Royal Bank of Canada expands blockchain trial to include cross-border payments and smart contracts

Editor's note: It is February now, and major financial institutions in various regions around the world have stepped up their efforts to test blockchain. Recently, JPMorgan Chase revealed that it is evaluating the technology's ability to improve transaction processes. This week, Korea's National Bank teamed up with Coinplug to explore blockchain remittance applications. Central Bank Governor Zhou Xiaochuan also revealed that the central bank will deploy important forces to explore the application of blockchain technology. The Royal Bank of Canada, which first announced the establishment of a blockchain pilot project in November last year, has also accelerated its pace and announced the expansion of the scope of blockchain trials.

The Royal Bank of Canada (RBC) recently announced the expansion of the scope of its blockchain trials. Linda Mantia, executive vice president of RBC, who is responsible for digitalization, payments and cards, said that the bank is considering more applications of blockchain technology, and the trials focus on capital markets, cross-border payments and smart contracts.

RBC, Canada’s largest bank by market value and assets, announced its blockchain trial last November to apply blockchain to its consumer rewards and loyalty products.

Mantia said that as a veteran company in the banking industry, RBC has increasingly felt that the awareness of blockchain in the banking industry is increasing. It is generally believed that blockchain technology will become a kind of "financial Internet", and the full impact of this technology has not yet been unlocked.

Is blockchain a curse or a blessing for banks?

Blockchain technology has the potential to revolutionize the traditional financial industry. Many people even believe that it can replace banks and automate banking operations. So is it a threat to banks? On this point, Mantia also talked about her views. She gave an example to illustrate this situation - many people once believed that if the next generation of innovative services like Amazon, eBay or PayPal became possible, banks would face risks because they did not seek potential applications.

“If you look at every major advancement in technology, there’s been hype. The first 80% of the investment probably won’t lead to anything, but the last 20% is the big change. So at the end of every hype, there’s some shift.”

Many companies in the financial industry have released blockchain research reports, reminding banks and other financial services to pay attention to the development of this technology. As a market leader, Mantia said that RBC will not give up the opportunities it brings because of risks:

“No one wants to miss out on it. If you don’t follow the (tech) trends, you’ll be left behind.”

Expanding blockchain trials

Mantia didn’t reveal many details about RBC’s rewards proof-of-concept project, but she described the value and significance of the blockchain technology trial to RBC’s loyalty program.

First, Mantia pointed to blockchain as a technology that will help RBC better communicate its existing loyalty value proposition to customers.

"We've always said 'your points are your money'. So instead of limiting customers to our rewards store, we also let certain merchants like Best Buy on board so customers can use their points with us to buy things from them."

“We are actively promoting this so that our customers can use it as another form of cash.”

She suggested that distributed ledgers could help RBC more effectively enforce rules around how payments are made, while also providing a means for RBC to increase interoperability with its partners.

RBC's research history

Mantilla said RBC's mastery of the loyalty program provides it with the ability to use the technology within its own ecosystem.

Although RBC is also a member of the R3CEV blockchain consortium, this does not prevent it from building its own private proof-of-concept project, and RBC is not the only one to do so.

According to Mantia, RBC first looked into Bitcoin as part of its payments research.

Mantilla said RBC is trying to create a culture where problems are evaluated with a focus on business needs, even if that means entering uncharted territory.

“We started out by looking at Bitcoin purely to see what was so interesting,” Mantia recalls. “It was clearly trying to solve a problem in global trade.”

To Mantia’s team, bitcoin is more impressive than past payment innovations, but she said RBC is focusing more on blockchain because it may offer the biggest opportunity.

“We think this distributed way of solving problems may be the future, but we don’t know how the future will develop, and we are always thinking about how to take advantage of it.”

Digital Cash

Mantia also talked about RBC looking to expand its payment product line, noting that anonymous or semi-anonymous "digital cash" could help.

When Mantia was asked if she thought Bitcoin could become a digital currency in the future, she euphemistically said that she believed in the value concept of digital currency.

"Do you need cash when you shop online? Do unbanked people need it, too? I believe there will be a need, especially for a currency designed for a global economy."

Original article: http://www.coindesk.com/royal-bank-of-canada-expands-blockchain-testing-beyond-loyalty/
By Pete Rizzo
Translator: printemps
Editor: printemps
Source (translation): Babbitt Information (http://www.8btc.com/test-beyond-loyalty)