain. As Coinfox reported earlier, the UBS has been working on the development of blockchain, and so do most leading banks under the auspices of the R3 blockchain research project.
Still, not everyone in the banking sector is so enthusiastic about implementation of what is being seen as a rival technology. Not long ago Australian banks closed more than a dozen bank accounts related to bitcoin initiatives. The McKinsey Global Banking Annual Review also describes cryptotechnologies as the emerging threat to the financial sector.
Maria Rudina
