“The competitive landscape may be impacted by the growth of non-depository institutions that offer products that were traditionally banking products as well as new innovative products. This can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions. We might not be successful in developing or introducing new products and services”.
Those very exact words from the Bank of America’s report to the SEC may have been ignored by many, as they are merely one paragraph of what is a 190-page report. But for those who pay attention and are interested in the potential impact that blockchain technology could have on the world, these words mean a lot, as it is the first time a bank of renowned reputation has warned of a situation that many have taken for granted (unofficially).
With the publication of such a report, it can be noted that the Bank of America issues an official declaration in which they claim that they may be losing the war against cryptocurrencies.
These statements, while not having the same impact or purpose as a public announcement or a press conference, are in sharp contrast to previous opinions given by other banking personalities who, after attacking crypto, have had to accept that their elimination is a lost battle. The most exemplary case is that of Jamie Dimon, chief executive of JPMorgan Chase, who at one time referred to bitcoin by saying “(it is) a fraud (…) worse than tulip bulbs. It won’t end well. Someone is going to get killed” and that whoever traded with bitcoin was “stupid” , an opinion that 3 months later he claimed to have “regretted having said”
Similarly, other financial actors have already acknowledged that banks do not have the possibility of exerting sufficient pressure to ban cryptocurrencies: Indonesia, Korea, Japan, Venezuela, Russia, Israel, the United States and the European Union have already issued similar opinions. Now, Bank of America’s report confirms that not only is a problem at a regulatory level, but cryptos are taking a significant market share that could lead to serious financial losses resulting from the monopolization of services.
The report seriously takes the existence of the crypto market as an important competitor for the banking sector, which could force them to invest in infrastructure upgrading:
“Technological advances and the growth of e-commerce have made it easier for non-depository institutions to offer products and services that traditionally were banking products, and for financial institutions to compete with technology companies in providing electronic and internet-based financial solutions including electronic securities trading, marketplace lending and payment processing.
Further, clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies. Increased competition may negatively affect our earnings by creating pressure to lower prices or credit standards on our products and services requiring additional investment to improve the quality and delivery of our technology and/or reducing our market share, or affecting the willingness of our clients to do business with us “.
While this may be negative for Banks, it is extremely positive for customers, as an investment in technology and infrastructure represents greater security and efficiency in services. One more example of how cryptos can even influence business models in the banking sector.
