first_img The estimate is based on an analysis of granular cost data from the banks, which were aggregated by benchmarking firm, McLagan, combined with Accenture’s models to identify where the blockchain could help generate savings. Investment banks currently maintain independent databases for transactions, customer information and other data, which need to be reconciled with the data of other firms, clients and counterparties to complete any transaction, the report notes. That process is complex, costly, and error prone, it adds. Thus, the promise of blockchain technology is that these processes could be streamlined and made more efficient, accurate, and secure through shared, distributed databases. “By replacing traditionally fragmented database systems that support transaction processing with a distributed ledger system, banks can reduce or eliminate reconciliation costs, while improving data quality,” the report states, adding that this would generate significant savings for many of the banks’ core middle- and back-office processes. For example, the report states that finance reporting costs could shrink by 70%; that compliance costs could drop by between 30% and 50% at the product level, and on a centralized basis, due to the improved transparency and auditability of transactions; that know-your-client and client-onboarding costs could decline by 50%; and that functions, such as trade support, clearing and settlement could decline by 50%. “This joint analysis with Accenture suggests that blockchain technology could significantly change the cost structure of investment banks over the next decade,” says Chris Blain, partner at McLagan, in a statement. “The technology represents a potentially important breakthrough at a time when leading investment banks are looking at myriad ways to rebuild their returns on equity.” “Through this first-of-its-kind analysis of real-world cost data we draw a clearer line under blockchain’s value to investment banks,” adds Richard Lumb, Accenture’s group CEO, financial services, in a statement. “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.” Keywords Investment banking,  Blockchain Pot company must pay dealer, court finds Related news James Langton IHS Markit to launch global online ledger for carbon creditscenter_img The adoption of blockchain technology in the back office could chop almost 30% from the overall infrastructure costs of the world’s big investment banks, according to a new joint report from consulting firms Accenture and McLagan. In fact, blockchain technology could generate between US$8 billion and US$12 billion in annual cost savings for eight of the world’s largest investment banks, the report suggests. Morgan Stanley shutters Calgary office: report Facebook LinkedIn Twitter Share this article and your comments with peers on social medialast_img read more