Blockchain tech could save top investment banks $8 billion a year
A report from the pair, titled "Banking on Blockchain: A Value Analysis for Investment Banks," looks at real-world data from 8 of the world's top 10 banks and estimated that blockchain technology, first developed to underpin bitcoin, could cut operational costs by up to 30%.
That works out at between $8 billion (£6.5 billion) and $12 billion (£9.8 billion), depending on the firm.
The analysis suggests that banks could make huge savings of up to 70% in financial reporting; up to 50% in compliance; and up to 50% in business operations such as settlement and clearing.
Chris Blain, a partner at McLagan, says in an emailed statement: "This joint analysis with Accenture suggests that blockchain technology could significantly change the cost structure of investment banks over the next decade.
"The technology represents a potentially important breakthrough at a time when leading investment banks are looking at myriad ways to rebuild their returns on equity."
Blockchain technology, also known as distributed ledger technology, is a form of shared database originally developed to underpin the digital currency bitcoin. It enables all parties to see the same version of a ledger and uses complex cryptography and group authentication to police the editing of the ledger.
By replacing traditionally fragmented database systems banks use, blockchain-based solutions can reduce or eliminate costs associated with replicating data and improve data quality.
David Treat, managing director for Accenture's financial services industry blockchain practice, says in an emailed statement: "As we move into production implementations, bank executives will need a clear roadmap for how and where to rethink their strategies and redesign their operating models, which is why we undertook this unique study."
Investment banks have poured millions of dollars into exploring the potential of blockchain over the last two years and are now starting to introduce real-world projects based on the technology. A consortium of seven banks, including Deutsche Bank, HSBC, and Societe Generale, announced on Monday a joint project to develop a blockchain-based international trade app. Wall Street clearing house DTCC has also begun working with firms to bring blockchain into the clearing process.
Richard Lumb, Accenture's group chief executive for financial services, says in an emailed statement: "Through this first-of-its-kind analysis of real-world cost data we draw a clearer line under blockchain's value to investment banks. Our goal is to help banks move rapidly from proof-of-concept to production system with blockchain technology, generating real cost savings and improving bottom-line results."
While Accenture and McLagan's analysis points to sizable cost savings, their estimates are below those of Santander, which estimated in 2015 that banks could save up to $20 billion (£16.5 billion) a year in infrastructure costs.
Learn more:
- Credit Card Industry and Market
- Mobile Payment Technologies
- Mobile Payments Industry
- Mobile Payment Market, Trends and Adoption
- Credit Card Processing Industry
- List of Credit Card Processing Companies
- List of Credit Card Processing Networks
- List of Payment Gateway Providers
- M-Commerce: Mobile Shopping Trends
- E-Commerce Payment Technologies and Trends
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Catan adds climate change to the latest edition of the world-famous board game
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- JNK India IPO allotment – How to check allotment, GMP, listing date and more
- Indian Army unveils selfie point at Hombotingla Pass ahead of 25th anniversary of Kargil Vijay Diwas
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market