According to the Bain study, blockchain has the potential to reduce costs for banks if executed in the right way. In the era of the blockchain, as industries now understand its potential to revolutionize the way we do business today because of its nature of transparency. There are so many benefits which come along with this technology that every sector are trying to check if any possibilities to implement, if yes then where. We already can see the major possibilities of implementing blockchain in the financial sector by transforming business models, helping to build new connection in business, generating extensive efficiencies but a lot of research and work has to be done before we can realize its full benefits in any industry.
As Vitalik Buterin, inventor of Ethereum has said: “Blockchain solves the problem of manipulation. People in the West say they trust Google, Facebook, and their banks. But people in many other countries do not trust organizations and corporations that much. Blockchain’s opportunities can help overcome that obstacle.”
On June 14, major global management consulting firm Bain & Company has released a report and their study they also have favored of implementation of blockchain technology in the financial sector. According to Bain, “transaction banking revenues tend to be less volatile than other types of banking revenues, and bankers can cross-sell products, which is critical for client loyalty.”
Bain report gave its closure by saying “Using this technology, execution, clearing, and settlement could occur simultaneously, minimizing liquidity and credit risks. Custody and other post-trade security services also are under threat from new technologies.”
According to the consultancy firm’s study, trade finance operating costs could be reduced by up to 50 to 80 percent by blockchain tech “if adopted in the right way by participants in the trading ecosystem.” The cost cuts would arise from paramount increases in processing speed –– Bain calculates three or even four times more expeditious settlement, billing, and payment.
While the senior research director at the Bank of Canada’s funds management and banking department has raised question over the effectiveness and security of using blockchain for banking at the 2018 G20 Global Financial Stability Conference in Seoul so Bain’s study can be really helpful for people to understand how and why blockchain can play a crucial part in the financial sector in the coming years.