Royal Bank of Canada announces expansion of blockchain testing

RBC Review : The Royal Bank of Canada is the bank with the highest market value and the largest assets in Canada, and is also one of the leading diversified financial services companies in North America. In the field of Canadian corporate banking and investment banking, the Royal Bank of Canada has always been a top securities underwriter and an excellent merger and acquisition advisor, and is also in a leading position in global custody business. In terms of blockchain, RBC has also been ahead of the curve and has been testing blockchain very early. At that time, the focus was on testing customer loyalty, that is, using blockchain technology for customer points. At present, the test will be further expanded to asset markets, cross-border payments and smart contracts.

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As we head into February, the world’s largest financial institutions are stepping up their support for blockchain technology, with their innovation labs increasingly conducting trials with the technology.

Just a few weeks ago, UBS announced their smart bond application, NRI discussed their research on the use case of distributed ledgers for securities, and even JP Morgan, one of the banks that has been bearish on the concept of Bitcoin and digital currencies, is looking to evaluate the role of blockchain technology in improving the trading process.

But among the biggest companies, the Royal Bank of Canada (RBC) has indicated that it has been experimenting with blockchain technology to improve customer rewards and loyalty since November last year. As Canada's largest bank, with revenue of $10 billion in 2015, their news was just a customer acquisition gimmick that was quickly drowned out by the industry's move toward B2B applications.

However, in a recent interview, Linda Mantia, chief vice president of digital, payments and card services at Royal Bank of Canada, pointed out that the Royal Bank is focusing on another use case of blockchain technology, and our testing is mainly in asset markets, cross-border payments and smart contracts.

Mntia pointed out that in the context of the entire industry, RBC believes that blockchain technology will become a form of network finance, and its various derivative technologies have not yet been fully developed.

Mantia told CoinDesk:

“We are studying what blockchain technology really means. If Steve Jobs had told us everything that iPad could do, we might not have understood it.”

Mantia also touched on the growing hype surrounding blockchain, arguing that if the next Amazon, eBay or PayPal type of service is created, banks are at risk but are not pursuing potential applications.

“If you look at every advancement driven by technology, there’s always someone hyping it up. 80% of the investments don’t generate returns, but the benefits of the remaining 20% ​​are huge, and after every hype, some transformation happens quietly.”

The Royal Bank made the comments as part of a financial community that is wary of excessive optimism surrounding blockchain technology.

But as a market leader, Mantia said RBC will not back down from opportunities and risks. She added:

“No one wants to miss it. If you don’t jump on this express train of the times, you will be left behind.”

Mantia

Renewing customer loyalty

While Mantia did not reveal the rewards for RBC’s proof of concept, she did touch on the value of testing the use of blockchain technology in the bank’s loyalty program during a discussion last November.

First and foremost, Mantia described blockchain as a technology that could help RBC better deliver its existing loyalty services to customers.

She said:

"We always say your points are your money. So we don't lock customers into rewards stores, and we partner with merchants like Best Buy so our customers can use their points to buy something. We're aggressive in our approach, and give our customers the impression that this is another form of cash."

She suggested that decentralized ledgers could help enforce rules around payment options, while also allowing RBC to improve operations with its partners.

Extended authorization

RBC controls its customer loyalty program, and she said the bank also has the ability to use blockchain technology in its own systems.

However, RBC is not the only member of R3 CEV, a blockchain consortium working with 41 peers to explore a private proof of concept (POC).

According to Mantia, RBC initially researched Bitcoin within its internal payments division. Mantia specializes in digital banking, credit cards, customer loyalty and retail payments, which are among the company’s innovation projects.

She introduced the corporate culture of Royal Bank of Canada: We want to create a paradise that embraces problems, where we evaluate problems, focus on business needs, and even explore unknown areas.

Mantia recalled,

“We started looking at Bitcoin when it first started and wanted to understand why it was so interesting. It was clear that Bitcoin was trying to solve a global business problem.”

Mantia's team believes that Bitcoin is the most impressive innovation compared to previous payment innovations, which is why Royal Bank of Canada favors it. However, she mentioned that the bank was the first institution to discover the potential of blockchain technology and believed that the technology may be a greater opportunity.

She said,

“We thought at the time that the future might be to build distributed computing centers around a problem, but we didn’t have a deep understanding of the development trend. We had been thinking about what blockchain technology could be used for.”

Digital Currency

Mantia also talked about RBC's active expansion of its payment product line, emphasizing the benefits of the anonymity or semi-anonymity of "digital currencies."

However, Mantia has not yet made a clear statement on the Bitcoin blockchain, the only open blockchain that has reached commercial scale today.

When asked what she thinks about the future of Bitcoin as a currency, she said the concept is worth considering.

She asked,

“When you shop online, you need digital currency, right? But do people without bank accounts need digital currency?”

Finally concluded:

“We still have some issues to work out and we need a currency that works for the global economy.”