Citibank Scrapes JPM Coin-Like Crypto Token ‘Citicoin’ Platform And Decides To Bet On SWIFT
Citibank Scrapes JPM Coin-Like Platform And Decided To Bet On SWIFT
Everybody is talking about JPM Coin right now, the token which was created by the JPMorgan bank. However, do you remember Citicoin? Way back before cryptocurrencies got so famous and Bitcoin was well-known, Citigroup’s Innovation Lab, which is set in Dublin, was trying out the project.
Citicoin would be like JPM Coin. The project was never really officially launched to the public, even as proof of concept. The main goal of the company back then was to streamline its payment processes on a global scale. However, the project was ultimately scrapped recently, as the company deemed that the technology had more efficient ways to be used.
In fact, the Citigroup mainly decided to just use someone else’s tech instead of creating their own. According to Gulru Atak, the global head of innovation at the company, the group has found out that it was better to make improvements to the projects that already existed than to create their own, as they would have to spend too much money with research.
The main solution that was created by the company was to use services like SWIFT instead, as this is what the company was using for a long time. There are many labs working on cross-border and money remittance solutions at the moment and even the classic SWIFT is starting to look at solutions to make its process be faster.
One of the main goals now is to find ways to effectively trade spending less money and time in the short term. Instead of waiting for some future technology, the company is focused on using what is available now.
Citibank believes that, in order to completely change how cross-border payment works using the blockchain, a company needs to have all the banks in the world on board of the initiative, which just seems like too much work. Because of this, they are not so keen on the blockchain technology anymore, at least not if it is not widely used.
Atak affirmed that the SWIFT took a long time to establish its presence, so it is better to bet on an institution that already has connections than to change to something new.
The Citigroup has flirted with the blockchain recently, but never actually gone very far. Despite Citicoin, the group has already created CitiConnect, which linked the bank to Nasdaq in order to streamline the payment for private securities with the other company. The structure was only used to connect the two institutions, though.
Citigroup Will Not Completely Abandon The Blockchain Technology
Despite what it looks like, Citigroup is now completely ready to simply abandon the blockchain technology and move onwards. According to Atak, areas like trade finance will continue to be explored by the bank and this may include the blockchain tech.
According to her, this niche could use a considerably more realistic use case as it is a lot easier to create an ecosystem for finance trading because it does not require so many banks to have compatible systems.
HSBC, a big rival of Citibank, has settled around $250 billion USD of money in foreign exchange trading using the blockchain technology in 2018. Citigroup cannot be behind, obviously, so the company is very focused on the development of new solutions.
According to Opeyemi Olomo, the blockchain lead of the lab, there are “clear pain points in the market” and the main one is around the transparency of credit. Olomo sees an opportunity in this and believes that there are not too many liquidity providers in this market yet, so the bank can use that to grow.
Another important point in using the blockchain is custody solutions. Banks are always worried about guarding the assets in the best possible ways, so using the blockchain could be an interesting solution for that.
Atak has affirmed that the company is looking into these solutions and that this will be an important challenge for the group down the road.