Barclays: Bitcoin, FinTech And More... How The British Bank Is Disrupting Finance

| About: Barclays PLC (BCS)

Summary

Earlier this month, Britain’s top financial regulator granted an electronic money license to Boston-based company Circle, which uses the technology behind Bitcoin to allow costumers send and receive currency transfers.

Shortly after, Circle announced that Barclays will help the company to operate in UK.

Now, thanks to its investments in FinTech sector and partnership with Circle, Barclays emerged as one of the leaders of digital finance among its Britain counterparts.

I believe that the British-based bank has enough resources to succeed in the virtual currency industry and has a lot of potential in the long-term.

Earlier this month, Britain's top financial regulator The Financial Conduct Authority with the help of British government, granted electronic money license to Boston-based company Circle, which uses the technology behind Bitcoin to allow costumers send and receive currency transfers between pounds and dollars. Shortly after the news came out, Circle announced that one of the biggest UK banks Barclays (NYSE:BCS) will help the company to operate in the country:

Customer deposits will be held by Barclays, which is also providing the mechanism to make transfers from any UK bank account in and out of Circle.

The decision to grant the license to the virtual currency provider is a part of the broader plan of the UK government to make London a hub for the development of financial technology. As Harriett Baldwin, economic secretary to the Treasury, said:

Circle's decision to launch in the UK and the firm's new partnership with Barclays are major milestones. Together they prove our decision to introduce the most progressive, forward-looking regulatory regime is paying off and cements our status as the world's FinTech capital.

As for Barclays, it already has a number of FinTech initiatives in motion, and a bitcoin play in its portfolio will only help the British bank to continue disrupting finance industry and becoming the leader of this field.

FinTech ecosystem

2014 was a year when investments in the FinTech sector tripled to $12.14 billion in comparison with $4.05 billion in 2013. In 2015, the spending spree continued as more and more players joined the field. I already wrote an article about Fiserv, a provider of financial services technology, and how its FinTech initiatives will help it to disrupt the space. I believe that Barclays also has a lot of potential in this field and based on the success of its recent projects, the bank already achieved a lot of progress in the area.

Probably the most important thing that Barclays did, in order to lead the digital currency revolution, was to start its own FinTech accelerator. Launched in partnership with TechStars, it helps the newly found startups significantly improve their businesses and take them to the next level. Last week, Forbes reported that Barclays added 10 new businesses into its program and is expected to increase the number later this year. As Techstars Cape Town MD Yossi Hasson said:

To be selected out of the 450 applications from across the globe is no small feat. Each of the 10 companies represented something unique that we believe has the potential to become a significant and relevant player on a global scale.

At the moment, thanks to its investments in FinTech and partnership with Circle, that now has the license to operate in UK, Barclays emerged as one of the leaders of digital finance among its Britain counterparts. And while it will take the virtual currency industry a long time to become popular, average FinTech transaction value per user in the UK among businesses is steadily on the rise and is expected to grow exponentially in the coming years:

Click to enlarge

Source: statista

BBVA in its article Five FinTech Trends for 2016 described the growth of the FinTech ecosystem and the increasing popularity of Blockchain technology. Since Barclays has a strong connection to those two subjects, it would be easier for the bank to conquer the virtual currency market and shape the finance industry, at least in UK. But we should remember that this is a long-term game, and winners of this digital race won't be known anytime soon. However, considering the resources that Barclays has, I believe that the bank has enough chances to succeed in this field.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.