Oversea-Chinese Banking Corp Limited’s Chief Talks About The Bank’s Biggest Disruptive Threat

Earlier this year, Samuel Tsien, Oversea-Chinese Banking Corp Limited’s (SGX: O39) chief executive, was featured in an interview by the Asian Banker.

Tsien talked about a range of topics and one of his statements caught my eye. It was about fintech and its disruptive potential. Expanding on this topic, Tsien talked about the bank’s biggest threat:

“Blockchain, by the way, is the more fearful technology to me because it can remove the element of trust. And that I think is the biggest threat.”

Blockchain is a data structure that makes it possible to create a digital ledger of transactions. Blockchain’s premise is that the data on the digital ledger is secure, as it’s extremely difficult to change or remove. With a secure record of transactions, the promise of blockchain is that transactions between two parties can happen without an intermediary.

Now the thing is that, as Tsien’s statement alludes, the intermediaries I mentioned could include banks such as OCBC.

Trust is the key

Tsien believes that the public’s trust in the banking system is one of the advantages for banks. In a recent CEO roundtable, he made these comments about fintech companies:

“I still believe that banks have an intangible advantage over such companies. I refer to the public trust that customers place in us. One reason for this, ironically, is the very fact that the banking system is strictly regulated.”

If blockchain becomes the norm, the intermediaries might lose its relevance, and with it “the trust element is removed,” Tsien said. To be sure, OCBC is working to see how blockchain can be used to enhance OCBC’s offerings. Tsien commented:

“So we are engaging blockchain to see how we can make use of it to further reinforce the trust that the banks have, rather than have it replace the trust in the bank.”

It’s still early days yet for blockchain. There is no guarantee that it will disrupt the banking industry. But it’s worth observing what unfolds with this technology.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.