Earlier this week, the Bank of America mentioned to the U.S. regulators that it may not have the abilities to compete with the growing use and popularity of cryptocurrency.
The major American Bank tries to remain competitive, but as they said to the Securities and Exchange Commission (SEC) this week,
“Our inability to adapt our products and services to evolving industry standards and consumer preferences could harm our business.”
They also talked about cryptocurrency as a phenomenon that may cause a “substantial expenditure”.
The different banks are becoming more aware of the potential of the blockchain technology, but very few of them perform direct actions not to get overthrown. One great example is the European Central Bank, which confirmed that it had adopted a hand off approach to legislating cryptocurrencies. On the other hand, Bank of America tried to evolved and innovate regarding cryptocurrencies by receiving a patent for its own cryptocurrency exchange platform in December 2017. However, they were criticized recently after refusing credit card cryptocurrency purchases for their customers.
The bank also mentioned that the growing competition in the financial system gives them a lot of difficulty to keep their employees in the long term. Later in the report to the SEC, Bank of America was entering into the details about the serious threat cryptocurrencies can be for financial institutions,
“…The competitive landscape may be impacted by the growth of non-depository institutions that offer products that were traditionally banking products as well as new innovative products..This can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services[.]”
It is clear that blockchain technology and cryptocurrencies are becoming more popularly and used recently, which brings many concerns to banks about their future, as they may not be able to follow as virtual currencies continue to improve and upgrade.