A recent poll conducted by Specialist Banking found that 68.89% of financial intermediaries believe that cryptocurrencies/blockchain will play a big part in the future of banking.
Some banks are considering incorporating blockchain into their businesses or offer services that deal with cryptocurrencies.
Earlier this year, mobile bank Revolut announced it was soon to release phase one of its cryptocurrency offering to its customers.
‘Financial Services: Building Blockchain One Block at a Time’ – a study by global technology consulting and services firm Cognizant – found that three-quarters of financial services executives predicted that their revenues would grow by more than 5% following the adoption of blockchain.
However, only 48% of respondents reported that they had a defined blockchain strategy.
“These results [the Specialist Banking poll] show the potential that many within the banking industry already see in blockchain technology and cryptocurrencies,” said Rahim Kaba, director of product marketing at VASCO, a software firm which works with companies such as Wells Fargo, US Bank, JP Morgan Chase and RBC Royal Bank.
“As the pressure to digitise processes, strengthen compliance and audit practices and transact securely across channels increases, blockchain is emerging as a viable digital platform that can adequately address both consumer and business concerns.
“Blockchain gives banks and other financial institutions choice with respect to the technology platform they choose while digitising business transactions.
“In the lending market, for example, leveraging blockchain to record transactions tied to loans provides a new way of transacting with multiple parties in an open, efficient and cost-effective manner.
“Direct participants and ‘observers’ such as auditors and regulators can more easily track transactions and verify their authenticity.
“Blockchain’s decentralised approach ultimately changes the dynamics of today’s financial system – shifting the power from institutions to users.”
Jon Matonis, VP corporate strategy at blockchain research and development specialist nChain, said: “Prevailing wisdom states that there is a potential $20bn in costs savings to be realised by banks via improved blockchain reconciliation processes.”
Research has shown that blockchain technology could reduce infrastructure costs for eight of the world’s 10 largest investment banks by an average of 30%.
“Regarding the readership poll on the topic of cryptocurrencies and blockchain playing a larger role in banking, I would caution that it may not be in the way banks expect because public blockchain cryptocurrencies remove barriers to entry and bring new market entrants into the traditional functional roles of banking,” added Jon.
Graham Lloyd, director and industry principal of financial services at Pegasystems, believed it was not a question of whether or not cryptocurrencies/blockchain would play a big part in the future of banking but, instead, how long it would take.
“It’s difficult for people to understand how cryptocurrencies are controlled, but even harder to get comfortable about their value fluctuations.”
A recent study by HSBC revealed that 80% of respondents did not understand blockchain.
“As people become more comfortable and develop a greater understanding of blockchain, their perceptions will change,” added Graham.
“While some suggest it will be a force for good, others suggest that the changes it would impose on the way these organisations operate will leave a trail of ruin in their wake.
“Either way, one thing seems certain: the potentially huge blockchain iceberg lying on the financial services industry horizon requires careful navigation to avoid a massive collision.”
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