Royal Bank of Canada Chief Describes Blockchain as a ‘Quantum Innovation”

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RBC logo is seen in Toronto financial district April 19, 2010. The Royal Bank of Canada (in French, Banque Royale du Canada, and commonly RBC in either language) is the largest financial institution in Canada, which is measured by deposits, revenues, and market capitalization. The Canadian Press Images/Francis Vachon

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Dave McKay, chief executive of Royal Bank of Canada, likes the blockchain, loves his bank’s mobile wallet and thinks banks should focus more on fixing their legacy systems than trying to pull fintech startups under regulators’ purview.

At least that’s what Robert Barba, technology editor of American Banker and editor-in-chief of Bank Technology News, is reporting. 

Here are takeaways from the conversation.

Dipping a Toe into Blockchain

Like most large banks, the company is experimenting with the blockchain, a technology that McKay described as a “quantum innovation.”

The company could roll out a loyalty program that relies on the technology known for its fast settlement and distributed system of recordkeeping by next year.

“It would be a nice hybrid step” into integrating the blockchain into banking, McKay said. “A loyalty account is a good, safe currency to start with.”

When asked why RBC would use rewards — rather than tangible money — as a test case, McKay said an unproven technology “begs caution.”

“It is a brand-new technology, and what do we really know about it? How cyber-secure is it? We are going to learn a lot more about it,” he said. “Given what is at stake, it is not something you can rush to market with and fix as you go. You want it to work.”

Although several recent announcements indicate that financial institutions are still curious about bitcoin and cryptocurrencies — not just the underlying blockchain architecture — McKay seemed uninterested in bitcoin, saying that the industry wouldn’t be “solving any problems with a new currency.”

Besides using the distributed ledger technology for its loyalty system, RBC is also one of the 13 banks that have formed an alliance with R3CEV, a blockchain startup, to develop commercial applications of distributed ledger technology in the financial industry.

“Some of these issues are best broached as an industry,” McKay said.

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Founder of Blockchain News and The Hackitarians Foundation, Richard Kastelein is an award winning publisher and editor, hackathon organiser and entrepreneur. He has written over 700 articles at Blockchain News, has a massive network in the Blockchain arena and is available as a speaker and consultant. (richard@the-blockchain.com) Kastelein has spoken (keynotes & panels) on technology at events in Amsterdam, Barcelona, Belfast, Berlin, Brussels, Brighton, Copenhagen, Cannes, Cologne, Curacao, Frankfurt, Gdansk, Hollywood, Hilversum, Geneva, Groningen, London, Las Vegas, Leipzig, Madrid, Melbourne, NYC, Oxford, Rio de Janeiro, Sheffield, San Francisco, San Jose, Sydney, Tallinn, Vienna, and Zurich. A Creative Technologist & Canadian (Dutch/Irish/English/Métis) his career began in the Native Press (Canadian Arctic) and he later spent a decade in the Caribbean media. Currently, he writes occasionally for Wired Insights, Guardian & Virgin and his articles have been translated into Dutch, Greek, Polish, German & French.