The chief executives of Wells Fargo and Mastercard told CNBC’s Andrew Ross Sorkin at the Fintech Ideas Festival on Wednesday that they see potential long term, but that blockchain’s business use-case is still unclear.
“Blockchain has been way oversold,” Wells Fargo CEO Tim Sloan said on stage at the conference in San Francisco. “I think the fundamental technology is very interesting, but it’s been very slow to roll out.”
Sloan pointed to a pilot the U.S. bank did with Commonwealth Bank in Australia, using blockchain for trade transactions. That and other blockchain “consortiums and pilots” within the bank have yet gain real adoption, he said, adding that the Australia pilot resulted in just one transaction.
“If you turned the clock back a few years ago, it should have completely changed the industry — that’s just not the way it works,” Sloan said. “Over time, I think it’ll have an impact.”
Blockchain is also known as a distributed ledger, essentially a database that can’t be altered or changed, and can be seen by all participants using it. Its use cases range from tracking lettuce on a supply chain to storing health records. The technology also underpins cryptocurrencies like bitcoin.
Around the time bitcoin was climbing to nearly $20,000, blockchain was also becoming a corporate buzz word. In one case, a public company saw its stock soar 200 percent after announcing it was pivoting to blockchain. Executives have largely embraced blockchain, while very few have openly backed bitcoin.
Mastercard CEO Ajaypal Banga also had reservations about the technology, even though it has the third most blockchain patents.
“I think blockchain could be interesting, but the business model is not proven,” Banga said on stage with Sloan. “A lot of this has to improve and change over time.”
Still, Mastercard is “deeply invested” in a few blockchain ideas, he said, pointing to its potential to improve supply chains and problems with counterfeit goods.
“There are interesting possibilities with blockchain and to ignore that would be a bad idea,” he said. “We’re just saying we don’t know the business model yet.”
The sentiment echoes comments from a top executive at Bank of America, which has the most blockchain patents. The bank’s tech and operations chief, Cathy Bessant, told CNBC she was “open-minded” but on her “private scoreboard, in the closet,” she is “bearish.”