SAN FRANCISCO — The bill is finally coming due on the investments that two of the nation’s largest banks have made in blockchain technology.
At an industry conference Wednesday, top executives from Wells Fargo and Bank of America expressed major skepticism about the technology’s potential in the financial services sphere. The comments suggested that their interest in distributed ledgers is wearing thin.
“Personally I think blockchain has been way oversold,” Wells Fargo CEO Tim Sloan said in remarks at the Fintech Ideas Festival. “By now, that should have completely changed the industry. And that’s just not the way it is.”
Cathy Bessant, BofA’s chief operations and technology officer, indicated that she has become more confident in her belief that the hype associated with blockchain outstrips the reality.
“Now I’m more in throw-down mode. I’ll say to anybody, bring me a use case that makes sense, and I will look at it,” Bessant said. “But in financial services, it’s a really tough model.”
Nearly two years ago, the Charlotte, N.C.-based BofA and San Francisco-based Wells Fargo were among the banks that
Not all big banks are bearish on blockchain. Last month, JPMorgan Chase
And there is no sign yet that Wells Fargo and Bank of America are throwing in the towel. Sloan said Wednesday that he thinks blockchain technology will have an impact over time, while Bessant said that BofA is experimenting aggressively.
Still, their remarks served as a rejoinder to bold predictions from years past about the game-changing potential of blockchain, the record-keeping technology behind bitcoin. In a December 2015 research note, analysts at Goldman Sachs wrote: “The blockchain could disrupt everything.”
In separate comments Wednesday, Bessant argued that Apple’s new credit card, which was unveiled earlier this week, could have a positive impact on the retail industry’s adoption of mobile payments.
The Apple Card,
Bessant said that Apple's incentives for consumers to use the digital version of the card instead of the physical version may add pressure on retailers to accept mobile payments.
Customers will receive 2% cash-back rewards when they pay by swiping their phones, and only 1% when they swipe their cards. The physical card offers a backup that consumers can use when they shop at merchants that have not embraced mobile payments.
“The idea that Apple would be in the business of encouraging adoption overall actually can only be good news for all of us,” Bessant said.
The two-day conference also featured discussions about the evolving methods for authenticating digital banking customers and the likely impact that the arrival of 5G mobile networks will have on the industry.
Sloan predicted that within the next five years, bank customers will no longer be using passwords to log in to their digital accounts because biometrics-based authentication methods will have taken over.
“I think that’s really important,” he said. “It means that the possibility for impostor fraud to occur goes down significantly.”
Whether the rising use of biometric authentication will lead to a backlash among consumers has long been the subject of debate, but so far the tech industry has borne far more wrath than banks over privacy concerns.
“People are choosing the convenience of access,” argued Chris Feeney, who heads the technology policy division at the Bank Policy Institute, the big-bank trade group that organized the conference.
Also speaking Wednesday was Mastercard CEO Ajay Banga, who predicted that once 5G is adopted, far more devices will be connected to the internet, which will lead to a massive increase in data collection by businesses, causing cybersecurity risks to multiply.
Banga warned that criminals are envisioning the ever-more-connected future and saying, “Boy, good times are coming.”
