CIBC Looking into Blockchain Technology, P2P Lending

CIBC, Canada's fifth largest bank by assets, is reportedly studying how blockchain technology can streamline transaction processes.

Canadian Imperial Bank of Commerce (CIBC), Canada’s fifth largest bank by assets, is reportedly studying how blockchain technology can streamline transaction processes.

The bank is the first in Canada to disclose such an interest, until now expressed by a half dozen institutions based in the US and Europe. CEO Victor Dodig raised the notion during a speech to a Bay Street crowd in Toronto, during which he made several arguments highlighting the bank’s commitment to progress and technology. CIBC is also considering getting involved with peer-to-peer (P2P) lending.

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“If you believed all of the doom and gloom being written about banking these days, you would think it’s just about all over for us — that the Apples, Googles and others … are about to put us out of business, and that our clients are set to desert us in droves for new financial services providers.”

Although the smallest of Canada’s ‘big 5’, CIBC was the first to introduce several innovations in the country. It pioneered drive-through banking in the 50’s and 60’s, was the first bank to introduce an ATM in 1969, and the first to offer telephone and online banking. Its online-only spinoff, President’s Choice Financial, offers no-fee banking and at one point, was the fastest growing bank in the country.

This week, it also became the first to participate in ‘suretap’, a mobile app backed by Canada’s four major wireless carriers. It supports multiple payment methods and is compatible with the point-of-sale infrastructure at Canada’s largest retailers.

The bank has also recently introduced CIBC Mobile Banking for the Apple Watch.

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On the blockchain, Dodig expressed more of a cautious stance relative to other banks announcing their plans, saying that it is tough to tell whether the technology will play a central role in how the banks do business. However, it is essential for the banks to understand how it works and the level of security it offers.

Embracing Disruption, but Tradition Triumphs

During his speech, Dodig emphasized that the bank plans on working with emerging technologies that are reshaping the banking landscape, and not fighting them. At the same time, these technologies will not spell extinction for the banks.

“If you believed all of the doom and gloom being written about banking these days, you would think it’s just about all over for us — that the Apples, Googles and others … are about to put us out of business, and that our clients are set to desert us in droves for new financial services providers,” he said, according to Financial Post.

Furthermore, he suggested that the traditional banking model has the upper hand when it comes to personal client relationships. New entrants may have a tough time disrupting some areas of traditional banking because clients “will continue to rely on the safety, strength and security of well-capitalized banks like CIBC,” he said.

He also countered the mindset favoring the globalization of banking, which pictures technology’s figurative melting away of borders. “In my view, the operational complexity, competitive pressures and varying regulatory frameworks facing global banks has created an environment where, the costs of being a truly global bank far exceed the benefits,” he said.

Dodig pointed to CIBC producing a return on equity of 20%, more than double the less than 10% generated of global firms.

He also predicted that branches will continue to exist, but will be “smaller and smarter.”

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