Accenture Reports Blockchain Tech Could Save Banks $8 To $12 Billion A Year
On January 17, 2017, Accenture, along with benchmarking firm McLagan, published a report detailing the potential savings blockchain technology could offer banks. After analyzing cost data from eight of the ten world’s largest investment banks, the report concluded that blockchain-based technologies could cut the banks’ infrastructure costs from $8 to $12 billion a year by 2025.
The blockchain allows for the creation of a decentralized, distributed digital ledger, and banks would be able to benefit from the increase in transparency and efficiency offered by this type of system. Having an immutable ledger of transactions would help banks in the areas of clearing and settling securities. Since the immutable ledger is tamper-proof due to cryptographic hashing, bank reconciliation processes would also become unnecessary, and auditing could be simplified.
Due to the increase in data quality and transparency offered by the blockchain, the report estimates bank infrastructure could be reduced by an average of 30%. The report also highlights how costs regarding compliance, trade support, and know-your-customer (KYC) checks could be cut by as much as 50%.
Despite the significant potential cost savings, the report is wary of regulatory hurdles this emerging tech may yet face. The report states:
“...after the credit crisis of 2008, regulators will likely be reluctant to materially reduce the role of newly created and strengthened clearing and settlement infrastructure... without being absolutely confident that blockchain networks are a safe, secure and resilient alternative.”
The report doesn’t estimate how much it may cost to develop and deploy blockchain-based applications, but with the potential billions in savings, the push to integrate this revolutionary tech certainly seems worth the investment.