KPMG Report Upbeat on Bitcoin's Potential to Disrupt Retail Banking

An 18-page report by KPMG's UK banking division explores how the retail banking world is ripe for gradual disruption and how some emerging systems can make this happen.

The review is well-summarized in a section discussing "the three pronged attack on retail banking." The three major services provided by banks--deposits, Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term and lending--are each being challenged by new approaches.

Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term like Bitcoin are categorized as challenging the payments world. PayPal is considered to be a challenger for payments and deposits, while peer-to-peer schemes and "digital banks" are making inroads into the lending space.

In a section devoted to digital currencies, Bitcoin is explored in addition to other forms of digital cash. These take the form of digital wallet apps such as Square and Apple Pay; the latter's rival CurrentC; Snapchat's "snapcash"; and local “complementary currencies” such as the Bristol pound.

Bitcoin is illustrated as removing three parties from what is typically a five-party payment process, saving up to 2% of transactions. Though it is in its early days and its future uncertain, the technology holds promise regardless of the outcome:

"Bitcoin is the internet of money. It would be wrong to write it off just yet. It’s just in its infancy and will grow. With its open architecture it could develop into something very interesting."

One of the featured Bitcoin-related products is the Nymi, a wristband whose bitcoin wallet is secured by the user's heartbeat.

In the report's conclusion, it is argued that the successful technologies of the future may be those that bring their own original concepts to the table:

"It is easier to launch a new kind of current account to match a close rival’s new offering than to work out the opportunities that a digital currency such as Bitcoin presents or to see the value in social media or biometric authentication."

"With intelligent leadership," it is not beyond the banks to develop or adopt new approaches.