Blockchain Technology to Become More Relevant in Payments This Year, Sberbank Exec Says

According to Sberbank’s deputy CEO, blockchain technology can assist in resolving current settlements-related problems. The banker said that the biggest bank in Russia is collaborating with other financial institutions to create blockchain-based payment solutions.

Sberbank Sees Solution to Russia’s Troubles With Settlements in Blockchain Technology

Alexander Vedyakhin, the first deputy CEO of Sberbank, is certain that blockchain technology can assist in resolving the payment issues that have arisen due to major Russian banks being cut off from the primary global interbank payment system, SWIFT, as a result of Moscow’s war on Ukraine.

According to Vedyakhin, who was quoted by the Interfax news agency, “blockchain technology will make it possible to tackle this issue because this is a distributed ledger. There is no one point of decision-making, no centre, and no knife switch that can be turned off.

The executive also stated that “everyone has everything documented, and there are special protocols that make it possible to do this secretly” at a Federation Council’s Budget and Financial Markets Committee meeting. The Federation Council is the upper house of the Russian parliament.

Along with other banking institutions and the Central Bank of Russia, Sberbank, which is majority owned by the state and is the largest bank in Russia in terms of assets, is currently researching blockchain technology’s uses. Vedyakhin, who thinks blockchain technology will be even more significant in 2023, emphasised:

The next generation payment systems are blockchain.

Issues With Speed and Privacy Overcome in Latest Protocols, Vedyakhin Says

The banker also emphasised some difficulties that still need to be fixed while pointing out how the technology surrounding cryptocurrencies has advanced in recent years. They include transaction confidentiality and the functionality of blockchain platforms.

The first was quickness. We were unable to handle numerous transactions with what we could see before. We now think that the issue has largely been resolved. Confidentiality was the second. You probably won’t want to make a transaction if another 10 million people view it after we do. Now, the new protocols have also addressed this issue, Alexander Vedyakhin explained.

Sanctions were implemented by the U.S. and the EU after the invasion of Ukraine in late February 2022 against a number of Russian banks, including Sberbank. The financial constraints significantly reduced Russia’s access to the world financial system.

Herman Gref, the CEO of Sberbank, stated in June of last year that the bank had begun developing an alternative to SWIFT’s international settlements system and intended to finish it within a year. In the same month, Rostec, a Russian manufacturing and IT conglomerate announced a blockchain-based platform with a related objective. Also, the possibility of legalizing cryptocurrency payments for international transactions has been explored.