Bitcoin traders accuse Australia s biggest banks of declaring war

Commonwealth bank Bitcoin

Bitcoin Exchanges / August 7, 2018

Commonwealth Bank of Australia chief information officer David Whiteing has warned the bank's technology halo could slip unless it embraces crypto-currencies like Bitcoin, online assets like air miles, and gets on the front foot with hiring untapped technology expertise.

In a wide-ranging briefing at an Australian Information Industry Association lunch in Sydney, Mr Whiteing gave the clearest indication yet that the bank has recognised a shift in global sentiment towards crypto-currencies, by revealing it is poised to kick off a trial to use peer-to-peer fiat and crypto-currency exchange Ripple for transferring payments between its subsidiaries. He also said standard customer accounts would likely soon be enabled to store various online reward credits.

"I have a view that a bank account will become a storer of value, rather than a storer of currency value, so why can't a bank account be used to store loyalty points in the same way that you can use the slider on a Qantas website to decide whether you are paying with points or dollars?" Mr Whiteing said.

"We have multi-currency bank accounts today, with 15 currencies available on your phone instantly in real-time, so it is not that difficult for us to take that technology and make that a loyalty point store. It shouldn't be that difficult for us to then add crypto-currencies to it, and whatever other means of payment transfers people might want."

The move to use Ripple internally is a big endorsement for the growing global fintech sector, which is pitching numerous tech-led innovations to change the way the financial services sector operates.

Ripple Labs has so far raised $US34.4 million ($45 million) from a range of backers including Andreessen Horowitz, Google Ventures and IDG Capital Partners and has signed on smaller institutions like Germany's Fidor Bank and a number of US banks, but CBA is the first major bank to publicly disclose its plans to use it.

Planning for future tech

CBA has enjoyed a reputation in recent history of being a pioneer in technology, in relation to other financial institutions, due in large part to a mammoth program to replace its ageing core banking platforms with a modern system. However Mr Whiteing said it needed to press on with a tech agenda.

"One of the things that my leadership team talks about quite a bit is that today we are a technology team in a bank that has a technology halo, tomorrow if we get this right, we will be a technology company that does banking services, " he said.

Mr Whiteing said the bank could not bet on always being ahead of the curve, so needed to design its systems and hire the right staff to be able to react quickly to industry-changing ideas emerging from the tech sector. This will include tearing up the bank's carefully-prepared hiring procedures when the need arises.

"We should mirror the society in which we operate, so if we become really good at being inclusive we will be able to harvest the ideas and be able to respond quickly, " he said.

"Our graduate recruitment process is like every big corporate … it is optimised to get the best and brightest graduates that are extremely well-rounded and show great leadership potential. But quite frankly they are useless in some teams that I have got, where I actually need the person who has the first class degree, but sits in the corner of the cafeteria and really doesn't like to talk to people … but is also awesome in crypto or data science."

Following Mr Whiteing's speech director of financial services at technology startup Tilikum Investments, Jodi Stanton, said the bank's use of Ripple has significant positive implications for financial innovation in Australia.

"If the momentum can be carried through with enabling policy and investment, innovation at this institutional level can provide significant consumer savings as well as opportunities for Australian fintech investors and entrepreneurs, " Ms Stanton said.

"Consuming these new sources of instant liquidity opens the opportunity for entrepreneurs with the technical know-how to offer a variety of new services, from very fast, low-cost cross-border remittances to new hard asset mobile digital currencies. Opportunities exist to be a price taker or a price maker, or both, and early participants, be they institutions or entrepreneurs, can open a "seat on the exchange" with their own digital offers."