the global investor
Blockchain Technology and the Banking Industry:
Changes Are Here and Here To Stay The world of banking as we know it is changing, and the biggest reason is blockchain technology.
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et us ask you one simple question:What do you know about the global financial system? It moves trillions of dollars a day and serves billions of people around the world. But that’s not all. It’s also slow, incredibly complex, and expensive – as inter-bank transactions need to rely on a trusted third party to maintain a central ledger as the record of authority. Perhaps this would have continued to be the case for many more years, but in 2008 blockchain technology was developed, and this has been changing everything. Originally created as the technology behind cryptocurrencies such as Bitcoin, it is in fact responsible for the massive disruptions in every industry around us, such as the Internet of things (IoT), the government, healthcare, banking and payments, and many others. It’s no secret that in the early days of its appearance, banks and financial institutions around the world treated it with scepticism. According to P. V. Singh, Carnegie Bosch Associate Professor of Business Technologies, the original hope for blockchain technology was that it would simply reduce transaction
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costs and make micropayments possible – as a result, bringing underbanked or unbanked individuals into the system. Now, in 2019, we’ve seen it disrupting and revolutionising many different industries and sectors, but despite that, we keep coming back to the same question – wondering just how useful it really is for the banking sector, and whether it is here to stay for good. Blockchain technology supporters believe that it can be used to create secure and convenient alternatives to time-consuming and often expensive banking processes. An interesting example of which comes from Capgemini’s Digital Transformation Institute, who released a report stating that consumers could save up to $16 billion
on banking and insurance fees each year via blockchain-based applications. Blockchain is still considered to be a young technology. Despite this, however, Harvard Business Review claims that,‘it will do to the financial system what the Internet did to media.’ And it looks as though we really are headed in this direction, as up to 99% of banks and investment companies around the world are now either exploring blockchain technology, or already utilising it, and according to Accenture, a global management consulting company, the world’s banking sector will save up to $20 billion by 2022 through the implementation of blockchain. In terms of the adoption of blockchain technology to date, the Bank of America is currently a leading
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