“Die-hard libertarians say that Bitcoin is going to end the banking system, but most sensible people realise that the two can co-exist…It’s like Microsoft Windows and Linux…We try to run things without a bank but it’s not practical. Not everyone accepts cryptocurrency, there’s a price fluctuation. You can’t replace the baking system, in my view, at least not in the foreseeable future.”Unfortunately, not everyone shares this same opinion, with some experts believing that they pose a real threat to the traditional financial institutions. Colin Luce, the SVP of Business Development at Uphold says;
“Cryptocurrencies, for the very first time, pose a serious and significant threat to financial institutions because up until now, all of the innovation in fintech has been at the application layer. Now we’re starting to see payment systems and ecosystems live completely outside of the existing infrastructure stack…finding innovative ways to serve the underbanked and cross-border use cases.”Banks have long had to fend off new technology, so they are use to fending off challenging technological threats, long before cryptocurrencies were about. They are not blind to the threat, and instead are turning their attention to the cryptocurrencies that aim to work with banks, such as Ripple. It is not just banks that could become threatened though, Buelau points out, and said that credit card companies could actually be the ones to suffer, saying;
“If you’re talking about a credit card company, then I think it is a threat because credit card companies are a middleman. They allow you to spend money and they charge fees to you and to the retailer and they make the transaction happen – with cryptocurrency you don’t need that.”Jeff Faulk, who is the Director of Payment Platforms for CO-OP Financial Services agrees with his view, and adds;
“I’m not sure that crypto threatens financial institutions in general. It certainly challenges the existing payment rails associated with VISA and Mastercard, as well as any central banking authority, such as the Federal Reserve in the US.”However, regardless of whether they feel financial institutions are threatened or not, they have also acknowledged the fact that banks will not be going anywhere quickly, and that they are still very much needed.