blog Market Intelligence /marketintelligence/en/news-insights/blog/citi-placing-lots-of-bets-on-blockchain-startups content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Citi Placing Lots Of Bets On Blockchain Startups

StreetTalk – Episode 69: Banks left with pockets full of cash and few places to go

Street Talk – Episode 69: Banks left with pockets full of cash and few places to go

Amid Q1 APAC Fintech Funding Slump, Payment Companies Drove Investments

Paypal Well-Positioned To Gain Share In COVID-Related Digital Payments Shift

Fintech
Citi Placing Lots Of Bets On Blockchain Startups

May. 02 2018 — A number of large, publicly traded U.S. financial institutions have been investing in blockchain startups, and none has been more active in the space of late than Citigroup Inc.

Through its holding company and various subsidiaries, Citigroup has invested in seven startups since the start of 2015, which is more than Goldman Sachs Group Inc. and JPMorgan Chase & Co. combined. Based on our research, which looked at private placements from all publicly traded U.S.-based financial services companies, we think this could be a wise move. One of the perceived benefits of blockchain is that there is not a central intermediary influencing the system, so investing in the technology at arm's length might play to Citigroup's favor.

US-based, publicly traded financial services companies that have made the most investments in blockchain companiesWe chose 2015 as our starting point because that was when U.S. financial services companies seemed to take a keen interest in blockchain, enough that they began discussing it on conference calls, at investor days and at industry events.

Citigroup has tended to invest in blockchain startups focused specifically on financial services applications, which makes sense. In addition to offering a potential return, funding a startup can help the incumbent institution become well-versed in the technology without having to do development work in-house. This might explain why JPMorgan, for instance, made fewer investments, since it created its own organic blockchain initiative known as Quorum.

But JPMorgan's approach has reportedly presented some issues. JPMorgan is trying to spin off Quorum because other banks were reluctant to use a system linked so closely to the bank, according to a Financial Times article published in March. This might serve as a good argument in favor of the passive investment route. That way, the incumbent can potentially benefit without being perceived as too involved in the process. Startups can likewise gain from such relationships.

In addition to the obvious monetary benefits, the startup can use its backers as beta testers in pilot programs. Since blockchain is a network technology, it helps to have large institutions testing it out in the early stages. R3 offers a prime example. The software firm, known for its open-source distributed ledger platform Corda, has attracted more than 40 of the world's largest banks as investors, including Bank of America Corp., Wells Fargo & Co., and Citigroup from the U.S. Those large banks have in turn tested new concepts using the platform. In March, for instance, Credit Suisse Group AG and ING Groep NV announced that they settled a securities lending transaction using Corda.

Blockchain companies that have the most US-based, publicly traded financial services companies
It remains to be seen how the potential of blockchain is ultimately realized. In our view, investing in startups seems like a shrewd way for financial services companies to explore the many facets of the technology without seeming overbearing and without committing massive amounts of internal resources to projects.

More discussion of blockchain can also be found on the Street Talk podcast, which is available via  iTunes.