No longer delegated to the digital backwater, financial institutions are scurrying to dive into the burgeoning space founded on distributed ledgers.
In the last two months alone, 13 financial services firms made their first investment in one of these startups, according to a report by CBInsights. The five largest financing deals all included a strategic investor.
The different types of financial institutions also spans the entire financial services spectrum—including traditional banks (CIBC, Santander), investment banks (Goldman Sachs), insurance providers (New York Life, Mitsui Sumitomo), payment networks (Visa, American Express), and exchanges (CME Group, NYSE, Nasdaq)—an indication of the versatility and far-reaching impact of distributed financial technology. [CME Group and Santander are investors in Ripple.]
The CBInsights report includes a great chart that shows the date of first investment by financial services companies:
As TransAmerica Ventures CEO Georg Schwegler recently noted, “finance companies—banks and insurance—are becoming aware of the advantages of the technology finally.”
“For the banks it offers the opportunity to revamp existing banking systems and speed up settlements as long as transactions comply with tough money laundering and ‘know your customer’ regulations,” Philip Gomm, the head of banking and payments at Capgemini Australia, told AB+F.
Even the most ardent naysayers are reconsidering the blockchain’s potential. “You’re wasting your time,” JPMorgan Chase CEO Jamie Dimon railed at the Fortune Global Forum, in reference to hanging your hopes on Bitcoin the currency. “But the technology will be used,” he noted, adding that the technology could work “very well for cheap transfers of money.”
Read the full CB Insights report here.