Financial institutions, including banks, are gradually warming up to cryptocurrencies and are starting to notice the potential of these digital assets. A group of experts from the Bank of Italy recently published a report titled “Banks and Fintech: strategies and business models” in an effort to explore the bond. If appropriately utilised, blockchain technology has the potential to revolutionise their business models, especially on the risk management, organisational processes and the internal control system.
The Bank of Italy has always managed to maintain a somewhat controversial and contradictory stance when it comes to innovation. They at the beginning of this year published a report “Economic and regulatory aspects of the crypto-activity” which looked into analysing the economic, accounting and other big profiles of crypto, and also emphasised on the importance of the regulation of cryptoasset exchanges adopted in legal jurisdictions. The report by the central bank shows that cryptocurrency is not categorised as money or any form of financial instrument. However, the Bank of Italy, Consob and other Italian supervisory authorities are going to supervise blockchain tech activities.
Even though the authorities looking into blockchain and fintech, they still harbour the opinion that cryptocurrency is speculative, risky, inefficient and dangerous. The Bank of Italy released a report which was against Bitcoin, the leading crypto by market cap. The central bank is not satisfied with how digital currencies including Bitcoin are being used and claims that digital currencies support illegal activities, such as money laundering, fraud, etc., for instance, cybercrime has made the country to lose over 10 billion euros in crypto.
The report notes that the responsible financial and technology authorities in Italy need to map and describe various strategies which banking intermediaries can follow to adopt the technological innovation in its business models. They should also do the following things: motivate banks to adopt new information technologies; analyse the impact of fintech on the competitive environment where banks operate from; assess the effects of fintech on traditional banking business models. This will encourage other big players to change their operations into sustainable technological innovations.