Wells Fargo, the fourth largest bank in the US, is joining the digital asset craze.
The bank has announced that it’s piloting a new digital currency for cross border transactions, following in the footsteps of JP Morgan, which launched its stablecoin earlier this year.
The new digital currency, dubbed “Wells Fargo Digital Cash,” is designed to drive operational efficiencies, including longer operating windows and real-time processing.
Unlike Bitcoin, which is public, open-source and lacking any central authority or issuer, Wells Fargo Digital Cash is a private, internal settlement service that will run on the banking giant’s first distributed ledger technology (DLT) platform.
The bank says the first step is to be able to complete internal book transfers of cross-border payments within its global network using digitized cash and then it plans to “build and deploy multiple DLT-based applications.”
Says Lisa Frazier, head of the Innovation Group at Wells Fargo,
“As a result of the increasing digitization of banking services globally, we see a growing demand to further reduce friction regarding traditional borders, and today’s technology puts us in a strong position to do that.
We believe DLT holds promise for a variety of use cases, and we’re energized to take this significant step in applying the technology to banking in a material and scalable way. Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world.”
The move is another sign that legacy players are seeing the changing tide in the banking industry as cryptocurrencies prove that monetary value can be transferred instantly, at a fraction of the cost of bank wire fees and without the need for staff.
Operating in a decentralized environment, cryptocurrencies are transferred from peer-to-peer.
As cryptocurrency platforms and emerging digital currency initiatives, such as Facebook’s Libra, are putting increasing pressure on traditional banks and financial institutions to revamp their infrastructure to accommodate faster transactions and more mobile services, Wells Fargo says the pilot plans to “achieve near real-time money movement.”
Wells Fargo, which has $1.89 trillion in assets, has plotted to shutter 800 branches in 2019 in an effort to slash costs by $2 billion, reports CNN.
Legal woes, litigation fees, backlash and fall-out from the bank’s infamous fake-accounts scheme have added to the pressure to streamline company protocols and increase profit margins by adapting new and more efficient technologies.