Blockchain technology has great disruptive potential for the financial industry and therefore also for regional banks. This technology could make financial intermediaries completely superfluous.
A bank has three central tasks in an economy: Maturity transformation, lot-size transformation and risk transformation. Maturity and lot-size transformation could be fully handled by blockchain technology, and banks would no longer be needed to perform these tasks. Risk transformation must be considered separately, at least in part. It is based on the fact that people trust a financial institution, better the people working in it. The closer people are to the customer, the easier it is to take a leap of faith. People strive for security, they want certainty that people are involved in the process whom they can trust and not just technology. In an increasingly technological world, this is an advantage that you as a regional bank can use to your advantage. You can enable your customers and the people in your region to feel additional security and trust.
In the case of maturity and lot-size transformation, on the other hand, it is probably only a matter of time before concepts are on the market that will be adopted by people and thus replace banks in their function. People will see that it works and they will see that it brings a lot of benefits in terms of cost and quality.
How can regional banks respond?
As a regional bank – whether a savings bank or a cooperative – you have a mandate to do something for your region, to promote the economic viability of your members and people within your circle of influence. That’s your public service mission. You can become an operator of a blockchain to fulfill that very public mandate and just anticipate that before someone else does. Then you are still in the game in the future and have the chance to build on it, to build entire platforms or ecosystems on it. As already mentioned, others are already thinking well and successfully in ecosystems. In the future, banks will have no choice but to think in terms of ecosystems and offer corresponding infrastructures. This is precisely where an opportunity lies for you as a regional bank. If you create a regional ecosystem, not in the sense of isolating yourself from others, but rather with the goal of enabling the people and businesses in your region to be part of the region – even if they are not currently in the region – then there is an opportunity in that and that creates a reason for you to exist in the future.
Blockchain technology can be a way for you to ensure this and holds a lot of potential that you can use for yourself as a regional bank.
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Have a bright future!