Why Don’t Banks Adopt Blockchain?


Blockchain technology has been around for over a decade, and it has shown its potential to transform various industries, including finance. Despite this, the adoption of blockchain technology in financial institutions and banks have been relatively slow. In this blog post, I am going to share my opinion on why banks do not adopt blockchain technology and potential solutions to encourage its adoption.

Why Don't Banks Adopt Blockchain?

Reasons Why Banks Do Not Adopt Blockchain Technology

Some of the banks, like JP Morgan, Santander, and HSBC, have adopted this new technology in their banking system, but the process is relatively slow. There can be some reasons, such as:

Regulatory Challenges of Blockchain

One of the main reasons why banks don’t adopt blockchain technology is regulatory challenges. Banks are heavily regulated, and they must comply with strict regulations to ensure the safety and security of their customers’ funds.

Blockchain technology is relatively new, and there is still regulatory uncertainty around its use in finance. This uncertainty makes it challenging for banks to adopt blockchain technology, as they may face legal and regulatory risks. However, there is hope in terms of Decentralised Finance Apps (DeFi).

Interoperability Issues of Blockchain

Banks use different systems and platforms to manage their operations, and these systems may not be compatible with blockchain technology. It is difficult for banks to integrate blockchain technology into their existing systems and workflows.

Scalability Issues

Scalability is another reason why banks don’t adopt blockchain technology. Blockchain networks, especially public ones like Bitcoin and Ethereum, have limited transaction throughput, which can result in slow transaction processing times and high fees.

It makes such open-source blockchain-based applications and services unappealing to banks, which value speed and efficiency.

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Security Concerns

Although blockchain technology is known for its security, it is not immune to attacks. Banks are responsible for safeguarding their customers’ funds, and any security breaches can result in significant financial losses and reputational damage. As a result, many banks are hesitant to adopt blockchain technology due to security concerns.

Cost Considerations

Building and implementing blockchain-based systems can be costly, especially for large financial institutions. Banks may also need to invest in additional infrastructure and personnel to support blockchain-based systems, which can add to the cost.

Solutions to Encourage the Adoption of Blockchain Technology in Banks and Corporates

Indeed, the solutions are too complex and need time to renovate and resolve all these, but some of the solutions that come to my mind are:

Regulatory Clarity

Regulatory clarity is essential to encourage the adoption of blockchain technology. Governments should develop clear and concise regulations that enable the development and operation of blockchain-based projects while ensuring consumer protection. Clear regulations help to build trust in the technology.

Interoperability Solutions

To address interoperability issues, banks should collaborate to develop common standards and protocols for blockchain technology. Corporates can use APIs for such tasks, but it is not efficient in the long run. I think interoperability is one of the significant barriers to adopting blockchain technology.

Scalability Solutions

Layer-two scaling solutions, sharding, and off-chain scaling solutions are ready to solve this problem, but these need a little more time. I am hopeful that the scalability issue will be resolved soon, at least within the next five years.

These solutions aim to increase the transaction throughput of blockchain networks, making them more efficient and faster. Banks can leverage these solutions to improve the speed and efficiency of their operations.

Improved Security Measures

To address security concerns, blockchain-based projects must implement robust security measures, such as multi-factor authentication, encryption, and secure coding practices. Moreover, the banks understand how to improve the overall security of the system.

Cost-benefit Analysis

Before adopting blockchain technology, banks should conduct a cost-benefit analysis to evaluate the potential benefits and drawbacks of implementing blockchain-based systems.

This analysis should consider the costs of building and implementing blockchain-based systems, as well as the potential benefits, such as increased efficiency, cost savings, and improved customer experience.

By conducting a thorough cost-benefit analysis, any corporation can make more informed decisions about whether to adopt blockchain technology in their system.

Collaboration with Fintech Startups

Corporations and banks can collaborate with fintech startups to accelerate the adoption of blockchain technology. Fintech startups are often more agile and innovative than traditional banks. They develop and implement blockchain-based solutions more quickly.

By collaborating with fintech startups, banks can leverage their expertise and experience in developing blockchain-based solutions and accelerate their adoption of blockchain technology.

5 Leading Banks that Have Adopted Blockchain Technology in Their System

Some banks have started to explore and implement blockchain-based services. These leading banks are:

JPMorgan Chase

JPMorgan Chase is one of the largest banks in the United States and has been one of the early adopters of blockchain technology. The bank developed its blockchain platform called Quorum, which is based on the Ethereum blockchain. Quorum is a permissioned blockchain platform that enables secure and efficient settlement of financial transactions.

JPMorgan Chase has also developed a blockchain-based payment network called Interbank Information Network (IIN), which enables banks to share information about payments and prevent fraudulent transactions. IIN currently has over 400 member banks, making it one of the largest blockchain-based payment networks.


Santander, a Spanish multinational bank, has been actively exploring blockchain technology and has developed several blockchain-based services. The bank has developed a blockchain-based payment app called One Pay FX, which enables instant cross-border payments between Santander customers in Spain, UK, Brazil, and Poland.

Santander has also partnered with Ripple, a blockchain-based payment company, to enable cross-border payments using Ripple’s blockchain technology. The partnership enables Santander customers to make instant and low-cost cross-border payments to other banks that are part of Ripple’s network.


HSBC, a British multinational bank, has been exploring blockchain technology to improve the efficiency and security of its operations. The bank has partnered with blockchain-based platform Digital Vault, which enables secure and efficient storage of digital assets such as securities and cryptocurrencies.

HSBC has also conducted several successful blockchain-based transactions, including a transaction in which it used blockchain technology to issue a letter of credit for a shipment of soybeans from Argentina to Malaysia. The transaction demonstrated the potential of blockchain technology to improve the efficiency and security of international trade.

Deutsche Bank

Deutsche Bank, a German multinational bank, has been exploring blockchain technology to improve the efficiency of its operations and reduce costs. The bank has partnered with several blockchain-based companies, including Digital Asset Holdings and R3, to explore the potential of blockchain technology.

Deutsche Bank has also developed a blockchain-based prototype for managing securities lending transactions, which enables the efficient and secure settlement of securities lending transactions. The prototype demonstrated the potential of blockchain technology to improve the efficiency and security of securities lending transactions.


BBVA, a Spanish multinational bank, has been actively exploring blockchain technology and has developed several blockchain-based services. The bank has developed a blockchain-based platform called BBVA Blockchain, which enables the efficient and secure settlement of financial transactions.

BBVA has also developed a blockchain-based platform for issuing and trading corporate bonds, which enables companies to issue and trade bonds using blockchain technology. The platform offers several benefits, including improved efficiency, transparency, and security of bond issuance and trading.

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