Blockchain technology

Blockchain technology

Blockchain technology provides numerous opportunities for the finance industry. Promising possibilities for the application of Blockchain technology exist both in the development of new business models as well as in achieving efficiency gains for existing activities.

Greater control over own data thanks to Blockchain

The way that Blockchain Technology works can be compared to a digital notary. All transactions are examined and verified by a large number of notaries in a network. After this step, all of the entries are saved in a decentralised manner in identical copies on different databases. As a result, the technology makes it possible to transfer and manage not only information, but also assets and their ownership directly between different parties via the internet. The technology promises significant advantages: the system functions without intermediaries and is better protected from external attacks as a result of the various data sets. Because they are interconnected, it is no longer possible to manipulate the individual entries once they have been saved.

Taking advantage of opportunities – overcoming challenges

The use of Blockchain provides major opportunities for both banks as well as clients. Blockchain reduces the costs of customer identification. Customer data is available more quickly, which makes authentication more efficient. At the same time, it strengthens the rights of the customer. They are given sole ownership of their digital identity with a key that gives them access to personal data and certificates.

Established intermediaries and their business models are facing fundamental challenges as a result of the Blockchain technology. They must take advantage of their financial expertise, broad customer base and the significant trust that they enjoy. The legal situation has not yet been clarified on most points. Focus must be placed on data protection and secure data transmission. Questions on responsibility and liability also pose a challenge. What is essential here is determining, on a case by case basis, to which area of responsibility the a possible mistake arising from the use of Blockchain technology falls under.

There is also still a need for clarification when it comes to cryptocurrencies as a use case for Blockchain technology. Among other things, this includes the legal classification of cryptocurrencies, how these are handled from a tax perspective as well as the security-related and legal requirements for the custody of keys.

Position of the Swiss Bankers Association (SBA)

The SBA advocates fostering innovation in the area of Blockchain technology, but also minimising risks through regulatory measures. The applicable laws should serve as the basis for this. Only if the best global framework conditions prevail will Switzerland continue to be able to foster domestic growth and value creation in the global competition between locations. The SBA strives for close collaboration with the authorities and the relevant associations to resolve outstanding issues and to contain potential risks.