Banking has been transformed over the last two decades, for customers and the industry. Consumers are increasingly performing monetary transactions of all kinds digitally. However, while the rise of digital currency (cryptocurrencies) has been notable, one expert does not expect them to replace physical money soon.
Hiromi Yamaoka, head of the Bank of Japan (BOJ) payment systems department says, “It's too far off”.
“It would change the banking system too drastically,” he added while participating in a forum on financial innovation. Of course, Japan is not shy about being at the forefront of a digital revolution, so Yamaoka's opinion is probably fair.
The country and indeed the BOJ have become pioneers in developing financial technology. Last year, the Bank of Japan opened a department dedicated to fintech. It provides valuable insight to banks wanting to open new business opportunities.
Additionally, the nation's bank also partnered with the European Central Bank to research distributed ledger technology (DLT) like blockchain. That research led to the organizations claiming blockchain is not mature enough.
“From a practical perspective, I think this is still ‘under construction',” Yamaoka told the forum, speaking blockchain and DLT technology. He said the initial hype surrounding the technology was “quite tremendous”.
Changing the Banking World
Mirroring his thoughts on DLT tech, Yamaoka thinks digital currencies are not about tot transform the industry. That does not mean they never will, but physical money is here to stay.
Certainly, the general market seems to corroborate this prediction. Bitcoin for example caused a massive stir and is still an important cryptocurrency. However, it has not quite transformed the financial industry like some initially predicted.
There is clearly a shift to a digital banking climate. Customers are buying most of their products digitally, and paying for them digitally.