The adoption of blockchain technologies could help to save the global financial services industry $110 billion in costs over the next three years.
That’s according to a report by Mckinsey, which says that the distributed ledger technology will start to have a material impact over the next three years as it is applied to ‘pain points’ across seven use cases.
With wide scale adoption predicted to happen in the next five years, the report says that the area that will see the biggest benefit will be cross border B2B payments. This area is likely to see significant disruption to legacy and middle men and see up to $60bn in savings.
Trade finance could also receive a boost with up to $14bn saved through the removal of paper-based processes in favour of the distributed ledger tech.
The report says that blockchain technology could be: “One of the most disruptive innovations since the advent of the Internet.” However, caution is called for when it comes to creating a regulatory environment around it. “Enabling collaboration, shaping a positive regulatory environment and identifying clear business cases justifying the transition costs will pose the biggest challenges to implementation,” said the report.
Significant investments have been made around the technology with big tech firms such as IBM making a concerted effort to increase its uptake.
Areas such as P2P payments, derivatives settlement, anti-money laundering, and ID fraud, are all areas which are expected to be key areas where the technology is to be applied.
The efforts being made to increase adoption could spark somewhat of a blockchain gold rush, with the report predicted that banks could invest up to $400m by 2019.
As the technology continues to be tested in proof of concepts, the use cases where it will have the greatest impact will likely become clearer, but currently many businesses are still trying to figure out appropriate use cases.