Bitcoin is the destroyer of banks… Or so we are told. As we all know, by holding your own private keys, you can become your own bank and remove the need for that central intermediary.
One of the key benefits of this is the reduction in fees and the global nature of the network. However, there are other avenues that are attempting to modernise and reform the banking industry such as Monzo, Revolut, and TransferWise. Banks need to adapt or face a difficult battle.
Each of these companies do not have a physical location and everything is done online. In doing so, they have reduced costs dramatically and passed these savings on to the consumers. They have also reduced the fees if I want to pay in pounds, euros, or dollars.
Unsurprisingly, these companies have become very popular with young adults who appreciate the ease of use and international nature.
So banks are seemingly being attacked by two forces: both cryptocurrencies and these new online banks. This coupled with public disapproval still stemming from the 2008 financial crisis means that banks are in need of reform.
JP Morgan’s supposed cryptocurrency looks like it’s the first step along that line. Although not a cryptocurrency, the system could allow them to reduce fees if they so wish. Instead of just reducing fees, the new “technology” they have created could give them an excuse to. For banks that have been raking in massive profits, the fees they charge could easily be reduced anyway. However, now that the competition has truly stepped up their game, banks are slowly leaking customers.
It is likely that more banks will follow JP Morgan’s lead and jump onto the cryptocurrency hype train with their own forms of JPM Coin, showing that they can adapt. Through these “cryptocurrencies,” they will be able to “reduce” costs whilst also marketing themselves as ambitious and innovative solutions. In reality, they are old horses that need taking out back.