It’s been over a year since the Wells Fargo banking scandal came to light. Currently, Wells Fargo estimates their employees opened 3.5 million unauthorized accounts. In response, the bank’s leadership continues to be criticized by leading politicians and Wells Fargo has yet to fully recover from the scandal.
There are lingering questions, too, if technology could have helped prevent the opening of fraudulent accounts at the bank. Or do financial institutions need do undergo fundamental cultural change?
On one level, Christian Catalini, a professor at MIT, said blockchain technology “could have made it easier to spot that these accounts were not being opened by the consumers behind them.”
“It would make it more difficult for someone to perform identity theft or impersonate others. It could also make it … [easier] to identify cases where someone is performing an action they’re not supposed to do,” he added about using appropriate technology. “Of course, this all relies on it being implemented correctly, and on users understanding how to take advantage of the technology.”
Catalini further explained that blockchain technology provides “immutability and traceability.” Also, the cost of performing an audit using blockchain is “extremely low” if “you’ve recorded the right data on a distributed ledger,” he said.
“Making sure the data added to it is legitimate is still a concern.… A robust identity system is needed to avoid issues like the fake accounts,” he said.
In addition, Aaron Wright, founder/director of the Tech Startup Clinic at Cardozo School of Law, agreed that “Participants on public-blockchain based payment system, like Bitcoin, can avoid these Wells Fargo-like problems.”
“The accounts can be user controlled and there is a great deal of transparency in these systems – since information about all of the accounts are publicly accessible,” Wright said. “No one can create an account on your behalf unless you deputized them to do so and you can track all transfers between accounts fairly easily.”