Banks will become redundant due to blockchain and crypto,' says ABN Amro
Brokers, banks and other financial service providers will become redundant with blockchain technology, writes the Dutch bank ABN Amro in a new report. The bank foresees a development in which the current 'platform economy' evolves into a 'protocol economy'.
The bank writes that many intermediaries are needed in our current economy; real estate agents to provide houses with a price tag, the notary who verifies documents and banks that provide international payments. "That is going to change," says Ralph Wessels, head of investment strategy at ABN Amro.
By applying blockchain, the costs involved in such services will come down. ABN Amro warns financial service providers that they may suffer the same fate as travel agents. Many of them had to close their doors because people could book a holiday more easily and cheap through the internet.
Thanks to the transparency and immutability of data on the blockchain, it offers various solutions. For example, it can be assumed that the data on the blockchain has not been manipulated, making a notary redundant. However, Bart Versteeg, director of the Royal Notarial Association, does not believe that blockchain will make his profession completely redundant:
"Blockchain records what is said but not whether it is true. We verify what is written in deeds, and we also offer our clients legal support. We're also all about secrecy - you don't want your will to be public."
Banks, and therefore ABN Amro itself, also must watch out for what the future may bring. Issuing bonds, for example, can be done via blockchain. Earlier this year, the German Vonovia did this by issuing €20 million in bonds on Stellar (XLM).
Smart contract networks such as Ethereum (ETH) and Cardano (ADA) also have the potential to automate all sorts of things. The Decentralized Finance (DeFi) sector alone offers many solutions that traditional banks also provide, but in a decentralized way. Think, for example, of borrowing and lending money.