An Open Letter to UK Banks

An Open Letter to UK Banks

Dear UK Banks,

If your internal architecture for transactions does not look like the Libra one, be worried. You have had a decade to adapt to cryptography and public key methods, and the mixture of permissioned and permissionless blockchains, and smart contracts illustrates the platform of the future. Whole new financial ecosystems will now be build around these more open systems, and not around your closed door methods.

You have spent decades building up a reputation for trustworthiness, but now you must fully adapt to the rise of public key signing, and remove yourself from your digit-based methods of the past. Account IDs, sort codes, and simple checksums are just a bunch of numbers, whereas private keys and hashes provide a unique identities and also provide high levels of integrity. Your confidential world, too, is not really confidential anymore, and you must adopt ways to preserve your customer’s data within more open spaces, and detect fraud in an instance.

I know you love your SWIFT network infrastructure, and it has served you well in scaling around the world, but it is old, untrustworthy and crumbling. The Libra architecture shows the model of the future of SWIFT, and if it does not adapt quickly, it will crumble as an infrastructure for financial payments. If you do not make provisions for this, you too will be affected.

There is a whole new market evolving, and this time we trade not in equivalents of paper money, but in tokens and crypto assets. We will enact not through legal document and paper-based contracts, but with smart contracts which will allow you, your partners and your customers to interact with your world.

In the near future, we will use public key encryption in the way we used our plastic cards in the past. And our modern world will not hide its transactions behind closed doors, but make them available for review, and for consensus building. While many issues still exist, you should support the building of an ecosystem which protects privacy, and not to allow others to disregard your customers. It is your role to keep your customers on-side, and not allow them to be picked off by our large tech companies.

We may debate the motivations of those behind the Libra protocol, but from a technical point-of-view, it is the way that you should be transacting and in allowing others to build around your infrastructure. If you do not adopt, you may increasingly to be pushed to the edges of our financial world. And, in the end, you may make yourselves redundant.

You are the core part of our economy, and our success depends greatly on you. If you are not already doing it, please adapt quickly to the massive change you are likely to see, and lead the world, as you have done before. The health of our society depends on you changing your ways in the face of the rise of public key methods, blockchain and tokenization. You have done it with the rise of digital banking, and now you must face a faster and more disruptive force: the rise of crypto.

— Professor Bill Buchanan