- Key Insight: Distributed ledger blockchains can help banks like BNY process transactions in real-time.
- What's At Stake: BNY processes trillions of dollars of payments and transactions every day around the globe that blockchain could improve.
- Expert Quote: Carolyn Weinberg, BNY: "The blockchain will enable this future state where we can have 24/7, always-on, immutable recordkeeping."
Global financial markets are currently shifting to a 24/7, "always-on" operating system assisted by digital assets and blockchain infrastructure, according to the
"All of the computers we have are going to change, and we're going to have a whole different mechanism of transacting," she said at The Most Powerful Women in Banking conference hosted by American Banker on Wednesday. "The blockchain, in concert with our traditional ways of doing business, is going to transform how we do business for the future."
Weinberg explained that
"The blockchain is always on, whereas most of our systems shut down and have batch processing," she said. "We all go to bed at night, so this concept of 24/7 doesn't really exist in the way we work today. The blockchain will enable this future state where we can have 24/7, always-on, immutable recordkeeping."
As an asset management bank, BNY is the custodian of trillions of dollars of payments and securities transactions every day, according to Weinberg.
"We are the largest collateral manager and do lots of security lending," she said. "If we actually apply the blockchain, we would have faster, better, more efficient systems for some of our clients, and they need things moving faster."
Distributed ledger technologies, such as blockchain, are a secure way of conducting and recording transfers of digital assets without the need for a central authority, as multiple participants in a computer network share and synchronize copies of the ledger. New transactions are added in a manner that is immutable and visible to all participants in near real time.
"Distributed ledger technology is very much the core of what we're talking about and everything builds from that," Weinberg said. "We start with an always-on programmable blockchain, and that's where we store all the information and transactions taking place."
Weinberg said the applications of distributed ledgers for banks include issuing
"You can say, 'I'm going to represent this security on the chain' and it sounds super fancy, but actually the old version of that was data input," she said. "The new version of data input is putting it on-chain, or tokenizing."
Weinberg recalled a cryptography "code-breaking" class she took while studying applied math at Harvard University. "Crypto and blockchain in general, in all fairness, was a bunch of math nerds in a corner [at the time]," she said.
Today, however, the concepts have entered common conversation through cryptocurrency. "Why is it called crypto?" she said. "It's cryptography; you're holding keys to unlock the data inside. The key to a code is the same thing in both cryptography and blockchain. When someone says, 'I'm storing my blockchain, my bitcoin,' they're actually storing the [digital] keys to unlock that bitcoin. It's not actually bitcoin itself. The concept of those keys moving around or being stored or shared is much more mainstream now, which is really quite exciting."
BNY is pursuing an aggressive technology strategy for blockchain, digital assets and artificial intelligence. The company
"What's going to be more and more exciting is the layering in of AI," Weinberg said. "I'd say in five years, we'll see much more programmable optimizations, customizations and the ability to really drive new use cases that we haven't imagined. The combination of AI plus smart contracting is remarkable. As this gets more scale, I think we're going to see that interplay happen more and more."
