DeutschWith BNY Mellon, another major bank is adopting blockchain technology. In the future, they aim to modernize slow and expensive bank transfers through the use of distributed ledgers. Additionally, the commercial bank is working on utilizing tokenized assets.
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BNY Mellon: why the Major Bank is Now Focusing on Crypto Payments
The US major bank BNY Mellon is now focusing on crypto payments instead of traditional payment methods, as Bloomberg reports. The aim of this measure is to modernize the bank’s processes. Tokenization is also set to play a greater role in the future.
BNY representative Carl Slabicki explained that they are particularly working on improvements to cross-border money transfers. This is typically subject to significantly longer waiting times and higher fees than domestic transactions.
“This allows banks to overcome the limitations of outdated technologies, making it easier to move deposits and payments within their own ecosystems – and eventually, as standards evolve, in the broader market as well,” Slabicki explained.
Transfers can therefore take several days. The use of multiple fiat currencies still presents a hurdle today. Blockchain and cryptocurrencies offer solutions for these vulnerabilities. The New York banking house also recognizes this, which is why they are now relying on Distributed Ledger Technology.
The technology is also a suitable means for processing real-time transactions, Slabicki explains. They also plan to accept tokenized deposits. The tokens could, for example, represent a claim against a commercial bank.
Why Crypto Payments Outperform Bank Transfers
Crypto payments are superior to traditional bank transfers on many levels. Often, digital assets can be transferred via the blockchain at a lower cost.
Furthermore, crypto networks are accessible around the clock, while banks usually only process transactions during their business hours. Instead of multi-day waiting periods, real-time transfers are possible thanks to the blockchain.
While neobanks like Wise or Revolut have been processing real-time transfers for years, established firms like JPMorgan or BNY Mellon are now following suit. By these banking industry giants adopting the blockchain, they are doing their part for the growing popularity and adoption of the technology.
BNY Mellon holds assets totaling 55.8 trillion US dollars, making the bank one of the largest of its kind. It processes transactions worth approximately 2.5 trillion US dollars every day.
As part of the Swift network, it is among the companies working on a modern, blockchain-based solution. So far, Swift relies on a comparatively complicated system that works through mutual deposits. By using the blockchain, banks could thus free up large parts of their idle liquidity.
According to Bloomberg, BNY Mellon also shows interest in the general concept of tokenization. For example, the bank could use tokenized bonds or shares. Compared to traditional assets, tokenized versions are easier to trade and transfer. While fees are reduced, transfers are possible around the clock, as the blockchain is constantly online.
The report does not specify which blockchain is planned for this. This year, the bank announced the use of Ethereum and Ripple in previous press releases.
