The Bank of Montreal is a financial leader in Canada. Recognized as one of the ‘big banks’, they are a trusted company bringing every traditional financial service customers can imagine. It was no surprise earlier in the year when they decided to ban cryptocurrency purchased with the use of their credit and debit cards. What was surprising was yesterday’s announcement of their new pilot program.
Despite being anti-crypto, BMOCM is clearly pro-blockchain. Their announced pilot program will function as a mirrored service to traditional issuance of deposit notes. The platform will follow $250 million worth of variable rate notes. These are being issued to the Ontario Teachers’ Pension Plan by BMO, via the Canadian Depository for Securities.
Corroborating the pilot program was Ontario Teachers’ Managing Director, Audrey Gaspar. She stated, “Ontario Teachers’ is committed to exploring technology and innovations that might improve our ability to serve our members, we are pleased to partner with Bank of Montreal in this pilot blockchain initiative.”
The pilot platform built by BMOCM offers multiple benefits. Accessible by both the issuer and receiver, the platform will divulge details such as transactions, amounts, and term sheets. In doing so, the validity and accuracy of this information can be confirmed at all times. It is a next-gen settlement system.
Development of blockchain based services is essential. Above all, they are needed to remain financially competitive. A recent study by Juniper Research has shown that by 2030, banks are expected to save roughly $27 billion annually. This saving will be realized through a variety of means ranging from increased efficiency in security clearing, settlement services, auditing, etcetera.
One Small Step
When speaking on the topic of the pilot platform BMOCM Managing Director Kelsey Gunderson stressed that this was only a first step. The overall goal is for a much larger implementation of blockchain through traditional services. While calling the pilot program an “important first step”, Gunderson touched on the eventuality that the company would utilize blockchain to offer trading of securities. This trading would take place in both primary and secondary markets
Who are they?
Ontario Teachers’ is Canada’s largest pension plan. The group controls and invests over $189 billion worth of assets.
BMO Capital Markets is a segment of BMO. They provide top to bottom financial services for institutional, corporate, and government bodies alike. They manage over $744 billion worth of funds.
The cooperation of these two organizations, and their acceptance of blockchain technology bodes for its future. Although traditional banks may frown upon decentralized currencies, the underlying technology isn’t going anywhere. Its potential to streamline processes extends to too many facets of industry.