Study Says that Blockchain Could Dramatically Reduce Costs for Banks
Banks are worried about the new competitors that they are now having with the growth of blockchain and crypto startups all over the world. But, they should try to embrace blockchain rather than being far away from it. According to a study carried out by the consultancy firm Bain & Company, blockchain technology has the potential to revolutionize bank transactions.
As reported by the study, transaction banking revenues are in general less volatile than other types of banking revenues, with cross-sell products, bankers could have an impact on clients’ loyalty. Bain concludes in the report that the banking system could change dramatically in the future by using Distributed Ledger Technology (DLT).
The Document Reads As Follows:
“Using this technology, execution, clearing and settlement could occur simultaneously, minimizing liquidity and credit risks. Custody and other posot-trade security services also are under threat from new technologies.”
The consultancy firm believes that trade finance operating costs could be drastically reduced between 50 to 80 percent just by embracing blockchain technology in the right way. At the same time, the technology would increase transaction processing speeds and reduce problems related to traditional systems.
At the same time, Bain partner and banking expert, Dr. Christian Graf, explained that banks could change the fee structure to a new flat rate for the provision of comprehensive solutions. Those banks that start working on it earlier will have bigger chances to gain competitive advantages.
Currently, different banks from all over the world are starting to embrace blockchain technology so as to reduce costs and improve efficiency. In a statement released by Bank of America, it informed to investors that if they do not start to invest in blockchain technology, they would have important loses.
JP Morgan, for example, has developed its own blockchain network known as Quorum that it is now being used by many different financial companies everywhere around the world. Moreover, banks like Santander Group, are working with Ripple so as to have faster transactions at lower costs.