A new blockchain mobile app, the first of its kind, is making waves across the pond with the goal of making “everyone a bank.” As a result, U.S. tech experts say, the credit union industry can longer take a wait-and-see approach to this technology.

“I have been waiting for something like this to turn up ever since I really figured out distributed ledger,” said John Best CEO of the Tampa, Fla.-based Best Innovation Group (BIG), a technology innovation and development company focused on the financial services industry. “I think the [blockchain] skeptics didn’t do enough homework.”

Best referrers to the London, England-based fintech firm Bank Account Based Blockchain (BABB) that recently announced a partnership with Contis Group Ltd, an alternative payments and banking firm also based in London.

BABB will use Contis Group’s white-label license and banking services infrastructure, explained BABB CEO Guido Branca. The app will provide U.K. bank accounts, transfer and card payment services.

“I believe BABB’s plan to build a platform to offer banking services to everyone, through the blockchain and the latest mobile technology, will both provide new features not seen in the High Street banks and include many who have been excluded from the traditional financial system,” Branca said in a statement.

Selfie banking

To use the BABB app, users download the app, then take a selfie and a voice print before receiving a U.K.-based account upon activation. Contis Group Executive Chairman Peter Cox lauded the initiative in a released statement, calling it a “revolutionary app” that will “bring financial inclusion to the masses.”

“We see BABB’s vision to create a banking platform that can open a bank account with just a selfie and voice as very powerful innovation,” he added.

Andrew Downin, innovation director at Filene Research Institute, said that BABB’s offering is an “intriguing development.” To date, he explained, there has been a “division of strengths” between fintech startups and banks or credit unions.

“Fintech startups have the technology, but can’t offer traditional banking products because they don’t have a banking charter,” said Downin. “Banks and credit unions can offer traditional products but oftentimes don’t have the capital or expertise to invest in cutting-edge fintech. I would anticipate we will see similar deals like this (BABB), and I wouldn’t be surprised to see one occur in the U.S.”

Currency model

BABB is building a banking platform based on a “permissioned” Ethereum blockchain implementation of a distributed ledger using smart contracts technology, explained Branca. Ethereum is a decentralized platform that runs without the possibility of downtime, censorship, fraud or third party interference.

“Using Ethereum is interesting,” said Best. “There are a lot of discussions around doing this sort of thing on a public permission-less network, but it seems they are moving forward.”

BABB was cautious in that it is using a fiat currency [a government-based currency such as dollars, Euro or pounds] as opposed to developing a pure digital currency-based banking platform. Downin said this was a smart move.

“We continue to see valuation risk in digital currencies such as Bitcoin, and acceptance of these digital-only currencies is still nascent,” he said. “By connecting the BABB platform with a fiat currency they may avoid some of these downside risks.”

Best agrees with Downin adding that the fiat currency will ease user trepidations and help to quell general banking industry concerns.

“Using a fiat currency will see more palatable to the general masses,” said Best. “And it helps with regulatory issues.”

Branca explained that the first stage of the process is integrating BABB’s core blockchain banking platform with Contis’ banking services and payments infrastructure. BABB has also applied to join the U.K.’s Financial Conduct Authority’s Sandbox. If accepted, the solution will be tested in a “safe place.”

Blockchain’s future

Whereas the CU industry has been skeptical of blockchain technologies, Downin said that Filene recently hosted a colloquium on Emerging Technology at the University of California, Irvine. Blockchain, and its capabilities and potential opportunities for credit unions, was a hot topic, he noted.

“Interest in the room was significant,” said Downin. “The CU Ledger initiative being sponsored by many credit union system organizations is also an emerging example of credit unions beginning to test the blockchain waters.”

