BANKS can make huge savings by adopting blockchain technology that supports cryptocurrencies due to its secure and low cost nature, research has shown
Responding to a NewsDay article on virtual currencies, a banker, who requested anonymity, said banks could leverage off blockchain technology as the progression to digital currencies was inevitable.
By tatira Zvinoira
“Two things should happen,” he explained.
“First, there must be a leap in regulatory understanding so that regulators can step in and begin to fill the regulatory framework for the digital environment.
“Secondly, players themselves, financial services providers must embrace blockchain technology because of the features it has and the capacity to use such low cost, but very secure products built around not just cryptocurrencies but blockchain.”
Blockchain is a catch-all phrase for distributed ledger technology and is a new type of database system that enables multiple parties to share access to the same data, at virtually the same time.
Due to this, research has shown that banks incorporating blockchain technology into their systems can save billions of dollars a year, reducing time windows and impact cost dynamics.
In terms of savings, this is done as it has enormous implications for trade confirmations, reconciliation, cash management, asset optimisation and other exceptions based on business logic processes that otherwise cost billions of dollars each year.
A report from Accenture Consultancy, an American global professional services company providing consulting, digital, technology and operations, found billions of dollars can be saved if banks adopted blockchain technology
“Currently, data reconciliation sits at the heart of most business models.
“However, because everyone maintains their own data, the process is beset with inefficiencies, such as the need for different parties to constantly message data back and forth between them to get things done.
“Blockchain, by contrast, could enable a progression from today’s multiple and sequential data reconciliation models to a much more efficient process in which reconciliation is an integral part of the transactional process,” Accenture Consulting said.
“The long-term opportunity for banks is to repoint key operational, risk and finance systems to blockchain-based, shared data platforms.
“This would enable decommissioning of large parts of their process and data infrastructure. While getting to this end-state will take time and multiple iterations, significant potential for cost and efficiency gains should continue to fuel interest and investment.”