Bitcoin and blockchain technology will lead to cheaper SA banking fees: expert

With R35 million being traded on South African BitCoin exchanges in the last day – along with new “classes” aimed at getting workers up to speed with the tech – it’s clear that blockchain technology is being taken more seriously by South African professionals.

According to Amit Kaundinya, practice manager at WiPro Limited, the traditional promise of banks has been to act as a middleman – verifying transactions, conducting fund transfers, convert currencies, and more.

This is set to drastically change however, as the blockchain technology acts as a distributed ledger that leverages a series of timestamped records, or blocks, to effectively authenticate a transaction in a secure manner, without third party intervention.

“Banks are cautious about the role of the blockchain when, in fact, banking CIOs can – and should – be embracing the technology to more effectively secure their own transactions, rather than shunning it as a possible replacement for their services,” he said.

What it means for you

These changes are indeed already taking place, according to Farzam Ehsani, blockchain lead at RMB and chair of the South African Financial Blockchain Consortium (SAFBC).

Ehsani and the consortium are currently working with the country’s biggest banks and financial institutions to introduce a sovereign blockchain – Springblock – allowing the competitors to make use of and develop new technologies together.

Speaking to BusinessTech, Ehsani noted that the SAFBC is exploring several different blockchain technologies which promise to make the transfer of assets a more seamless process.

“Today many people use the internet protocols and technology on a day-to-day basis without knowing how it works. Blockchain protocols and technology will be no different,” he said.

While the new project promises to go relatively unnoticed by the average banking customer, Ehsani noted that customers will certainly notice a change in their banking fees.

“If you look at the trend of banking fees over the last few years, you see that they have been decreasing – this is a global phenomenon,” he said.

“Technologies like blockchain, as well as new FinTech companies entering the space, will contribute to this trend going forward.”

He also noted that “any forward-looking financial institution” is exploring incorporating cryptocurrencies and their innovations into their systems, as well as looking at using blockchain to improve insurance, share-trading and other financial products.

“Few appreciate how transformative blockchain technology is to the world,” he said. “20 years ago, most banks didn’t have any online presence – today, that’s unthinkable. Times change quickly.”

When? 

Despite the mass excitement surrounding blockchain and cryptocurrencies, Ehsani said it was impossible to say when exactly South African consumers could expect improvements such as lower bank fees.

“Timing is difficult to predict. What is important is that the journey has started,” he said.

Part of this delay is because of the steep challenges the new technology currently faces.

According to Ehsani, more than any political or financial regulations, education is the biggest sticking point in blockchain’s mass adoption.

“As blockchain technology is so revolutionary much education is needed across the industry,” he said. “Only once people fully understand it – its benefits as well as its risks – will real progress be made.”

Read: A simple demonstration of how SA businesses can use blockchain technology