Intesa Sanpaolo researcher: Blockchain technology cannot play its role if banks do not change

Massimo Morini, head of interest rates and credit models at Banca IMI, the investment banking and capital markets subsidiary of Italy's Intesa Sanpaolo Bank, recently published a batch of new papers on blockchain technology.

The paper focuses on the "real business cases" of blockchain technology. He believes that from cryptocurrencies (such as Bitcoin) we can learn that traditional financial business models need to be reformed, not just improved.

Morini wrote:

“A serious misunderstanding about blockchain technology is that it can be applied to financial markets because it makes them more efficient. This is meaningless; the purpose of creating blockchain is to change some trust-based business processes so that these processes are less dependent on trust; if no structural changes are made, then even the best blockchain technology will become inefficient.”

Morini also wrote that the financial industry must now prepare to use trust in a "fundamentally different way" and redefine existing business processes.

However, Morini acknowledges that not all markets need the efficiencies offered by blockchain technology alone, saying the financial industry needs to focus on use cases that reduce risk by offering cost savings through fewer reconciliations and faster settlements.

Morini believes that new business models based on distributed ledgers and blockchain-based smart contracts will gain greater regulatory clarity. Electronic money or assets need to be convertible to and from central bank accounts or at financial institutions.

However, he advises banks and financial institutions to make changes as soon as possible:

“If regulators understand the advantages of a more transparent and less risky architecture than most existing solutions, blockchain-friendly laws and regulations could arrive sooner than expected.”

Original text: http://www.coindesk.com/banca-imi-blockchain-reform/
By Pete Rizzo
Compiled by: Kyle
Source (translation): Babbitt Information (http://www.8btc.com/banca-imi-blockchain-reform)