McKinsey & Co blasted over blockchain in retail banking report

McKinsey & Co stands accused of being late to the blockchain party, after releasing a report about retail banks’ cautious approach to the technology.

The ‘Big Three’ management consultancy firm flagged up three retail use cases that could eventually be deployed at scale, and which offer most in terms of blockchain’s three key strengths: data handling, disintermediation and trust. These are remittances, KYC/ID fraud prevention and risk scoring.

This would have established them as trialblazers if written in 2009, FinTech expert Richard Turrin argued on LinkedIn. “The first uses are out there but ironically not used by banks, but their competitors. Blockchain still faces a long, tough road for general adoption in banking,” he commented.

Remittances are “already done by Alibaba in Hong Kong. So sure, great use case but not used by banks but instead by AlipayHK as a direct assault on banks. Santander is I believe the first bank to use the tech in FX transactions.”

As for KYC: “Tough one, Singapore with help from the Monetary Authority is working on this for commercial clients but getting banks to share is not easy.”

And finally, risk assessment using customer data. “This one is barely worthy of comment. Sure McKinsey if we had all data for everyone on blockchain from all banks everywhere you could make a better credit decision.”

“Please show me a retail bank using blockchain. I’m still waiting. JP Morgan’s coin? Sure, but its a separate new use of crypto not blockchain replacing an existing system,” Turrin concluded.

Consultancy firms, eh? Always quick to tell you what took place yesterday, but not so hot when it comes to what’s happening tomorrow.