At E-Crypto News, we were concerned about how big banking and blockchain technology will fare in this decade. We reached out to Rick Burke who is the head of Corporate Products and Services TD Bank. Here is what he had to say.
Rick Burke, Head of Corporate Products and Services TD Bank
- Why is the finance industry wary of blockchain technology adoption?
The idea that financial professionals and the industry are generally wary of blockchain adoption is a common misconception. In fact, many are inclined to implement the latest technology and in a survey TD Bank did at the Association for Financial Professionals Conference, 92% of respondents said they see positive attributes to blockchain for the industry. Unfortunately, most organizations just don’t have the proper resources in place to adopt them right now, whether that is technical infrastructure, capital or expertise.
- Are we seeing a shift from traditional legacy payment systems to new ones?
There is a shift to both enhance legacy payment systems to better accommodate today’s needs and introduce new options. Payment rails such as ACH have existed for decades, but they are evolving to include faster payment solutions like Same-Day ACH. Capabilities like these are in addition to brand new payment rails, like The Clearing House’s Real-Time Payment solution. Improving the speed of existing payment systems along with adding brand new faster payment solutions are a one-two punch that greatly expands the abilities of corporate treasurers to better meet the needs of their companies and their customers. Financial professionals are seeing the increased need to collecting real-time data and analytics along with the funds that ultimately impact their bottom line.
- Cybersecurity seems to be an issue as it regards payments. What are the challenges that the industry is going to face in this decade?
Fraud and cybersecurity are top-of-mind issues for those involved in the electronic payments and transactions space, and the industry understandably is showing greater concern. In fact, 40% of financial professionals who participated in TD’s recent AFP survey named payments fraud and cybersecurity as a top operational challenge for their organization in 2020.
The concern is real. As we enter the new decade, there will be increased challenges in increase in frequency of attempted cyber attacks and even success rates as hackers adapt to more sophisticated systems. The human element remains a large part of fraud prevention, though, and organizations need to invest time and money into training all staff – not just those in finance – about potential threats. Given the rapid change in the payments space, including the increase in digitally originated payments and the evolution of real-time payments, attackers are more creative than ever before.
- Is there any chance that the payments industry will take a leap of faith concerning blockchain technology or decentralized ledger systems?
The “payments industry” covers a large group of varying responsibilities and perspectives on this topic. Financial institutions, their payments partners and their regulators have a primary focus on security, resiliency and efficiency in the payments environment. As a result, many of these organizations see blockchain and distributed ledger technologies as a potential enabler of non-monetary processes like document retention and credential access but would likely be hesitant to take a leap of faith where actual payment transactions are involved. Having said that, it’s important to remember that not too long ago, the Internet was a place where leaps of faith were being considered and today the Internet is central to the digital delivery of payment capabilities to consumers and businesses. It’s just a matter of time.
- How can artificial intelligence increase the integrity of payments?
As payment innovations become more complex and faster, it is increasingly difficult for humans to detect errors for transactions that are happening in real time. AI has been successfully applied in several industries and it is increasingly becoming a reliable, efficient and cost-effective solution.
The implementation of AI supports the ability to automate repetitive and difficult tasks, which frees time to improve other parts of the payments process that need more hands-on attention.
- Will a recession in the general global economy spill over into the financial services sector? Can a global recession influence decision make concerning the adoption of blockchain technology or decentralized payment systems?
We’re not seeing a consensus that a recession is imminent; our survey showed that half of those surveyed do not believe an economic recession is a threat in 2020. However, the half that do are implementing many strategies to help safeguard their organization, including increasing capital reserves, holding off on large capital spending projects and accelerating debt payoff. Given this, those companies that are in capital-preservation mode likely would defer some level of investments into payments-related technology.
- What is the biggest hurdle for the financial services sector in terms of the adoption of decentralized ledger technologies? Are regulatory issues going to be a big problem in the coming decade as regards the adoption of decentralized ledger technologies?
The biggest hurdle for the financial services sector in terms of adopting these technologies is that our level interest does not match our corporate customers’ current ability to adopt them. About one-third of respondents in our recent survey named the ability to adapt to faster electronic payments as a top operating challenge. Adopting new and innovative technologies is a time-consuming and expensive process, and financial services firms are often allocating that investment elsewhere. Additionally, decentralized ledger technology is still a new and complex landscape for most. Established businesses must assess the risk, scope and commitment of adopting these new technologies. Given the current uncertainty of our geopolitical environment, it’s impossible to say exactly how the regulatory perspective will shift in the coming decade to impact this specific sector.
- If you had three wishes and a genie who could make them come true. What would your wishes be for the global financial services sector?
A, An end to cyber fraud;
B. An unrelenting focus on identifying and addressing the needs of financial services customers;
C. more wishes.