Cryptos will ultimately replace the banks, right? Wrong. At least not according to one executive at JPMorgan Chase. The traditional banking industry is so intertwined with society that it’s practically impossible to uproot, he believes.
Banks haven’t been the most enthusiastic when it comes to cryptos. Jamie Dimon, the JPMorgan CEO has long held the belief that cryptos are a scam. The Bank for International Settlements has also stated in no uncertain terms that cryptos don’t qualify as currencies. This is no surprise, however. What caught us by surprise was when JPMorgan, the largest bank in the U.S, and the very bank Dimon heads, announced their own crypto.
It led many to ask, has Dimon changed his views towards cryptos? In a recent interview on CNBC’s SquawkBox, Ron Karpovich revealed that he hasn’t really changed. Karpovich is the global head of e-commerce at the bank. Asked whether Dimon is still a ‘player hater’ regarding cryptos, he tactfully responded:
I think there’s a difference between trading a cryptocurrency that’s in the market, that’s ubiquitous, versus using the technology to enhance your payments infrastructure. So, we look at the technology as a means of doing things faster and cheaper. Every CEO would want to make things faster and cheaper.
So, no. He hasn’t really converted to the gospel of cryptos. He is just using cryptos to make things ‘faster and cheaper.’ However, this does sound oddly similar to Dimon believing in the superiority of cryptos.
So, from that standpoint I believe there’s a buy-in to the concept of using blockchain. We are big players in this space. We created Quorum as a private blockchain and put it out to the market to allow others to use it
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And while banks may be stuck on technology that’s slow and inefficient, they are still an integral part of the payments system, Karpovic added. Crypto companies have advertised themselves as able to do what banks can, but with lower fees. However, they can’t take banks out of the equation, at least not yet.
Well, ultimately, behind the scenes, they are going to have to use a bank to move funds. There’s more partnership instead of competition in that space.
The payments space has very small margins, he continued. This squeezes out the small players, forcing them either into consolidation or lose out to the big firms.
Blockchain will become a mainstay in the payments market, he added. However, contrary to popular belief, the end product will not change. Cryptos will not suddenly replace the established forms of payment.
“I think you’ll continue to use the payment type you prefer, be that a wallet, be that a card or be that your bank account. But behind the scenes, the instantaneous nature of using the blockchain technology will make your payment faster and cheaper,” he stated.
JPMorgan’s JPM Coin will only be available for institutional clients. In its announcement, the bank promised to keep working on developing the coin to avail it to retail consumers.