Banks Face Complex Challenges in Embracing Blockchain Technology, Says Chainlink Co-founder
In a recent interview, Sergey Nazarov, one of the co-founders of Chainlink, emphasized that banks, unlike startups, did not initially embrace blockchain technology, which has placed them at a disadvantage in terms of its adoption.
“Banks have invested significantly in securing their existing infrastructure and have trained many individuals to operate within that infrastructure, which is fundamentally different from startups,” he stated.
Banks Exercise Caution in Adopting Blockchain Due to SWIFT Investment
In a September 19 interview, Sergey Nazarov, the co-founder of Chainlink, discussed how the substantial investments made by banks worldwide in the SWIFT infrastructure have made it a more complex process to integrate blockchain into their systems.
SWIFT is the dominant method for international payments and settlements in the banking industry.
“So, banks heavily rely on these systems, placing substantial value on them, and they are not looking to replace them. The only viable way for banks to efficiently incorporate blockchain is by building upon their existing infrastructure.”
Nazarov went on to explain that Chainlink’s Cross-Chain Interoperability Protocol (CCIP) experiment with several major banks yielded three crucial findings.
At the time of this publication, the price of Chainlink stands at $6.90.
Chainlink’s CCIP Experiment Highlights
The experiment demonstrated that banks can easily connect to numerous blockchain networks using their existing SWIFT infrastructure with minimal effort. This allows for seamless interaction with various blockchain networks, whether public or private.
Blockchain Enhances Collaboration in the Banking Sector
Furthermore, this approach facilitates efficient interbank transactions across different blockchain networks, enabling private blockchains to seamlessly interact with public ones.
According to Nazarov, this paves the way for transferring value from the private banking sector to the public blockchain industry, significantly impacting both sectors.
Notable Adoption Example: ANZ and Chainlink’s CCIP
On September 15, BeInCrypto reported that the Australian bank ANZ utilized Chainlink’s CCIP to rigorously test a tokenized asset purchase.
Nigel Dobson, ANZ’s Portfolio Lead, highlighted the bank’s proactive exploration of decentralized networks and pointed out the growing confidence among institutional investors.
“Banks are increasingly exploring use cases involving tokenized assets, with 93 percent of institutional investors believing in their long-term value, according to a recent EY report.”
In a statement dated July 17, Chainlink announced the launch of CCIP, acknowledging that providing a solution for the global banking industry is a challenging task.
The statement emphasized that it’s not just about having the right product but also establishing a universal standard for the industry to collaborate securely and flexibly.
By embracing blockchain technology within their existing infrastructure, banks aim to stay competitive in an evolving financial landscape.
