The so-called subversion of financial technology has not yet begun.

Is financial technology a threat to traditional banks? Judging from the banking industry's reaction, they are not overly nervous.

Blockchain technology is often considered to be a breakthrough in the financial sector. There have been 15 banks that have successfully tested the prototype of Distributed General Ledger Technology (DLT), including UBS, which is mainly used for trade financing and claims and letter of credit processing.

Invoices are still a business that requires a lot of paper in traditional banks, which is error-prone and inefficient. DLT technology can make the business faster and more secure, as well as save money.

Joint Venture R3

The prototype product was developed by R3, a financial technology company jointly established by banks such as Credit Suisse, UBS, Morgan Sachs, and Goldman Sachs. The R3 was established in September last year. At the beginning, only nine banks participated in the R3 and then grew rapidly. By the end of last year, 42 banks had already joined. R3 believes that using blockchain technology in trade finance will increase efficiency by 10-15%, and using blockchain-based trading platforms will increase trading volume by 15%.

There is a question like this: Say good to subversion of traditional banks? Those who are keen on financial technology have always inferred that blockchain technology will change our perception of banks and regard it as the most important innovation since the emergence of the Internet.

However, the banks did not seem to be ready to stand still, but became an important participant in financial technology. Lei Fengnet (search for "Lei Feng Net" public concern) had previously reported that a UBS survey shows that about 38% of the 210 banks in 24 countries have already cooperated with FinTech. UBS is one of them.

Picture from BI

What about subversion of financial technology?

UBS's survey shows that more than half of financial service institutions will use financial technology and related innovative products in a cooperative manner after one year. The reason for cooperation is also very intuitive: Traditional institutions are too slow and are constrained by tradition. Internal innovation is more difficult, and cooperation with external companies is faster and more efficient.

Using a cooperative approach, banks can also avoid destructive conflicts and avoid the danger of subversion. R3 is a good example. The purpose is also to keep emerging technologies under their control.

It is worth noting that R3 is a joint venture of major players in the global financial market, while blockchain technology represents openness, borderlessness, and democracy. R3 wants to create an open competitive environment and give partners the opportunity to use technology equally.

What will be the result? It seems that financial technology has received financial support, and entrepreneurs also have corresponding returns. In addition, this also makes the banking system open, otherwise it will be difficult to access, and applications such as investment consultants and credit platforms are difficult to implement.

Of course, this situation also makes financial science and technology become dull. Innovation through cooperation with banks will make it easier to change the world and simplify the process, or even become a modern software solution. The result is that the so-called subversion but also improve the efficiency of existing financial companies.