Consultancy Firm McKinsey & Company Explains Why Retail Banking Is Slow To Utilize Blockchain
- McKinsey & Company believes the banking industry is being slow in adopting DLT
- There are some constraints for it to happen including the regulatory framework
The consultancy firm McKinsey & Company believes that blockchain technology is gaining slower traction with retail banks because of two main reasons: the regulatory environment and a conservative decision-making process. Could this improve in the future?
Retail Banks Are Slow To Adopt Blockchain Technology
Distributed ledger technology (DLT) has expanded all over the world during the last years. There are some companies and institutions that decided to embrace this growing technology, however, McKinsey & Company considers that the retail banking sector is being slow in adoption DLT.
According to McKinsey, banks are nervous and also cautious about adopting blockchain technology. However, there are other banks that are involved in the DLT market and are moving forward with different projects related to this technology.
The company explains that there are some constraints for banks to start embracing this technology. These include a stringent regulatory environment for consumer finance and a controversial reputation of DLT. The last thing is related to Bitcoin (BTC) and how this technology relates to digital assets.
McKinsey believes that it would be very positive for financial institutions to embrace blockchain technology and improve their services. They could have improvements at processing remittance payments, managing Know Your Customers (KYC) issues and prevent fraud.
The report explains:
“Almost all of their attention, especially in developed markets, is on cost reduction. And where cost reduction is front and center they are prepared to look at pretty much any opportunity.”
At the same time, the industry could save $4 billion every single year by adopting these blockchain solutions for cross-border payments. Moreover, there would be an additional $1 billion saved per year through on-boarding costs for clients.
As per the report released by the company, it is very important to have a smoother exchange between digital and fiat currencies. This would prevent the risk of volatility-related losses for consumers. A regulatory environment that is friendly with the technology and companies working with it is also going to help.