Opinions

How Bank of America is Leading the Financial Services Industry?

Dubbing them as speculative and risky Bank of America (BofA) has declared cryptocurrencies a threat to its business model. In an interview with CNBC BofA CEO, Brian Moynihan, deemed banks to be more secure than Bitcoin due to the element of anonymity in the transactions performed using cryptocurrency. The institution banned its financial advisors from purchasing investments, related to Bitcoin, for clients. BofA has also barred its customers from buying cryptocurrency from their credit cards as it was limiting the bank’s ability to track the flow of funds. However it was one of the first banks to initiate coverage of Bitcoin. In 2013 BofA published a report “Bitcoin: a first assessment”, which stated,

Bitcoin could become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers. As a medium of exchange, Bitcoin has clear potential for growth.

On 30th October U.S. Patent and Trademark Office (USPTO) published the latest patent, related to cryptocurrency, filed by BofA which added up to more than 50 patents by the financial institution. All of the patents filed by BofA are in the field of cryptocurrency which surprisingly is opposite to the bank’s policy regarding Bitcoin. Bank of America was the first retail bank to file a blockchain related patent in March 2104. The patent, called “Wire Transfers Using Cryptocurrency”, was published by USPTO in September 2015. It was a system through which funds were transferred between accounts using technology which formed the basis of cryptocurrency. This patent was the first crypto related application from a major financial institution in the United States and possibly around the globe.

Currently BofA is leading in an informal competition of blockchain patents. It has surpassed major players such as IBM and Alibaba. An assessment of the bank’s role regarding the patents shows that it has not taken any action in actually using the technology and has only focused on registering it. All the endeavors in the blockchain domain do not imply that company will develop anything tangible. This observation is solidified by a statement given by Catherine Bessant, Chief operations and technology officer at BofA,

We’ve got under 50 patents in the blockchain/distributed ledger space […] While we’ve not found large-scale opportunities, we want to be ahead of it, we want to be prepared.

Bank of America’s interest in the blockchain technology didn’t prevent it from calling cryptocurrency “troubling” and it has mostly depended on patents to appear progressive in this field. Michael Wuehler former VP at BofA, whose name is listed as an investor on 8 of the patents owned by BofA, said that they are fundamentally “meaningless” in a tweet,

Patents help companies attract investment, protect property rights and collect monopoly profits from other companies using their inventions — and this could be the case with BofA.

The latest cryptocurrency related patent by BofA is Crypto storage Plans aka Digital Safe Deposit Box. It was filed in 2016. This patent will form the way to making a platform which is essentially a bank for private keys. If Bank of America launches this product it will surely be popular among the public considering the repute of the organization. Another facet to their patent is monitoring the stored keys in real time and provide updates if is being tampered with. Blockchain technology has provided banks a possible way of speeding payments. Maulin Shah the managing attorney at EnvisionIP, told in an interview,

Based on what’s publicly out there, the technology sector hasn’t embraced blockchain as much as the financial services industry.

Blockchain technology proves to be a potent way of reshaping the financial system of the world as banks are contemplating its use in speed trading and improvements in record-keeping. Hostility towards cryptocurrencies may not hold them back from benefiting through its underlying technology.

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Habibah Shahid

A Computer Science student but a writer at heart. Habibah writes about Cryptocurrencies and the underlying technology, Blockchain, with the perspective of a Computer Scientist. Email: habibah@blockpublisher.com or contact the editor at editor.news@blockpublisher.com

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