The global financial services landscape is evolving rapidly. To maintain an edge, firms are increasingly looking at blockchain. Now, Wall Street giant Goldman Sachs is researching the tokenization of assets as part of its innovation strategy.
Goldman Sachs CEO, David M. Solomon, told the French newspaper Les Echos that his company has been “conducting extensive research” into blockchain-powered tokenization.
In an interview that covered topics such as the outlook on the global economy, current asset valuation prices in the stock and private equity markets, and Brexit, Solomon divulged his bank’s interest in the development of digital currencies, blockchain, and tokenization.
Goldman acknowledges the power of tokenization
Solomon said that Goldman Sachs is following the developments of blockchain-powered stablecoin proposals such as Facebook’s Libra and JPM Coin very closely. Solomon believes that blockchain will likely play an integral role in payments in the future and wants to ensure that his bank is not left behind.
He stated that regulations will need to adjust to the technological innovation before these new payment technologies will take off at a large scale and that it is too early to say which stablecoins or blockchain payment platforms will prevail given that this technology is still in its infancy. “Whether Facebook is this platform, or it is one of the other fifty that people are watching that will make the most progress, I can not tell you,” he said.
When asked whether he thinks that banks could disappear as a result of technology companies disrupting the financial industry, he responded with “no.” Solomon acknowledges that banks will need to evolve to remain competitive in the fast-changing banking landscape and that an increased focus on technology is imperative. However, he does not believe that technology companies like Facebook and Apple will want to have the deal with the same stringent financial regulations that banks have to contend with if they were to venture down the path of becoming banks themselves.
Solomon stated that he believes that all financial institutions are currently looking into tokenization and the benefits of blockchain-powered payments.
If Goldman is doing it, everyone else will follow
Goldman Sachs has long been a pioneer on Wall Street. As a result, if the bank ventures into a new market, creates a new product or provides a new service, most of its competitors will follow suit as Goldman is widely considered as the most successful investment bank of our time.
Therefore, we can expect more banks to jump onto the tokenization wagon and explore ways to launch tokenized assets or payment services in the future.
While JPMorgan has been the leading the pack with the internal issuance of JPMCoin for its corporate customers earlier this year, it will likely only be a matter of time before other financial institutions will launch similar products in an attempt to remain competitive.
The reason for this is very simple said Soloman, “Banks must remain innovative, otherwise they will disappear.”
It’s becoming increasingly clear that tokenization will soon revolutionize the traditional finance world.