So far, there have been numerous reports regarding the positive influence that the blockchain network could play on banks from all around the world, yet no actual studies had been carried out.
Following the 2008 financial crisis, public and investment banks from all around the world had to deal with increased regulatory burdens, but also higher compliance costs that in turn led to increased interests and taxes for their clients. Innovation budgets were also lowered, thus explaining why we haven’t seen an evolution in the way banking is done in the last 10 years.
However, during the last couple of years and months, banks have seen increased profits, thus putting them on the path to recovery following the 2008 financial crisis. A recent report carried out by McLagan, a benchmarking and analysis firm, proceeded to look into data coming from eight of the world’s biggest investment banks, and studied how the adoption of blockchain technology could benefit the banks in question.
The results were quite remarkable, considering the fact that these banks could save anywhere between $8 to $12 billion dollars on a yearly basis, in operating costs. The study found that blockchain adoption would improve four major areas in the banking industry, these being reporting (with more streamlined data, and internal controls), central operations (with better KYC protocols carried out with the help of digital identities), business operations (better settlement procedures, trade support alongside with clearance of funds), and last but not least, compliance (improved transparency and cheaper, but also faster financial transactions).
The study also proceeded to predict the possible future of the blockchain network, and mentioned that the amount being spent on capital markets via the blockchain network are bound to grow by at least 50%, thus reaching $400 million by 2019; major financial institutions and banks are hard at work, in order to create better blockchain technology, for potential adoption, while more investments will be carried out; blockchain may be put for real-world use by more and more banks and financial institutions, and not just for company-based trials only.
To help carry out the report, McLagan proceeded to examine a wide variety of aspects, other than data, including the funding increases that blockchain is witnessing, but also assessing the factors that are driving up more research and development for blockchain-related projects. The study also identified some of the main issues present in the financial industry, and how the blockchain network could potentially overcome them, and finished by demonstrating the main challenges that mainstream adoption is facing at this moment in time.
Based on everything that has been outlined so far, what do you personally think about the report, and adoption of blockchain technologies by banking institutions throughout the world? Let us know your thoughts in the comment section below.