Russian Federal Reserve Bank: Blockchain technology will make banks disappear within ten years

The Russian Federal Reserve Bank expressed its hope to join the global blockchain exploration bank consortium R3, pointing out that they hope to become the first participant in R3's new research and development project; the Bank of Russia also announced the establishment of a blockchain working group to conduct blockchain research; the Internet Development Research Institute also submitted a proposal to President Putin to legalize blockchain technology. All of these reflect the importance that all parties in Russia attach to blockchain technology, but we can easily find that they clearly separate blockchain and digital currency and strongly oppose Bitcoin. The Russian Ministry of Finance even proposed that the State Duma ban Bitcoin and sentence users.

Translation: Nicole

This statement surprised all bankers. The deputy chairman of Sberbank, the largest bank in Russia and the third largest bank in Europe (2014 data), believes that the emergence and spread of blockchain technology will make banks disappear by 2026.

Sberbank Vice Chairman Andrey Sharov spoke at the 2016 METRO Show (industry conference) and shared his views on the future of banking.

According to Russian news agency RIA Novosti, Sharov predicted that the advent of blockchain technology could lead to the demise of the current banking industry.

Russian Federal Reserve: Blockchain technology will make banks disappear within ten years

Andrey Sharov

The deputy chairman of Russia’s largest bank said:

I am worried that banks will disappear in ten years and I will have no place to work. There are many peer-to-peer lending platforms and payment systems being developed based on blockchain technology.

Incredibly, the bank executive said that the Bank of England has established a banking consortium of 50 banks to work on blockchain solutions for the financial industry. You will find that only one banking consortium is conducting research and proof-of-concept solutions based on blockchain, and that consortium is the New York-based blockchain startup R3.

Sharov believes:

The Bank of England has formed a consortium of 50 banks - all built entirely on blockchain technology. There will be no room for me to grow.

This view echoes a speech made by Antony Jenkins, former CEO of Barclays, the largest bank in the UK, last year. Jenkins predicted that the future of financial technology will be led by blockchain innovation, which will seriously disrupt the current banking system. The former bank executive predicted that the number of bank employees will be reduced by at least 20% in the next decade, and may be reduced by half.

Sberbank blockchain interest

Russian Federal Reserve: Blockchain technology will make banks disappear within ten years

Leve Khasis

As Russia’s largest bank, Sberbank has shown great interest in joining the R3 global banking consortium, which is made up of 42 leading banks from around the world. In December 2015, Leve Khasis, first deputy chairman of the Sberbank Management Committee, said

R3 is to develop protocol standards and technology. Once it is implemented, I believe Sberbank will be the first to participate.

Khasis revealed that they are actively looking for documents related to R3, but the final decision is still unknown.

Khasis also said that Sberbank does not want to promote Bitcoin or develop its own cryptocurrency due to Russia’s strict regulatory regime. Moreover, he tried to distinguish Bitcoin from blockchain technology.

Cryptocurrency is irrelevant, blockchain is a much simpler, faster and more reliable method of accounting.

Russian officials said:

Blockchain can, but Bitcoin can’t.

What Russia’s largest bank and the Central Bank of Russia have in common is their interest in blockchain technology.

At the end of February 2016, the Bank of Russia announced the creation of a 'Blockchain Working Group'. This group will study and research breakthroughs in the distributed ledger and mobile payment industries in particular.

In December 2015, Russian Minister of Mass Media Nikolai Nikiforov gave a speech encouraging the development of blockchain technology, stating that the development of distributed ledger technology is in the 'best interests of the Russian masses.

Apparently, authorities are also trying to 'legitimize' blockchain technology, working to distinguish it from the bitcoin cryptocurrency.

Recently, the Internet Development Institute submitted a proposal to Russian President Vladimir Putin, calling for the legalization of blockchain technology in 2017.

According to these laid out plans, blockchain technology has nothing to do with Bitcoin.

Blockchain and Bitcoin are not the same thing. Blockchain is a revolutionary technology for distributed databases that is very useful for banks and organizations that work with securities exchanges. In the current situation, an official proposal from the Russian Ministry of Finance is making its way through the Russian State Duma, where Russia attempts to formally ban Bitcoin. The proposal also calls for sentencing those who use or mine Bitcoin as a criminal offense. Currently, Russia has indicated that using cryptocurrencies will result in a seven-year prison sentence.