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Screenshot of a breaking news alert e-mail from Q2 2017
On the 22nd of February, 2018, Bank of America, in its annual report to the SEC, expressed its concerns over cryptocurrencies and its inability to “outcompete” the new fintech wave.
BoA has cited the area of cryptocurrencies as a huge possible expenditure for the business of the bank and its eventual inability to stay on top of the cryptocurrency trends. The Bank also said:
“Emerging technologies, such as cryptocurrencies, could limit our ability to track the movement of funds. Our inability to adapt our products and services to evolving industry standards and consumer preferences could harm our business,”
Bank of America was one of the major US banks that banned the purchasing of cryptocurrencies with their debit and credit cards. With that, BoA has already obtained a patent for their cryptocurrency exchange system back at the end of 2017.
The report submitted to the SEC by BoA voices the fear of the bank that stiff competition from new emerging technologies may lower their profit margin substantially and increase their costs to stay afloat of the developing trends:
“In addition, the widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services as we grow and develop our internet banking and mobile banking channel strategies in addition to remote connectivity solutions.”
Another major worry of BoA and probably of most banks is the fact that as more and more products proliferate for clients and more and more technologies and financial solutions emerge, the pressure to create and deliver those products at a low price in order to retain clients and fight competition may be too much for BoA at this point:
“We might not be successful in developing or introducing new products and services, integrating new products or services into our existing offerings, responding or adapting to changes in consumer behavior, preferences, spending, investing and/or saving habits, achieving market acceptance of our products and services, reducing costs in response to pressures to deliver products and services at lower prices or sufficiently developing and maintaining loyal customers”.
With the uncertainty of the cryptocurrency market, and the growing power of blockchain, banks are seriously afraid of the upcoming wave of fintech, including Bitcoin and other altcoins. Probably they already realize how expensive and difficult it may be for them to develop cutting-edge blockchain technologies.