A new report has revealed that the largest global investment banks could reduce the cost of their IT infrastructure by up to $12bn per year using blockchain technology.
The joint analysis by global consultancy Accenture and operations-benchmarking specialist McLagan found that blockchain technology could significantly change the cost structure of investment banks in the next decade.
McLagan analysed data about the cost structures of eight global investment banks, while Accenture used a modelling tool to identify exactly where savings could be made.
It found that blockchain technology could infrastructure reduce costs for these banks by 30%.
Blockchain technologies use advances in software, communications and encryption, allowing investment banks to have a shared, distributed database instead of a separate, fragmented database structure.
Accenture said banks can decrease or eliminate reconciliation costs, and enhance data quality by replacing traditionally fragmented database systems that support transaction processing with a distributed ledger system.
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The move will cut the cost of middle and back-office processes. The report said finance-reporting costs could shrink by 70% via a shared source of verified data.
Costs associated with compliance, business operations like trade support and centralised operations such as know-your-customer checks, could fall by up to 50%.
Accenture financial services industry blockchain practice managing director David Treat said: “Given the tremendous cost of data reconciliation – which is part of every aspect of the capital markets industry – it’s no surprise that we’ve seen a significant amount of investment in blockchain technology. But, as with any emerging technology, understanding what these investments might yield is a challenge.
“As we move into production implementations, bank executives will need a clear roadmap for how and where to rethink their strategies and redesign their operating models, which is why we undertook this unique study.”
A recent report by Mckinsey revealed that the adoption of blockchain technologies could help to save the global financial services industry $110bn in costs over the next three years.
