Blockchain could cut bank infrastructure costs by 30%

Distributed ledgers – otherwise known as blockchain – are shared database systems which enable multiple parties to access the same data with a high level of security and confidence.

A report published by consultancy firm Accenture has now found that replacing traditionally fragmented database systems with blockchain could save the eight banks between approximately £6.4bn and £9.6bn each year.

“Capital markets institutions have faced a perfect storm of regulatory-compliance costs and revenue pressures in recent years, prompting them to invest in emerging technologies as a lever to improve profitability,” said Richard Lumb, group chief executive of financial services at Accenture.

“Through this first-of-its-kind analysis of real-world cost data we draw a clearer line under blockchain’s value to investment banks.

“Our goal is to help banks move rapidly from proof-of-concept to production system with blockchain technology, generating real cost savings and improving bottom-line results.”

The banks’ savings would be boosted by a 70% drop in finance-reporting costs, while compliance, centralised operations and business operations costs would each also fall by up to 50%.

This latest news comes one week after seven banks agreed in principle to launch a new digital trade chain, which utilises distributed ledger technology.

David Treat, managing director for financial services industry blockchain practice at Accenture, added: “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.”