Blockchain, cryptocurrency can help democratise financial services: PayPal CTO
Digital payments major PayPal on Thursday said the technological shift brought in by blockchain and cryptocurrency can help democratise financial services and bring in greater financial inclusion.
PayPal also highlighted that it has an offensive and defensive strategy for cybersecurity to ensure it can continue offering safe and secure user experience on its platform.
PayPal EVP and Chief Technology Officer Sri Shivananda said the infrastructure being built by the company will not only support digital currencies, but the intent over time is to also support all of the central bank digital currencies as a form of digital money.
"We are very interested in blockchain and crypto as well. We truly think that this is a paradigm and a shift in technology that will help us deliver to our mission to democratise financial services and make financial inclusion possible for those 1.8 billion people around the world that are not included in today's system," Shivananda said during a virtual briefing.
The ultimate vision is to increase the access, ubiquity and utility of digital assets and further facilitate moving and management of money, he added.
"The infrastructure we are building will not only support digital currencies, which we are already beginning to do, but the intent over time is to also support all of the central bank digital currencies as well, as a form of digital money," he said.
PayPal currently supports four cryptocurrencies.
Shivananda explained that the decentralised aspect of crypto offers a lot of opportunities.
"There's been a lot of innovation in the experiences related to payments, but the underlying infrastructure has remained exactly the same, and what the cryptocurrency and blockchain ecosystem does with the decentralised protocol is offer us the ability to go re-imagine that underlying substrate and make access, much easier for everyone," he said.
He noted that it is still early in the world of blockchain and cryptocurrencies, and that there is a lot to learn in this area going forward.
Cryptocurrencies are digital or virtual currencies in which encryption techniques are used to regulate the generation of their units and verify the transfer of funds, operating independently of a central bank.
The RBI had virtually banned cryptocurrency trading in 2018, and had directed all entities regulated by the central bank to cease dealing in virtual currencies. The Supreme Court had asked the Centre in 2019, to frame policies for crypto, and in 2020, struck down the curbs imposed by the RBI.
Asked if the company was engaged in a dialogue with Indian government on cryptocurrency, PayPal Vice President Customer Success Platform Guru Bhat said regulators in India have been at the forefront of innovation in the fintech space.
"We are very pro-innovation and progress when it comes to fintech and on those topics, we continue to be actively engaged with regulators around the world, including in India, to make sure that we are able to lend a hand wherever it's appropriate to progress the FinTech ecosystem in the country," he added.
Bhat said the pandemic has helped in acceleration of digital adoption but there has also been a surge in cyberattacks via phishing, ransomware, botnets and cryptojacking among other methods.
He said that while nearly two-thirds of the fintech companies it surveyed employ at least two people or more in Southeast Asia to deal specifically with information security requirements and cyber security, two in five companies spent less than 3 percent of their operating budget on cybersecurity.
"This means that there is a severe level of under-investment, and that causes a specific cause for concern because the cost of a breach, not just in terms of costs but in terms of brand, in terms of a breach of trust, etc., it can be so expensive, and especially in the realm that we are in financial services," he said.
Bhat added that nearly 1.16 million cases were reported last year, which is up three times compared to 2019, and more than 20 times of the level in 2016.