Over the past two years, we’ve seen a myriad of statistics that illustrate the potential impact of blockchain on banks’ bottom lines. The numbers are compelling and certainly help to illustrate the overall size of the impact and the speed at which the investments in blockchain are accelerating.
It’s not surprising. The tremendous cost of data reconciliation hits every area of the capital markets industry today. But to move blockchain from concept to reality, we wanted to illustrate what an investment in blockchain could really yield—to provide investment bank executives a clear roadmap they need for how and where to rethink their strategies and redesign their operating models.
A detailed blockchain value analysis
Accenture teamed with benchmarking firm McLagan, a business unit of Aon plc., to conduct a detailed value analysis. Using an aggregate of the general-ledger data from eight of the world’s top 10 banks, we mapped more than 50 operational cost metrics against our High Performance Investment Banking model to see where blockchain could add the most value.
It’s important to note that the results are specific to an aggregate of these eight banks and do not include the potential investment required. Our goal is to provide specific insights versus a general assessment What we found is that blockchain could provide an estimated eight billion USD in cost savings for the eight banks we examined. That includes:
- 70 percent potential cost savings on central finance reporting, resulting from improved data quality, transparency and internal controls.
- 50 percent potential cost savings on centralized operations, including know-your-client (KYC) requirements and client onboarding.
- 50 percent potential cost savings on business operations, including trade support, middle office, clearance, settlement and investigations.
- Between 30 and 50 percent potential cost savings on compliance, resulting from improved transparency and auditability.
The results above reflect the most conservative set of assumptions and the impact could potentially be more significant. Of course, regulatory changes or other unforeseen factors may still impede blockchain solutions from reaching their fullest potential.
But the findings are encouraging and highlight where and how a blockchain-based solution could provide value—saving investment banks billions of dollars each year. In addition, these solutions could:
- Significantly reduce the time between settlement delivery and payment.
- Enable banks to decommission large parts of their middle- and back-office infrastructures.
- Support the externalization of key operational processes to industry utilities.
The First Step
As investment banks rethink their strategies and redesign their operating models, the need for specific insights and innovations to smooth the path for blockchain adoption could grow. This could be just the start of a significant business model transformation. But it is already underway and the organizations that are making the first moves should be best positioned to realize the benefits and opportunities.
Learn what questions your investment bank should be asking in: Banking on Blockchain: A Value Analysis for Investment Banks.
If you’d like to discuss your situation in particular, contact me directly at email@example.com.