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The report, published on Tuesday jointly with benchmarking firm
McLagan - part of consultancy Aon Hewitt - is based on an
analysis of cost data from eight of the world’s ten largest
investment banks, and provides a rare concrete estimate of
blockchain’s potential savings.
Originally used to underpin digital currency bitcoin, blockchain
is a distributed record of transactions, or other data,
maintained by a network of computers on the internet without the
need for approval from a central authority.
As it creates a shared "golden record" of data that is virtually
tamper-proof, it obviates the need for reconciliation and could
prove a helpful resource for auditing.
Banks and other large financial institutions have been ramping
up their efforts to develop blockchain-based technology to run
some of their most burdensome back-office processes, such as the
clearing and settlement of securities.
But many have expressed scepticism over the impact the
technology will have, arguing that banks have jumped on the "blockchain
bandwagon" for the sake of publicity.
David Treat, a managing director for Accenture’s financial
services industry blockchain practice, said the significant
investments in the technology were no surprise "given the
tremendous cost of data reconciliation, which is part of every
aspect of the capital markets industry".
The report estimates that by deploying bitcoin’s underlying
technology to run some processes, like finance reporting, the
eight banks analyzed could reduce infrastructure costs by an
average of 30 percent, helped by better data quality and
transparency.
Costs associated with compliance, business operations such as
trade support and centralized operations such as
know-your-customer checks, could fall by up to 50 percent.
Their estimates did not include potential costs and investments
required to deploy the technology.
While sounding an optimistic note on the emerging technology’s
potential, the report warned that if regulatory hurdles
prevented blockchain’s widespread adoption, banks would not reap
any of its benefits.
"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 said.
(Reporting by Anna Irrera in New York and Jemima Kelly in
London)
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