IBOS member Santander says Blockchain technology could cut costs by $20 billion annually by 2022.
Blockchain technology, which is best known for powering Bitcoin and other crypto currencies, is becoming heavily accepted among finance firms because of its potential to streamline processes and increase efficiency. That’s because Blockchain has the ability to allow multiple parties to transfer and store sensitive information in a space that’s secure, permanent, anonymous and easily accessible.
Over 50 major financial institutions are involved with either collaborative Blockchain start-ups, have begun researching the technology in-house or have helped fund start-ups with products rooted in Blockchain.
A consultancy firm used data for eight of the world’s largest investment banks and looked into the potential benefits that Blockchain adoption might deliver. The study found that Blockchain could save bank’s $8 billion to $12 billion annually, and cut operational costs by 30% per year on average.
Below are the highlights in which the study found Blockchain promises the largest potential cost savings:
- 70% on reporting. This would largely be a result of more streamlined and optimised data quality, transparency, and internal controls. This is because the largest investment banks run extensive operations, making orderly reporting harder. Storing figures from these various components on a single electronic ledger would improve oversight.
- 50% on central operations. These include know-your-customer (KYC) or identification and client on boarding. This would be a result of more robust digital identities, and the standardisation of client data between different FSIs using the same Blockchain.
- 50% on business operations. These include trade support and clearance and settlement processes. The cost saving would result from reducing or removing the need for data reconciliation, transaction confirmation, and automation of clearance and settlement processes. By automating trading, banks could cut down on salary costs and run some operations 24/7.
- 30% to 50% on compliance. This would be both at product and procedural level, due to improved transparency and auditability of financial transactions. Currently, compliance costs are only increasing in line with the volume of new legislation and guidelines, as banks have to expand their expensive compliance teams. Blockchain could reduce time spent on administrative tasks, freeing up human compliance staff, and automate some humans’ positions altogether, reducing staff costs.
Read the full article, via Business Insider UK, here.