Blockchain, the core technology behind Bitcoin cryptocurrency, can replace the role of banks in the equity and currency trading. One of the largest scandinavian banks, SEB, together with 21 other smaller banks now tries to overturn its own business model.
Regarding shares and currencies trade, banks often act as “market makers” and as an intermediary between buyers and sellers. It has been a profitable business for banks in general during all trading session. In Sweden, SEB is the leading bank when it comes to this type of trading. But those days may soon be over.
SEB is the only Swedish bank which tries to develop a completely new way to manage stock and currency trading. SEB bank is accompanied by Morgan Stanley, Bank of America and HSBC. The core of the solution these banks try to implement is the technology behind the cryptocurrency Bitcoin, so-called blockchain, which will be used to potentially reverse the world's markets.
"There is a serious danger and a superb opportunity in the same time when it comes to the blockchain. Our role as “market-maker” and intermediary in trade can be threatened by blockchain technology " - says Rasmus Järborg.
The plan is the following - the banks cooperation will lead to a working prototype where the role of banks as intermediaries can be completely replaced with the blockchain technology. The collaboration runs over 12 months and SEB will be part of the steering committee for the project.
"The whole process will become quicker and cheaper for customers. SEB have always been at the forefront of the innovative trade schemes. It has changed dynamically from that cried out orders to using telephones, computers and now to the blockchain, " he said.
Although blockchain technology comes from the notorious Bitcoin, it doesn't mean SEB believes in the currency itself.
"We have had a very conservative approach towards Bitcoin. It is the underlying technology that is interesting. It can delete all steps in a share purchase and ensure that everything is done immediately ".