For half a decade, Bank of America has quietly been preparing for a future in which the world of finance migrates to the blockchain.
Under tech and operations chief Cathy Bessant, the giant bank has accumulated the most patents for the technology of any financial services company, for inventions ranging from blockchain-powered ATMs to storage for cryptocurrency keys.
But Bessant now says that she’s grown doubtful that blockchain – the distributed ledger software behind cryptocurrencies like bitcoin – will amount to anything in the near term. Or possibly ever.
“What I am is open-minded,” Bessant said recently in an interview at the bank’s New York tower. “In my private scoreboard, in the closet, I am bearish.”
Bessant, 58, is wading into the public debate about the blockchain, whose proponents have claimed will be as significant as the internet. A blockchain is essentially an encrypted database that runs on multiple computers, potentially cutting out the need for centralized authorities like banks or governments to settle transactions between parties.
Economist Nouriel Roubini has called it “the most overhyped” technology in history. Others have said that blockchain merely needs time to evolve, and could eventually upend entire industries from finance to cloud computing and healthcare.
As the mania over cryptocurrencies died down in the past year amid a bear market, attention and dollars have funneled into blockchain startups. Venture capital firms poured $5.4 billion into blockchain startups last year, compared to $1.5 billion in 2017, according to Autonomous Research.
The technology got a boost from rival J.P. Morgan Chase, which revealed last month that it created the first cryptocurrency backed by a major U.S. bank to facilitate blockchain-related payments.
But Bessant, who oversees 95,000 technology workers and was named the most powerful woman in banking last year, is a pragmatist. She started out at Bank of America in 1982 as a commercial banker, eventually rising to a series of top roles including head of corporate banking and chief marketing officer. She has run the bank’s global technology and operations division since 2010.
Most of what she sees doesn’t make sense for finance or significantly improve upon existing methods. It’s a technology in search of a use case, rather than something designed specifically to solve existing problems, she said.
“I haven’t seen one [use case] that even s