Citigroup has shelved its plans to introduce a blockchain-based token.
A March 18 a Coindesk report revealed that Gulru Atak, Citi’s chief of innovation lab and global head of innovation for treasury and trade solutions, believes that although the blockchain technology has the potential to transform many industries, many efficient and effective alternatives are available for the fintech sector.
“Based on our learnings from that experiment we actually decided to make meaningful improvements in the existing rails by leveraging the payments ecosystem and within that ecosystem, we are considering the fintechs as well or the regulators around the world as well, including SWIFT,” Atak told Coindesk.
Citi’s blockchain dive was initiated by Atak’s predecessor in 2015 when it was reported that the Wall Street giant was working on a digital token to streamline its services. However, the bank never officially announced or even launched a proof-of-concept for any blockchain-based project.
Efficient, but Not Realistic
In the area of cross-border payments, the banking giant is now focusing on technologies with shorter-term impact. Atak also pointed out the limited scalability and adaptation of the technology.
“We are trying to make those changes today, rather than just putting all our efforts into future technology,” she said. “If we are talking about cross border payments, how many banks do we have across the world – and how many of them are already on-boarded on SWIFT? And how long has it taken SWIFT to onboard all those banks?”
The bank was more focussed on integrating blockchain with the legacy systems. In 2017, Citi partnered with Nasdaq for a project called CitiConnect to streamline payments around private securities – much like JP Morgan’s attempt with JPMCoin.
“[CitiConnect] didn’t issue stablecoins but the infrastructure that was used was similar to issuing coins on a blockchain platform…But it was purely to integrate into a blockchain-enabled system on our client’s end and make it connect to our legacy payment processes real-time,” Atak added.
Citi, however, will continue to work on the blockchain domain especially on trade finance as the sector does not require a large number of banks to switch to the technology.
“Our focus is currently more in the trade space and trade finance and trade letters of credit. We are experimenting with this technology but probably we are a little bit, like, reserved when it comes to making bold public announcements,” Atak added.